Many assume that all debts are paid back in a chapter 13 bankruptcy. The reality is that most chapter 13 bankruptcy filers don’t pay very much of the dischargeable debt back. Most of it is wiped away at the end of the case.
The common follow up question is then…what type of debt is not dischargeable in a chapter 13 plan. Here is the list:
1. Criminal Penalties – Fines or Restitution resulting from a criminal conviction can’t be discharged.
2. Certain Taxes like:
a. Recent income tax debt b. Tax debt where the debtor attempted to evade or defeat the tax c. Tax Returns not filed d. Employment tax e. Any trust fund tax f. Fraud related to tax debt
3. Domestic Support Obligations
a. child support b. spousal maintenance
4. Debts from the debtor’s willful or malicious action
In a chapter 13, the creditor must obtain a judgement first AND the debt must be the result of personal injury or death.
5. Debts as a result of drunk driving
Drive vehicle while intoxicated and hurt someone, not dischargeable in a chapter 13.
6. Unlisted Creditors
7. Student Loans – unless hardship is proven.
8. Fraudulent Debts – Just like in a chapter 7 the creditor has to appear and challenge the discharge