At the beginning of the bankruptcy process, people in Arizona can look forward to having their debts discharged and getting a fresh start. With Chapter 13 bankruptcy, people need to complete a series of steps before earning the discharge. There are a few exceptions to the discharge rule, but Chapter 13 bankruptcy gives debtors release from a wider range of debts than chapter 7.
Filing for Chapter 13 means that much of the debt is put on a repayment plan. After debtors complete their plan and make all the required payments, they can obtain a discharge as long as certain criteria are met. People must have met all of their domestic support obligations, if applicable. Debtors must also take and finish a financial management course that is approved in their area if their local bankruptcy administrator or trustee has found that appropriate courses are available. A person cannot have received a discharge within the previous two years.
Once these conditions are met, a bankruptcy court will enter a discharge if it is determined that no pending proceeding exists that could create a limitation on a person's homestead exemption. Once granted, the discharge prohibits any creditor whose debt was covered under the Chapter 13 plan to seek or continue legal action to collect on debts. This does not apply to debts not covered under the plan, which typically include things like spousal or child support, home loans and criminal fines. Some educational, government or tax debts are also exempt.
Acquiring a discharge could be delayed if all requirements are not met and handled correctly. Also, there have been significant changes made to the laws regarding Chapter 13 bankruptcy discharges. Therefore, seeking help from an attorney could be beneficial in understanding how the law applies to each individual's unique situation as well as ensuring that the discharge request is submitted properly.
Source: United States Court, "The Chapter 13 Discharge", October 07, 2014