Chapter 13 – The Final Chapter

When your Chapter 13 was filed five years ago, the goal was to complete the plan and receive a discharge.  A “discharge” is the legal determination that essentially all of your unsecured debts that remain after the plan are simply wiped out.  With a discharge, the collection companies and bill collectors that once harassed you may no longer contact you or elicit payment for those debts from you.

So, what must occur to receive a discharge in a Chapter 13?

Like so many of the bankruptcy processes, the answer will vary from bankruptcy court to bankruptcy court, even in the same state.  The answer may also vary depending on the particularities of the case.  For instance, if you own a home and were using the Chapter 13 to eliminate or “strip” a junior mortgage, then extra steps may be required to ensure that removal of the lien is actually recorded with the county recorder’s office – this may be a challenge if the junior lien holder is out of business or sold the loan to any lender.  Your attorney may wish to work with a title company on this issue to ensure that public record reflects the elimination of the lien.

Under current bankruptcy law, you may also get a statement, signed by the court, that your mortgage is up to date. This is a great thing to have if you started the Chapter 13 when you were behind on your house payments.  Without that determination, the lender will often come back after the Chapter 13 plan is over and claim that you have other charges that have not been paid, like “attorney’s fees incurred to review the bankruptcy” or “property valuation charges.”  It is certainly better to have the court resolve those issues before closing the case rather than fight with the lender after the fact.

There is much to consider before the case is closed.  At Speckman Law Firm, we work with our clients throughout the process.  Near the end of the case, we re-visit the reasons for the filing and cover with the client the steps that must be taken before the case closes.  Paying that extra attention to the client’s case not only makes the process smoother, it better ensures that the client received all of the benefits afforded by the Chapter 13 bankruptcy.  A discharge and the closing of your bankruptcy is a great thing. We make sure it is done right.