Does Chapter 13 wipe out all debt?

Asked by: Prof. Royce Klein  |  Last update: February 19, 2022
Score: 4.7/5 (20 votes)

Chapter 13 bankruptcy allows you to catch up on missed mortgage or car loan payments and restructure your debts through a repayment plan. When you complete your plan, you will receive a Chapter 13 discharge that eliminates most of your remaining debts.

What debts Cannot be discharged in Chapter 13?

Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated ...

Do you pay back all your debt Chapter 13?

If your request to pay off Chapter 13 early is approved by a court, you'll be required to pay 100 percent of the debt claims on your bankruptcy case. This includes unsecured debt, such as credit cards, which would've been discharged if you'd kept making Chapter 13 plan payments on the original schedule.

Does Chapter 13 wipe out unsecured debt?

The majority of debts discharged in Chapter 13 bankruptcy are nonpriority unsecured debts. Credit card balances, personal loans, medical bills, and utility payments fit here. ... Because student loans are long-term debts, you won't have to repay them fully in your plan.

How much does Chapter 13 reduce debt?

This is known as a percentage plan and can vary from 1% - 99%. A 100% plan indicates that the petitioner does not qualify for debt reduction based on their income and ability to pay. This Chapter 13 plan structures 100% of that client's debt to be paid back through the repayment process.

Which Debts Remain After Your Chapter 13 Discharge?

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Does Chapter 13 trustee check your bank account?

Chapter 13 Bankruptcy

The trustee may conduct periodic reviews of your finances, including your business and personal bank accounts, to ensure you have sufficient cash to continue making payments as normal.

What is priority debt in Chapter 13?

You can't discharge priority claims in Chapter 7 or 13, and you must pay them in full through the Chapter 13 plan. Unsecured priority debts include recent income tax debts, past due child support, past due spousal support and other past due domestic support obligations. Also included are administrative expenses.

How much is the average Chapter 13 payment?

The average payment for a Chapter 13 case overall is probably about $500 to $600 per month. This information, however, may not be very helpful for your particular situation. It takes into account a large number of low payment amounts where low income debtors are paying very little back.

Does Chapter 13 take bonus checks?

If you file for Chapter 13 and receive the bonus after filing, it may be factored into your repayment plan. This depends on if the bonus is something you normally get every year or if it's a one-time bonus. In fact, any raise at work, overtime payments or extra income may be used to repay creditors more quickly.

How will Chapter 13 affect my taxes?

The Chapter 13 Trustee will not complete or file your tax returns for you. ... If your tax returns have not been filed or become delinquent during the course of your Chapter 13 plan, you may lose the protection of the Bankruptcy Court as your case may be dismissed.

Why do Chapter 13 bankruptcies fail?

The court reviews your assets and income when deciding whether to approve your plan, and the plans don't leave a lot of room for luxuries. Chapter 13 cases require a lot of motivation to carry through three to five years of voluntary austerity, but that's just one reason they fail.

What happens at the end of my Chapter 13?

A Chapter 13 bankruptcy lasts anywhere from 3 - 5 years. At the end of the payment plan, any remaining unpaid debt is eliminated by a Chapter 13 bankruptcy discharge. To get the discharge, the filer has to complete the plan, which can sometimes be complicated by changing circumstances.

Can I Payoff My Chapter 13 early?

In most Chapter 13 bankruptcy cases, you cannot finish your Chapter 13 plan early unless you pay creditors in full. ... In fact, it's more likely that your monthly payment will increase because your creditors are entitled to all of your discretionary income for the duration of your three- to five-year repayment period.

Can I go on vacation while in Chapter 13?

Chapter 13

As long as you are successfully making your monthly payments to the trustee on the schedule you all agreed to, you can travel or vacation to your heart's content — with three important provisos: You cannot miss any meetings or deadlines. You must be able to afford whatever you spend.

Can my bonus be garnished?

Bonuses and commissions are considered income and are subject to garnishment under the same rules as other types of wages. However, in most states tips aren't considered income, and thus are not subject to garnishment. Supplemental Security Income (SSI) benefits can never be garnished.

Will my Chapter 13 trustee take my stimulus check?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act prevents bankruptcy trustees from including stimulus money in calculations for a filer's monthly income and disposable income.

What happens if you win a lot of money while in Chapter 13?


If you have a month where you receive an unexpected lump sum or windfall, you must pay the lump sum in to the bankruptcy as well. Just like in Chapter 7 Bankruptcy, however, you get to keep whatever you win after the creditors are paid off.

Why is my Chapter 13 payment so high?

In a Chapter 13 case, nonexempt equity results in a higher bankruptcy plan payment. However, in a Chapter 7 case, nonexempt equity could result in a bankruptcy auction. You could lose that piece of property in a Chapter 7 case.

What happens after a Chapter 13 discharge?

Your discharge means any remaining debt is forgiven and creditors cannot go after you for it. If they do, then you should contact your bankruptcy lawyer. You've made all your Chapter 13 bankruptcy payments and your debts are gone.

Can creditors ask for bank statement?

The financial statement also allows the creditor to find out whether you have any equity in your home. ... Before attending the court you'll also need to collect evidence of your financial situation. You'll need all your financial paperwork, such as: bank statements.

What happens if you get a credit card while in Chapter 13?

A stipulation in Chapter 13 bankruptcy law states that you, as a debtor, are not allowed to increase any debt without receiving the permission of your bankruptcy trustee. If you do apply for a credit card, your bankruptcy payment plan will be canceled and the bankruptcy proceedings will be stopped.

Can I open a new bank account while in Chapter 13?

Generally speaking, the funds you have in your bank accounts are safe when you file for Chapter 13 bankruptcy. ... In fact, during the course of the Chapter 13 plan, debtors are able to open new bank accounts (with court approval) and even have plan payments automatically deducted from their bank accounts each month.

How long does a dismissed Chapter 13 stay on credit report?

If you file for bankruptcy but the case is dismissed, it will show up on your credit report for seven to 10 years from the date of the filing. The reporting period for Chapter 7 is 10 years and seven years for Chapter 13, but could be as long as 10 years. The effect on credit varies from debtor to debtor.

Can I sell my home after Chapter 13?

Generally, you cannot sell, refinance, gift or dispose of any of your property during your Chapter 13 case without the approval of the Bankruptcy Judge. This includes your house, car, appliances, furniture, jewelry, etc. Whether the property was acquired before or after you filed your case does not matter.

How long is Chapter 13 on record?

When is bankruptcy removed from your credit report? A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date the bankruptcy was filed, while a Chapter 13 bankruptcy will fall off your report seven years after the filing date.