After Bankruptcy, including the Discharge
1. How often can I file a Chapter 13?
2. What is the discharge in bankruptcy?
3. How will I receive my discharge?
4. What debts are not discharged in a chapter 13 bankruptcy?
5. A Discharge may be revoked
6. Are my out-of-state debts discharged in bankruptcy?
How often can I file a chapter 13 if I have already received a discharge in another chapter?
Only individuals, who have complied with the Bankruptcy laws and completed their chapter 13 Plan, can receive a chapter 13 discharge. An individual cannot receive a discharge in the 13 if they received a discharge in 7, 11 or 12 in the past 4 years before filing the current case, or in a chapter 13 in the last 2 years before filing the current case. 1328(f).
What is a Discharge?
A discharge is the court’s order stating that you do not have to pay your debts to the creditors that were listed in your bankruptcy documents, so long as the court did not entered a non-dischargeability order. Other debts that are not discharged under the current laws include student loans, child support, alimony/maintenance, government fines or penalties, most taxes and a few others.
If a debtor is required to pay child support or alimony/maintenance, then, after all Plan payments are completed, they must file a certification with the Court that all payments are current, otherwise they will not receive a discharge. (1328(a))
The effect of a discharge is that debtors are released from personal liability for all dischargeable debts, and all creditors, whose debts are discharged, are prohibited from performing any act to collect such debts from the debtors. This is known as a permanent, federal injunction. In a chapter 13 the discharge is not entered until all your plan payments are made and the terms of the Plan completed in full. If the debtor commits fraud, or fails to perform as required by law, the discharge can be revoked.
Even after a discharge, generally a creditor that has a valid lien on property belonging to a debtor (such as: house, car, furniture, jewelry) may recover the property or its value. However, if the debtor possesses certain property that is encumbered by a judicial lien or a non-purchase—money security interest, the Debtor will have to bring this issue to the Court for an order which will remove the effect of the lien. This action is called a Motion to Avoid a Lien.
If the debtor wants to keep assets that have secured liens (such as a house or car) the debtor can either continue making the same payments as before the bankruptcy, or pay the lender one lump-sum payment equal to the fair market value of the item (redemption).
While the discharge stays on your credit record for 10 years from the discharge, it becomes less and less significant in a creditor’s decision to grant new credit with every year that passes.
How will I receive my discharge?
Usually by mail, unless you have asked for electronic notification. In some states there may be a court hearing, which you must attend, where the court will explain the meaning of the discharge, or the reasons for denying your discharge, if it is not granted. Arizona does not have this discharge hearing, unless yours is a very unique situation.
What debts are not discharged in a chapter 13 bankruptcy?
If your discharge in bankruptcy is granted, in most circumstances all of your debts will be discharged except the following list, which is intended to be only an outline of most debts that are not discharged by operation of law or by a court order:
1. Certain taxes, including trust fund taxes. But these are normally paid as part of the chapter 13 plan.
2. If the bankruptcy court so rules, debts for obtaining money, property, services, or an extension, renewal, or refinancing of credit by means of false pretenses, fraud, or a false financial statement used with intent to deceive.
3. Debts not listed in the bankruptcy papers, unless the creditor had knowledge of the case in time to file a claim.
4. Debts for domestic support obligations (alimony, maintenance or support).
5. Interest on non-dischargeable debts.
6. If the bankruptcy court so rules, debts for intentional injury.
7. Debts for certain fines and penalties payable to governmental units.
8. Debts for student loans, unless not discharging the debt would impose an severe undue hardship. This undue hardship must be properly plead to the Court and the judge will decide based on your unique situation. This is a very difficult burden for the debtor to prove.
9. Debts that were or could have been listed in a prior bankruptcy case in which the debtor either waived their discharge or the discharge was denied.
10. Debt for personal injury judgments against you resulting from car accidents in which the debtor was a drunk driver.
11. Post-petition homeowner’s association fees (but this issue is disputed).
A Discharge may be revoked
A Discharge may be revoked in the case of bad faith or fraud.
Are my out-of-state debts discharged in bankruptcy?
Yes. Bankruptcy is a federal proceeding and the bankruptcy court has the jurisdiction and power to discharge debts contracted anywhere in the Country, whether in or out of your state of residence. Of course, there are certain debts that cannot be discharged in bankruptcy.