Will Your Debts Be Discharged After Completing Chapter 13 Bankruptcy?

Posted on: 17 February 2023

Chapter 13 bankruptcy is designed to provide relief to petitioners who earn a higher-than-average income or who want to protect some secured assets. But like Chapter 7 and most other forms of bankruptcy, it does include a debt discharge at the end of your repayment term.

What is discharged and what isn't? And what are some debts that may or may not be discharged? Here's what you need to know. 

What Debt Is Discharged?

The good news is that most unsecured debt is dischargeable in either Chapter 7 or Chapter 13. The main difference is that with Chapter 13, you will pay down more of the debt before seeing the remaining amount discharged.

This usually includes credit cards, personal (or signature) loans, loans from family or friends, older income taxes, medical bills, and many types of court judgments. These are many of the most common debts that most Americans deal with. 

What Debt Isn't Discharged?

Unfortunately, some types of debt aren't permitted to be discharged in order to prevent abuse of this social safety net. The most likely are secured debts, which are debts with some form of collateral attached (like a house or a car). These are only discharged if you give up the collateral.

In Chapter 13, some unsecured debts are also labeled as a priority and are generally not dischargeable. These include bankruptcy fees, support orders, amounts earned by your employees but not yet paid, and intoxication-related judgments. 

What Depends on the Circumstances?

Finally, there are a few less common debts that may or may not be dischargeable. For instance, while many government fees or penalties are dischargeable, criminal fines and restitution are not. 

Old debts that weren't discharged in a prior bankruptcy may be discharged now depending on the reasons they were not discharged the first time. For example, if a judge declared a debt non-dischargeable, it likely remains so. Did you waive discharge? Then it may be discharged now. 

Other situations may include homeowners association dues when not reaffirming the home, cram-down liens on secured assets, and judgments related to intentional harm or injury. These are decided case by case based on the specific details involved. 

Where Can You Learn More?

The discharge of qualifying debts is one of the most important elements of any bankruptcy. So you need to understand what will happen to yours when you file. Start by learning more in a consultation with a bankruptcy lawyer in your state today.