Debts Discharged in Chapter 13 But Not in Chapter 7

Certain debts that cannot be discharged in Chapter 7 bankrutpcy can be discharged in Chapter 13.

Filers can discharge more types of debt in Chapter 13 than in Chapter 7. Read on to learn which ones.

(For a complete list of debts that can't be discharged in Chapter 7, see Nondischargeable Debts in Chapter 7 Bankruptcy.)

Debts You Can Discharge in Chapter 13 (But Not Chapter 7)

Some debts that aren't dischargeable in Chapter 7 can be wiped out in Chapter 13 bankruptcy, including:

  • non-support marital debts pursuant to a divorce or settlement agreement
  • debts incurred to pay a nondischargeable tax debt (for instance, if you used a credit card to pay your taxes, you could discharge the credit card balance)
  • non-criminal government fines and penalties
  • condominium, cooperative, and homeowners’ association fees incurred after the bankruptcy filing date (depending on the court)
  • debts for willfully and maliciously damaging property
  • obligations for loans taken out from a retirement plan, and
  • debts that a filer couldn’t discharge in a previous bankruptcy.

What Happens If You Convert From One Bankruptcy Chapter to Another?

In most cases, bankruptcy filers can convert their cases from one chapter to another. If, for example, a court finds that a Chapter 7 filing is an abuse of the bankruptcy system under the means test, the filer can convert to Chapter 13 rather than dismiss the case altogether. Or, a filer can decide to convert because a particular debt will only qualify for discharge in Chapter 13, for example, or because the filer won’t be able to complete a Chapter 13 repayment plan. Once you make the switch, you are subject to the dischargeability rules of the chapter to which you converted, not the original bankruptcy type you started out using.

Example. Connie files for Chapter 13 bankruptcy because she owes a lot of property-related debt from a divorce. Her attorney told her that she can discharge such debts in Chapter 13 but not in Chapter 7. (She understands that she can’t discharge support-related divorce obligations in any bankruptcy chapter.) Connie proposes a feasible Chapter 13 plan that pays only 25% of her property-related divorce debt. Halfway through the plan, Connie loses her job and can’t continue her payments. She converts to Chapter 7. Her Chapter 7 discharge won’t include the property-related divorce debts. However, Connie will receive a credit for the amounts she paid on those debts during her Chapter 13 case.

(To learn what will happen to other debts in Chapter 13 bankruptcy, see Your Debts in Chapter 13 Bankruptcy.)

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