Going through a Chapter 13 bankruptcy is a time-consuming process that can take as long as five years, depending on the repayment plan approved by the bankruptcy court. When you make the final payment on the approved plan, you are ready for the discharge of debts to happen immediately. You must complete several steps in conjunction with making the final Chapter 13 payment, which could delay the discharge paperwork.
Discharge Time Frame
Getting a discharge in a Chapter 13 case generally takes between six and eight weeks after making your plan's final payment. This time frame depends upon the court's caseload — the busier the court, the longer you may have to wait for your discharge letter. Chapter 13 has discharge requirements as well, and your speedy adherence to them generally expedites the process.
After you make the final payment under your Chapter 13 plan, you are entitled to a discharge if: you certify to the court that any support obligations that were due prior to filing the bankruptcy petition have been paid in full; you have completed a court-sanctioned financial management course and you have not received a discharge for a Chapter 7, 11 or 12 bankruptcy within four years, or within two years for a Chapter 13 filing.
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When you receive a discharge after completing the Chapter 13 plan and associated requirements, the court will declare that all debts included in the plan, whether paid in full or not, are no longer valid. Creditors may no long contact you, nor may they initiate any further collection action against you with regard to any of the debts discharged. Bankruptcy laws prohibit the discharge of some debts associated with Chapter 13.
Debts Not Discharged
The Bankruptcy Code prohibits the discharge of long-term debts, such as the mortgage on your home, alimony or child support obligations, debts associated with government-funded education loans, debts associated with death or personal injury that occurred as a result of impaired driving connected with driving while under the influence and restitution or fines linked to a criminal prosecution.
When circumstances beyond your control arise while working out a Chapter 13 repayment plan, the court may grant a hardship discharge. This discharge may be available if the creditors have received as much money as they would have received if you had filed for Chapter 7 liquidation bankruptcy. The court will also have to determine that a modified plan is not an option. This generally happens when an illness or injury limits or prohibits your ability to hold down a job with adequate pay to fund a modified plan as determined by the bankruptcy court. If the court grants a hardship discharge, it may limit the dischargeable debt.