Chapter 13 Bankruptcy: Which debts are dischargeable and which are not?

A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor:

1. Certifies (if applicable) that all domestic-support obligations that came due prior to making such certification have been paid;
2. Has not received a discharge in a prior case filed within two years for prior chapter 13 cases and four years for prior chapter 7, 11 and 12 cases; and
3. Has completed an approved course in financial management.

Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.

Generally speaking, a discharge releases the debtor from all debts provided for by the plan. However, debts not dischargeable in a chapter 13 bankruptcy 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 or under the influence of drugs; and
• Debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime.

To the extent that debts are not fully paid under a chapter 13 plan, the debtor will still be responsible for repaying those debts after the bankruptcy case has concluded.

Debts for the following will be discharged under a chapter 13 plan unless a creditor timely files and succeeds in a legal action to have such debts declared nondischargeable:

• Money or property obtained by false pretenses;
• Debts for fraud or defalcation while acting in a fiduciary capacity; and
• Debts for restitution or damages awarded in a civil case for willful or malicious actions by the debtor that cause personal injury or death to a person.

The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. For example, debts that are dischargeable in a chapter 13 bankruptcy but not in a chapter 7 case include:

• Debts for willful and malicious injury to property (as opposed to a person);
• Debts incurred to pay nondischargeable tax obligations; and
• Debts arising from property settlements in divorce or separation proceedings.