What Debts Remain After A
Chapter 13 Bankruptcy Discharge?
A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not
provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge.
Additional exceptions to a Chapter 13 discharge include, generally, claims for spousal and child support;
educational loans; drunk driving liabilities; criminal fines and restitution obligations; and certain long-term
obligations, such as home mortgages, that extend beyond the term of the plan.
The effect of a discharge on child and spousal support obligations depends upon whether
the debtor filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. Whereas a Chapter 7 filing will have little
effect on such obligations, a Chapter 13 proceeding may stop the collection activities, at least temporarily. The
difference between chapters arises because, although all bankruptcies stop or "stay" creditors' efforts to collect
debts, the Bankruptcy Code excludes actions to collect child support or spousal maintenance from the stay unless
the creditor attempts to collect from the "property of the estate," and the different chapters of the Code define
this term differently.
In a Chapter 7 proceeding, "property of the estate" includes all possessions, money and
interests the debtor owns at the time he or she files. Money earned after the bankruptcy is filed, however, is not
property of the estate. Since most child and spousal support is paid out of the debtor's current income, the
bankruptcy should have little effect.
Under Chapter 13, however, the Code considers the debtor's earnings as property of the
estate, since the wage-earner plan is based on making payments from the debtor's current income rather than from
liquidated assets. As a result, support collections may be stayed. The court can decide to remove the stay to allow
for withholding alimony and child support from the debtor's income. Whether it does so may depend on how well the
wage-earner plan provides for child and spousal support. If the court does not believe that the plan includes
adequate provisions, it may decide to lift the stay.
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