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Bankruptcy May Be Your Option

Chapter 13 discharge details

A Chapter 13 bankruptcy is a legal mechanism by which a person can work through a payment plan to pay off debts. In a previous blog, we discussed the basics of a Chapter 13 petition and the steps to get started.

Ultimately, a person working through a Chapter 13 bankruptcy is attempting to get to the discharge phase. The discharge is the point at which the debtor is released from all debts under the plan, but there is more to the story.

Since a Chapter 13 involves a payment plan, the discharge phase comes at the point where the payment plan has been completed. There are a few more requirements to a successful discharge:

  • First, there must not be any outstanding child support obligations.
  • Second, there must not be any prior discharges in recent history (within two years for Chapter 13 and within four years for Chapters 7, 11, and 12).
  • Third, the debtor must have completed an approved financial management course.
  • In addition to these three main requirements, the court will fully review the case to ensure that all requirements have been met.

It's also important to note that there is a discharge hardship exception under the Chapter 13 law. This exception allows for relief from payment under the plan when the debtor is dealing with circumstances that are beyond the debtor's control.

This does not mean that the debtor has no other obligations and the case is closed. The court will still require that creditors be paid what they would receive under a Chapter 7.

Lastly, the court will want to know if it would be at all possible to modify the Chapter 13 plan to make it more feasible for the debtor.

Chapter 13 bankruptcies are categorized as a payment plan to pay off debts, but there are clearly many intricacies involved in the process.

If you are thinking that bankruptcy may be an option for you, please reach out to an experienced Chapter 13 bankruptcy attorney in the Tulsa area to answer any questions you may have.

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