Obtaining a discharge in a Chapter 13 case

Assuming you have a steady income and meet other requirements, you can file for Chapter 13 bankruptcy in Maryland. In a Chapter 13 case, you repay some or all your debts over a period of three to five years. When the repayment period is over, any remaining balances may be discharged.

Not all debts can be discharged

If you have an outstanding student loan balance, you will likely need to keep making payments after your case is over. Furthermore, tax and mortgage debts are unlikely to be forgiven or erased when a Chapter 13 proceeding concludes. However, it may be possible to free yourself from debts acquired to pay a state or federal tax debt. Child support and alimony payments will not be discharged at the end of a Chapter 13 case.

Debts that will likely be discharged

As a general rule, unsecured debts, such as medical bills or credit card balances, will be discharged when the repayment period ends. In some cases, you won’t have to include unsecured creditors in your repayment plan. However, this will depend on the amount of disposable income that you have each month. Disposable income is money left over at the end of the month after accounting for food, clothing and other essential expenses.

The criteria to receive a discharge

A Chapter 13 case won’t be discharged simply because you get to the end of your repayment period. In addition to completing a repayment plan, you must also prove that you have remained current on alimony or child support payments. Finally, it will be necessary to show that you have taken and completed a financial counseling course.

If you are struggling to keep up with debt payments, it may be a good idea to consider filing for Chapter 13 bankruptcy. Doing so may allow you to keep your home, car or other assets while making payments to creditors. A lawyer may explain the potential advantages of filing for bankruptcy, like obtaining an automatic stay from creditor collection activities.