Discharge Serving Families Throughout Mobile

Chapter 13 Discharge

When the debtor files a Chapter 13 case, the U.S. Bankruptcy Court is empowered to determine whether the debtor is eligible under the U.S. Bankruptcy Code to receive a discharge of debts upon completion of the Chapter 13 Plan. In some cases, a prior bankruptcy case filing where a Discharge Order was entered can render the debtor legally ineligible to receive a discharge in the case, but not prohibit them from having the other protections of Chapter 13 (deceleration of secured debts in default and protection under the court's automatic stay order).

How Do Discharged Debts Affect Creditors?

Creditors cannot collect discharged debts. This means they cannot sue the debtor, garnish the debtor's wages, assert a deficiency balance against the debtor after repossessing collateral (such as a car), or otherwise try to collect a debt against a discharged debtor by any other means of communication or legal action. Creditors cannot contact the debtor by mail, phone, or any other manner to collect or attempt to collect a discharged debt.

A creditor with a lien may enforce a claim solely against the property of the debtor that was pledged to secure a debt. The most common situation would be a car loan or a mortgage loan in which the debtor is in default. In some Chapter 13 bankruptcy cases, a lien can be ordered to be avoided or eliminated by the Bankruptcy Court.

A creditor may have the right post-bankruptcy discharge to repossess the debtor's vehicle or foreclose on the debtor's home if the monthly payments for these secured debts are not kept current. The secured creditor cannot, however, collect on any balance due that comes about as a result of an auction or foreclosure sale, including fees, costs of sale, or taxes paid by the creditor. Any costs or fees that arise under the discharged Promissory Note are subject to the Court's Discharge Order and cannot be recovered by the creditor.

What Types of Debts Cannot Be Discharged?

Most debts are covered by the discharge order, but not all. Generally, a discharge order removes the debtor's personal liability for debts provided for by the Chapter 13 Plan.

Examples of debts that are not discharged in a Chapter 13 case are:

Debts that are domestic support obligations (child support and spousal support)
Debts for most student loans
Debts for certain types of taxes specified in 11 United States Code Section 507 and 523 to the extent not fully paid under the Chapter 13 Plan
Debts that the bankruptcy court has determined or will decide are not discharged
Debts for most criminal fines, penalties, forfeitures, or criminal restitution obligations
Some debts that the debtor did not properly list on the bankruptcy schedules
Debts listed under 11 United States Code 1322(b)(5) and on which the last payment or other transfer is due after the date on which the final payment under the plan is due
Debts for certain consumer purchases made after the bankruptcy case was filed if obtaining the Chapter 13 Trustee's prior approval of incurring the debt was practical but not obtained
Debts for restitution or damages awarded in a civil action against the debtor as a result of malicious or willful injury by the debtor that caused personal injury to an individual or the death of an individual
Debts for death or personal injury caused by operating a vehicle while intoxicated

In addition, the Discharge Order does not prohibit creditors from collecting from anyone else who is also liable on a debt, such as an insurance company or a person who co-signed or guaranteed the loan or obligation.

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What Types of Debts Cannot Be Discharged?

Most debts are covered by the discharge order, but not all. Generally, a discharge order removes the debtor's personal liability for debts provided for by the Chapter 13 Plan.

Examples of debts that are not discharged in a Chapter 13 case are:

Debts that are domestic support obligations (child support and spousal support)
Debts for most student loans
Cebts for certain types of taxes specified in 11 United States Code Section 507 and 523 to the extent not fully paid under the Chapter 13 Plan
Debts that the bankruptcy court has determined or will decide are not discharged
Debts for most criminal fines, penalties, forfeitures, or criminal restitution obligations
Some debts that the debtor did not properly list on the bankruptcy schedules
Debts listed under 11 United States Code 1322(b)(5) and on which the last payment or other transfer is due after the date on which the final payment under the plan is due
Debts for certain consumer purchases made after the bankruptcy case was filed if obtaining the Chapter 13 Trustee's prior approval of incurring the debt was practical but not obtained
Debts for restitution or damages awarded in a civil action against the debtor as a result of malicious or willful injury by the debtor that caused personal injury to an individual or the death of an individual
Debts for death or personal injury caused by operating a vehicle while intoxicated

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Our FAQ

Have questions? We are here to help. Still have questions or can't find the answer you need? Give us a call at 251-241-5234 today!

What are Exemptions?

