What Happens After Chapter 13 is Paid Off?
You’ll get a discharge order that eliminates the outstanding balance of qualified debt once your Chapter 13 repayment plan is finished. Because it discharges some obligations that aren’t nondischargeable in Chapter 7 bankruptcy, a Chapter 13 bankruptcy discharge is actually even broader than a Chapter 7 bankruptcy discharge.
Whether you have already filed for Chapter 13 or are just starting to look into the process, there are many questions you may have about what happens after it’s paid off. So here’s a look at some of the important points to keep in mind.
Discharge from Debts Provided for by the Plan
Upon completing the repayment plan under Chapter 13, a discharge is obtained. The discharge is the legal absolution of all debts that were provided for in the repayment plan. However, debts not provided for in the plan are still owed by the debtor.
Debts that are not provided for in the plan are generally non-priority unsecured debts. These debts include credit card debts, medical bills, taxes, and other debts not related to a wrongful act. Some of these debts may qualify for a discharge under Chapter 13, but others will not.
The Chapter 13 repayment plan generally lasts from three to five years. The plan includes a means test that helps determine how much money is available to pay back creditors. If the debtor’s income is interrupted during the plan, the plan payments may be lowered. In addition, some trustees accept electronic payments.
In order to qualify for a Chapter 13 discharge, the debtor must show that the payment plan is reasonable and that he or she has completed all of the required financial management courses. The Chapter 13 plan may also be modified as necessary.
The Chapter 13 Trustee will audit the debtor’s finances and determine whether the plan is reasonable. The audit may include an analysis of the debtor’s income and expenses and an evaluation of the debtor’s tax refunds.
During the course of the plan, the debtor will be required to attend a budget counseling session. This is similar to the credit counseling session. However, during this session, the debtor will be required to prove that he or she is making payments on the plan.
A hardship discharge may be available if the debtor fails to make a plan payment. This type of discharge is a very rare occurrence. It is granted in very limited cases and requires that the debtor’s payment is at least as much as a hypothetical liquidating Chapter 7 Trustee.
Exceptions to the Chapter 13 discharge are debts owed to spousal support, child support payments, long-term obligations, debts related to a willful or malicious act, debts incurred as a result of a drunk driving accident or death, and debts for restitution.
Dealing with Nonpriority Unsecured Debts
Whether or not you file for bankruptcy, you may be left with some unsecured debt. When you file for bankruptcy, you must list all unsecured debt on the bankruptcy petition. There are two types of unsecured debt: priority and non-priority. Regardless of which type of debt you have, your bankruptcy will allow you to pay some or all of your debts over a period of time.
Priority debts include debts for certain tax obligations, attorney fees, court costs, child support, and certain long-term obligations. These debts are paid before non-priority debts. Some unsecured debts are also given priority, such as medical bills. However, most debts are not eligible for a discharge in bankruptcy.
Priority unsecured debts can be paid through a Chapter 13 bankruptcy plan. However, you will need to provide proof of claim for any priority debts you want to include in the plan.
The amount of your repayment plan will depend on your income, the value of your non-exempt property, and the type of debts you have. If you owe a lot of money on a car loan, for example, you may be able to pay it off in full through the plan. However, if you owe a lot on credit cards, you may only be able to pay a percentage of your debt.
The amount of your repayment plan will also depend on your ability to make up missed payments. If you are behind on your mortgage payments, you will have to make up the missed payments over time in the plan. If you cannot, you may still lose your home.
Suppose you have a lot of unsecured debt. In that case, you may be able to get a debt relief plan through a credit counseling agency or a non-profit organization. This may be a better way to handle your debts than filing for bankruptcy. In addition, the agency can work with you to find a solution that will fit your budget.
You may also be able to get a hardship discharge if you have a catastrophic injury that prevents you from working. A bankruptcy lawyer can help you determine whether you qualify for a hardship discharge.
Getting a student loan discharged through bankruptcy may seem like the logical course of action, but it can have severe long-term consequences. While it may seem like a simple matter to wipe out your student loan debt, it’s best to consult an experienced bankruptcy attorney.
If you file a Chapter 13 bankruptcy, you must make student loan payments after discharge. Your lender may also contact you. Your lender will set up a new payment schedule, so you need to know exactly how much money you owe. If you’re dealing with private student loans, you may have to wait five years before your loan can be enforced.
There are several ways to discharge a student loan through bankruptcy. For example, you can ask your lender for a deferred payment, try to renegotiate your payments, or file for a discharge. You may also qualify for an undue hardship exemption.
The National Student Loan Data System can help you find out who holds your student loans. If you don’t know what you’re paying for, it’s a good idea to find out before your bankruptcy filing.
If you have federal student loans, you may be able to get them discharged through bankruptcy. You can also get them recalculated at a lower interest rate. This is a good way to save money, especially if you’ve been unable to make your payments. You may also qualify for a student loan reduction, which can lower your interest from nine to ten percent to one percent.
The same is true for private student loans. Your lender may be willing to help you out, but you’ll have to wait five years before you can enforce your loan. If you’re having trouble paying your student loans, it may be time to consider filing for bankruptcy. You might be surprised at how much debt you have.
The best way to find out if you qualify for a discharge is to contact your lender and have them discuss your options. You should also check with your lender to see if they have a student loan repayment plan that you can use.
Breach of a contract or negligence-related debt
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy allows you to discharge debts arising from a breach of contract or negligence. The majority of Chapter 13 bankruptcy discharges are nonpriority unsecured debts such as medical bills, utility payments, credit card balances, and personal loans. However, student loans are considered long-term debts and will not be discharged under Chapter 13 bankruptcy. Likewise, debts for restitution for civil actions or fraud in a fiduciary capacity will not be discharged.
Chapter 13 allows you to discharge debts incurred in the course of a divorce, property settlements in a divorce, or in connection with non-dischargeable tax obligations. It also allows you to discharge debts arising from malicious damage or injury to property. Debts arising from willful injury to a person or property are not discharged. Debts obtained through false pretenses or fraud in a fiduciary capacity are also not discharged. However, a debtor is still liable for all debts that remain after bankruptcy. Suppose you have debts arising from a breach of a contract or negligence. In that case, you may want to seek the assistance of a Chapter 13 bankruptcy attorney. This will allow you to restructure your debts and start a fresh financial life. The process may take a little time, but it can be well worth it.
Does your credit score go up after Chapter 13 discharge?
After a Chapter 13 bankruptcy discharge, your credit score may change. How well or poorly your credit was before filing for Chapter 13 bankruptcy will determine your new score. Your overall credit score is likely to significantly decline for the majority of people.
Can you have a 750 credit score with a bankruptcies?
You can have a credit score of 725 or higher in just a few years after filing for bankruptcy, which will make it easier for you to rapidly obtain a loan or credit card. It takes five years to establish strong credit. By adhering to these recommendations, you can even restore your credit score to 800 after bankruptcy.
How long does it take to repair credit after Chapter 13?
A Chapter 13 bankruptcy only appears on a consumer’s credit report for seven years, as opposed to ten years for a Chapter 7 bankruptcy. However, once your Chapter 13 bankruptcy has been discharged, it typically takes between 12 and 18 months for your credit score to start rising.