Chapter 13 Without a Discharge
Chapter 13 Without a Discharge
Is it possible to file a Chapter 13 without a discharge of debts? Yes, it is possible to file a Chapter 13 bankruptcy without getting a discharge of debts at the end of the case. This happens when a Chapter 13 case is filed too soon after filing a Chapter 7 bankruptcy.
Chapter 13 Eliminates Leftover Debts – Usually
The Chapter 13 discharge is an order that is given by the bankruptcy court when the plan payments are complete. This order eliminates all personal responsibility for any leftover debts included in the case. On a regular Chapter 13 case, this order will occur after the trustee issues a notice of plan completion. Then, the bankruptcy attorney in the case will file a motion and certification with the court to get the discharge order. (Examples available on the Bankruptcy Court’s Website).
Some Chapter 13 Do Not End With a Discharge
Sometimes, Chapter 13 cases are filed BEFORE 4 years have passed since a previous Chapter 7 case. If there was such a recent Chapter 7 case, you will not get a discharge in the new Chapter 13. This is because you must wait 4 years AFTER a Chapter 7 to get a discharge through filing a Chapter 13. Click here to learn more about a Finished Chapter 13 case.
Does the Discharge Matter?
For some people, not getting a discharge at the end of Chapter 13 may not cause very many problems. Many times creditors write off the debt whether a discharge is entered or not at the end of a Chapter 13. Because no-discharge cases are not common, many creditor systems simply do not watch for this type of activity.
In such cases, people do encounter problems with car lenders. Many times, the car lender will not release the title after the end of a no-discharge Chapter 13. Or, the auto lender may require the debtor to settle or pay an additional amount to get a clear title. Remember, also that any lender may also see through the fact that no discharge of debts was entered. Although it is more rare, an unsecured creditor like a credit card may still seek collection on any unpaid amount.
Still, the discharge in bankruptcy is very powerful. Therefore, it can be wise sometimes to even let the Chapter 13 case dismiss after a certain amount of time has passed. Then, you can file a new Chapter 13 that will receive a discharge at the end. Chapter 7 also eventually becomes available after enough time passes. Switching from Chapter 13 to Chapter 7 can also be an effective tool if a discharge is needed later to eliminate new or old debts.
