Discharging Your Debt in Chapter 13:
What you need to know.



The Chapter 13 Discharge

Recently, the laws regarding Chapter 13 bankruptcy in Akron, Ohio have changed and the scope of the Chapter 13 discharge is complex. We'll inform you as much as we can on our site, but for any questions specific to your financial situation, you can give us a call. Our attorney excellent at Akron and Ohio bankruptcy law and would be happy to answer any questions you may have about Chapter 13 bankruptcy and the Chapter 13 discharge.

Your discharge at the end of Chapter 13 bankruptcy:

The Chapter 13 discharge marks the end of your bankruptcy. It is the official completion of your agreed-upon 3-5 year repayment plan and the point when your unsecured debts are discharged. It marks the beginning of your (mostly) debt-free life and when you’re up-to-date with your long-term obligations, such as your mortgage.

If you’re wondering just how much you’ll have to pay back during your customized repayment plan, read more about Chapter 13 bankruptcy. In short, your repayment plan is determined by the amount of your debt, income, and expenses. Every case is different and unique to your financial situation. Some debts in a Chapter 13 bankruptcy must be paid back in full and they’re referred to as priority debts. Priority debts include child support, recent taxes, and alimony. However non-priority debts in your Chapter 13 bankruptcy do not need to be paid in full, or even at all.


The following represents common non-priority, unsecured debts that can and will be discharged at the end of a successful Chapter 13 repayment plan. The majority of your discharge consists of non-priority, unsecured debts.



Non-Priority Unsecured Debt:

Credit Card Debt
Credit card debt is a non-priority, unsecured debt so any outstanding balance remaining after you finish your repayment plan is discharged.

Medical Bills
Medical debt can hit you unexpectedly and build up very quickly. Medical debt is one of the most common reasons people use bankruptcy as a financial resource to get them out of their insurmountable medical debt. You can discharge your medical bills through Chapter 13 bankruptcy.

Pay-Day Loans

Past-Due Utilities

Past-Due Rent

Personal Loans
Personal loans also get discharged at the completion of your Chapter 13 bankruptcy. However, if there’s an asset as collateral for the loan, Chapter 13 may discharge your liability on the loan but the collateral may be repossessed by the creditor if you don’t pay.

Older Tax Obligations
Most taxes and back-taxes are considered priority debts that cannot be discharged through Chapter 13 bankruptcy. However, certain taxes such as older income tax obligations may be discharged upon completion of your repayment plan if you did not commit fraud and you were timely with your filings.

Debts Related to Breach of Contract or Negligence
Be aware that Chapter 13 bankruptcy will not discharge a debt for willful or malicious injury to a person. However, willful or malicious damage to personal property may be discharged through Chapter 13 (this is not true in Chapter 7 bankruptcy).

VEHICLE TREATMENT

In your Chapter 13 bankruptcy, you may be able to reduce the principle of a secured vehicle loan to the current value of the collateral secured. This process is referred to as a "cramdown." You may also be able to get a much better interest rate on the vehicle.


By utilizing a Chapter 13 cramdown, you may be able to save certain properties as they become much more affordable after their loan is crammed down to the actual value of the property.



Debts that can be crammed down:

Certain secured debts can be crammed down. A secured debt is when you take out a loan or borrow money to purchase a physical piece of property such as a house or car. With a secured debt, the lender is able to repossess the property if scheduled payments are not made. The most common secured debt people have are mortgages and car loans. In a Chapter 13 bankruptcy, you can cram down your car loan, investment property mortgages, or other personal property.

An important thing to note: you cannot cram down a mortgage on your primary place of residence, meaning your regular home loan may not be reduced in a Chapter 13 bankruptcy, but through your Chapter 13, we create a plan to cure mortgage arrears on your primary place of residence through your Chapter 13 repayment plan. To learn more, see Your Home and Chapter 13 bankruptcy.

There are a couple restrictions when cramming down a secured loan through Chapter 13 bankruptcy:

  • To cram down a car loan, you must have purchased the car at least 910 days before your bankruptcy.

  • Similar to the 910-day rule for your vehicle, the one-year rule applies to all other personal property. To cram down personal property other than your vehicle, you must have purchased the goods at least one year prior to your bankruptcy.

  • Contact us and tell us your financial situation, bankruptcy can probably help you.

    We stop debt collectors from calling you. Let us know if they're harrassing and we'll handle it.