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What is a Chapter 13 Bankruptcy “Discharge” in Arizona

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The goal of most bankruptcy cases, be they of the chapter 7 or chapter 13 variety, is reduction in debt. Reduction of debt occurs in a bankruptcy at the end of the successful case and is called a “discharge”.

If a debt is “discharged” legally, the debtor’s obligation to pay is ended.

In a chapter 13 bankruptcy there are two types of bankruptcy discharge.

1. A “completed plan discharge” which is granted to a debtor who has…completed the plan. Surprising to many as well, is that a chapter 13 plan does not require that all debt be repaid. More often than not, the chapter 13 debtor in Arizona, only ends up paying a small fraction of unsecured debt during the plan and the rest is…discharged.

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2. A partial discharge. This type of discharge is granted to the debtor who does not complete the plan. What??? you ask. I can file a chapter 13 bankruptcy, not complete the plan and still obtain forgiveness of debt? Yes. If the debtor is unable to complete payments for reasons for which they “shouldn’t be held responsible”.

This type of discharge is more commonly called a “hardship” discharge. This hardship discharge gets rid of fewer types of debts than does the full discharge.