Most of the exemptions which will apply in a Chapter 7 case are found under Alabama state law. States are all given the option by Congress to decide whether to operate under their own exemption statutes, or under the exemption statutes set out under Title 11 of the U.S. Code ( the “Bankruptcy Code”). There are additional statutes ( “laws”) in both the United States Code and under the Alabama Code.
Whenever there is a statute that provides additional protection for your property over and above the standard list of exemptions, you can claim these exemptions to further protect your property. Failure to timely claim an exemptions can have the effect of a waiver of that exemption. This means it is highly important to provide your lawyer ( “attorney”) with all of the information he or she requests from you concerning your property. The panel trustee is only able to seize and liquidate property to pay creditors which is not subject to a legal exemption under Alabama OR federal law.
In Chapter 13 bankruptcy cases, the Debtor keeps all property. Exemptions are still important to identify and claim in your case, however. Failure to claim all of your exemptions in a Chapter 13 case can result in you being required to pay your creditors more than you would otherwise owe them if all exemptions were claimed.
At Ryan Legal Services, Inc., we are highly knowledgeable and keep up to date with respect to Chapter 7 and Chapter 13 bankruptcy exemptions. We represent individual clients in Baldwin, Mobile and Washington Counties.
Kevin Ryan is an experienced bankruptcy lawyer who will be there for you. Call us to set up a free telephone or office consultation. Kevin Ryan is admitted to practice before the United States Bankruptcy Court for the Southern District of Alabama. http://www.alsb.uscourts.gov
What is a Reaffirmation Agreement?

You may decide that you would like to keep your relationship with certain creditors in a Chapter 7 case. The procedure to maintain certain debts post-bankruptcy is called Reaffirmation. Reaffirmation is accomplished by entering into a written agreement with the creditor using one of a number of Official Bankruptcy Forms. Usually, the debtor and creditor simply re-establish the original terms of the loan. In some cases, the creditor may agree to reduce an interest rate, or modify the original contract terms as an incentive for the debtor to reaffirm the debt.
Reaffirmation of a long term mortgage loan or an auto loan may be something a debtor would want to consider in the context of filing a Chapter 7 bankruptcy case. The terms of the agreement, and whether the agreement would be in the client's best interest is something that a competent lawyer will discuss with a client. Reaffirmation of a mortgage or auto loan will cause the future payments to be reported to the major credit bureaus ( Trans Union, Experian and Equifax). Timely payments will help raise the debtor's credit score after the bankruptcy discharge order is issued in the Chapter 7 bankruptcy case.
A debtor will generally have only forty-five (45) days after the conclusion of the Meeting of Creditors to file the Reaffirmation Agreement. The debtor is required to file Official Bankruptcy Form 8 ( Statement of Intent) with the U.S. Bankruptcy Court that identifies the debtor's intent with respect to secured debts like auto and car loans. A debtor is never required to reaffirm any debt in a Chapter 7 bankruptcy case.
At Ryan Legal Services, Inc, we have been representing individuals in Chapter 7 and Chapter 13 bankruptcy matters since 1998. We represent individuals in Baldwin, Mobile and Washington Counties.
Kevin Ryan is an experienced bankruptcy lawyer who will be there for you. Call us to set up a free telephone or office consultation.
Should I Transfer Property Pre-Bankruptcy?

There are some cases where a client can meet with a lawyer and make arrangements to change the ownership of property, sell property, or dispose of property prior to filing a bankruptcy case. However, this should never be interpreted as a blank license to indiscriminately transfer assets out of your name. You should never transfer title to any property, or spend any amount of money that is not allocated towards necessary household bills, utilities, and pre-existing secured debt payments prior to consulting with a bankruptcy lawyer. The initial office consultation with a lawyer is dedicated mostly to discussing these issues. A lawyer will always be interested in meeting with you sooner rather than later so that these potential issues can be identified and properly addressed prior to moving forward on your case.
Transfers of property, or spending discretionary funds prior to filing a bankruptcy case can often result in negative consequences when you later file a bankruptcy case. Every bankruptcy case presents different circumstances, and different opportunities to legally protect your property from creditors. The objective in most bankruptcy cases is to protect all or as much of your property while terminating all or most of your debt. This is usually where a bankruptcy case can become too complicated for a person to obtain all of the benefits of a bankruptcy filing by filing a case without hiring a lawyer. The best bankruptcy attorneys set and accomplish goals with their clients to protect the maximum amount of property and obtain a discharge of all or a maximum amount of the client(s)' debt in the least amount of time.
You should not transfer any of your property until you speak with a qualified, experienced bankruptcy attorney. At Ryan Legal Services, Inc., Attorney Kevin Ryan has more than 18 years experience handling complex Chapter 7 and Chapter 13 Bankruptcy matters. Call now to schedule a free telephone or office consultation. We are happy to discuss these issues with you personally and confidentially.
Kevin Ryan is an experienced bankruptcy lawyer who will be there for you. Call us to set up a free telephone or office consultation.

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