Chapter 13 Bankruptcy Hardship Discharge: What You Are Still Liable For?

If you are declaring bankruptcy for, you may wonder in a Chapter 13 bankruptcy hardship discharge, what are you still liable for. A chapter 13 bankruptcy is a bankruptcy that is structured around the idea that you are still employed and have a steady stream of income but have become unable to pay all of the debts to your various creditors. Because a Chapter 13 bankruptcy is set up with the idea that you simply need more time and space in order to pay off what you owe, it is typically more lenient than a Chapter 7 bankruptcy and does not require liquidation of assets or sale of your personal property. You are given a time period of three to five years where you are able to make payments to your creditors under the supervision of a court ordered trustee. A hardship discharge can even be filed if you find you are unable to make even these small minimum payments.

In a Chapter 13 Bankruptcy Hardship Discharge, What are You Still Liable For?

Even with a hardship discharge, you will still be liable for some of your debts. A hardship discharge is typically granted when an injury or illness prevents you from working or otherwise reduces or eliminates your income. However, a hardship discharge is not a “get out of bankruptcy free” card, and there are certain debts that are non-dischargeable, even under hardship. One of these types of debts is tax debt that is owed for failure to pay taxes or for improper reporting of taxes. This type of debt will not be discharged even with a hardship.

There are also several other types of debt that cannot be discharged. Spousal support or child support stemming from a divorce is not dischargeable in a Chapter 13 Bankruptcy under a hardship discharge, and will still have to be paid as ordered by the court under the terms of the divorce. In addition to these debts, you cannot discharge money owed for damages from drunk driving or other reckless behavior which resulted in personal injury or a lawsuit settlement from another person.

Student loan debts are not dischargeable under any type of bankruptcy, and this important fact also extends to most governmental loans that are guaranteed, either in writing by the individual who took out the loan, or by property or some other method. Debts owed to retirement plans which have tax advantages, and debts that are owed for court settlements or criminal cases that resulted in civil penalties can also not be discharged under the Chapter 13 hardship rules. Despite your inability to pay your Chapter 13 agreed payments, you will still be liable for these items under any circumstances.

Finally, when you discharge debts in Chapter 13 bankruptcy, the court will ensure that the creditors have received at least as much as they would have had you declared Chapter 7 bankruptcy before approving the discharge.

Getting Legal Help

If you are facing a Chapter 13 bankruptcy discharge, it is essential to speak to an attorney to both help you get the discharge and to help you understand what your continued legal responsibilities will be following the Chapter 13 bankruptcy discharge.

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