What happens at the end of a Chapter 13 repayment plan?

Those who find themselves in need of debt relief may consider filing for Chapter 13 bankruptcy. Unlike Chapter 7, which provides a discharge of eligible debts via liquidation, Chapter 13 entails a repayment plan for eligible debts. Southaven residents may have questions about the benefits of Chapter 13, as well as about the actual bankruptcy process itself. One common question regarding Chapter 13 is: what happens at the end of the repayment plan?

At the conclusion of a Chapter 13 repayment plan, the debtor is generally able to receive a discharge of their eligible debts. The debtor will typically be required to complete a financial education class and are not eligible for Chapter 13 if they have discharged their debts in a previous case filed within a certain amount of time. For prior Chapter 13 bankruptcy cases, the time limit is two years; for prior Chapter 7, Chapter 11 and Chapter 12 cases, the debtor must not have had a prior discharge within the past four years.

Another requirement for the Chapter 13 discharge may not be applicable to all debtors; this requirement is that all applicable domestic support obligations must have been paid prior to the discharge certification. In addition, the court must also find no reason to believe that any pending proceeding will limit the homestead exemption of a debtor.

If all the requirements are met and the debtor has made their manageable payments on the repayment plan, the debtor will receive a discharge of remaining eligible debts. In addition, the creditors related to the discharged debts will no longer be allowed to continue or begin collection efforts. The end of a Chapter 13 repayment plan may seem far away to those just filing for bankruptcy, but the three-to-five-year plan can result in significant debt relief as well as a fresh financial start.

Source: FindLaw, "The Chapter 13 Debt Discharge," accessed April 19, 2015

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