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Which Debts Remain After Your Chapter 13 Discharge
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Chapter 13 bankruptcy functions as a payment plan during which you are protected from creditors while you make payments to a Chapter 13 trustee. These payments are disbursed monthly by the trustee to your creditors based on a payment schedule set out in your court approved Chapter 13 plan. • Your plan, which must withstand objections by creditors and the trustee, may provide for 100% payment of your creditors, or it may provide for something less. Priority creditors like the IRS or Georgia Department of Revenue, usually get paid at 100%. Secured creditors like vehicle lenders and jewelry finance companies usually get paid at or close to 100%. Unsecured creditors get the least priority and often get paid at less than 100%. • If you successfully complete your plan, the bankruptcy judge will issue an order declaring that you are debt free - your plan payments have satisfied in full your obligations. Any discharged debt is forever extinguished. • However, there are some debts that will survive your bankruptcy. Here are the most common: • mortgage debts - mortgage debt is considered long term debt in that it is not practical to pay the balance of your mortgage within the five year term of a Chapter 13 plan. Therefore, your plan will likely provide that you are to make ongoing mortgage payments “outside your plan” in addition to your plan payments that cover other debts. When your plan is over and you get your discharge, you remain obligated to continue paying your mortgage. • vehicle leases - since a lease is, in essence, a rental, it is not a debt. Instead it is more of a budget item like a utility bill, rent or insurance. If you want to keep your leased vehicle you must make your regular ongoing payment directly to the lessee during and after your plan • student loans - as discussed in this video, student loans are a hybrid kind of debt. They are unsecured but also non-dischargeable per the Bankruptcy Code. Most of the time, we provide for direct payment of student loan debt in the Chapter 13 plans we create for our clients. • Co-signed debt - if you have a co-signer on your credit card or other unsecured debt, and your plan provides for 25 cents on the dollar to unsecured creditors your Chapter 13 discharge will eliminate the other 75% of that debt as to you, but not your co-signer. To the extent that your co-signer remains stuck with the unpaid portion of this debt, it survives bankruptcy as to your co-signer. • Unlisted debt - if you did not include a creditor in your Chapter 13 case, that creditor does not have the opportunity to object to or otherwise participate in your Chapter 13 repayment plan. As such, in many cases, that unlisted creditor would have an argument that its debt survives the bankruptcy. These cases tend to turn on the facts of the particular case but suffice it to say that omitting a creditor can create problems for you. • Want more information about Chapter 7 practice and procedure in the Northern District of Georgia. Call Ginsberg Law Offices at 770-393-4985 or visit our web site at http://www.atlanta-bankruptcy-attorne... • Jonathan Ginsberg • Ginsberg Law Offices • Atlanta Bankruptcy Lawyers • 770-393-4985
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