A bankruptcy discharge is the end result of a bankruptcy case proceeding. Basically, it means that your debts have been discharged, or wiped out, and you are free to start over and rebuild your financial situation. Each type of bankruptcy has its own discharge, though, and a Chapter 13 discharge covers a broader assortment of debts than a Chapter 7 does.
Chapter 13 Advantages
When you are trying to decide which type of bankruptcy you need to file, Chapter 13 has some advantages over Chapter 7 that you need to consider. By filing Chapter 13, you may be able to keep your main home and stop any foreclosure proceedings. You may be able to catch up with delinquent mortgage payments over time and will still have to make your monthly mortgage payments during your bankruptcy proceedings. With Chapter 13, you can reschedule other secured debts and pay them off over the life of the bankruptcy plan. You will have lower payments each month and will, hopefully, be able to make these payments on time.
Another big advantage of a Chapter 13 bankruptcy is that it protects any co-signers you may have on other loans. This type of bankruptcy is basically a consolidation loan action where all of your bills are put into one payment for you each month. You will make this payment to a trustee who will pay each of your creditors and you will have no contact with them at all.
Chapter 13 Discharge
A bankruptcy court will issue a discharge to you after you have met all of the terms of your bankruptcy case. This means that you have not been issued a discharge within a certain time frame before this one, that you have successfully paid all of the payments your plan included and that you have completed a course in financial management. Your discharge will release you from any other debts that were not included in the bankruptcy plan. None of your creditors are allowed to contact you in any way about discharged accounts.
There are many debts that cannot be discharged through bankruptcy. Alimony and child support are never covered under a bankruptcy discharge. Most student loans are not covered and neither are some back taxes you may owe. This is a good reason to hire an attorney to help you through the paperwork. By working with a legal counsel, you will be well aware of what debts you will still owe that cannot be discharged by bankruptcy.
A Chapter 13 discharge does allow you to discharge debts from divorce proceedings and from destruction of property. A Chapter 7 proceeding does not allow either of these to be included.
Chapter 13 Hardship Discharge
At times, circumstances can prevent people from being able to complete their repayment plan set up by the courts for their Chapter 13 bankruptcy. You may be eligible for a Hardship Discharge if you are unable to make your payments due to something that was out of your control. Such circumstances may include loss of a job, illness or injury. However, a Hardship Discharge may not cover everything that a Chapter 13 Discharge does, so make sure you understand exactly what you will still owe if you file for a Hardship Discharge.
Because bankruptcy laws have recently changed in some states, be sure to contact an attorney for help in negotiating your way through the paperwork of filing for a Chapter 13 bankruptcy. Even if you believe you are capable of doing it without help, an attorney can be sure everything is in order so you can successfully obtain your Chapter 13 discharge and begin to rebuild your situation.