**Unsecured Vs. Secured Creditors - Chapter 13**

[coolcory41]

After a long 5 years we are scheduled for discharge the end of the month. WHOO! WHOO! :applouse:
We received a letter from our attorney to sign and it states we have a couple of creditors (back taxes with the IRS and 3 vehicles) that will not be discharged. She claims that because we reaffirmed the debt & kept the vehicles that we will have to continue to pay after discharge. The monthly statement we receive from our trustee shows these creditors separated as both secured and unsecured (different amounts). The secured portion is paid in full; the unsecured is not. Will the unsecured portion be wiped out and disappear after discharge? Or because we reaffirmed the debt, will the remainder goes back into repayment?

[justbroke]

We received a letter from our attorney to sign and it states we have a couple of creditors (back taxes with the IRS and 3 vehicles) that will not be discharged. She claims that because we reaffirmed the debt & kept the vehicles that we will have to continue to pay after discharge.

That's very odd. If the taxes were pre-petition (before you filed), then they must be paid through the life of the Chapter 13. More specifically, the "priority" portion of taxes (IRS or other) are paid and any amount remaining, the so called "unsecured" portion, is discharged (period).

Similarly, if your cars were crammed down then the unsecured portion would also be discharged. A cram down is where the value of the car is less than the amount of the creditor's "claim" and the creditor's claim value is crammed down into a "secured" and "unsecured" portion. Similar to how priority taxes are dealt with, the secured portion is paid and the "unsecured" amount is discharged.

The monthly statement we receive from our trustee shows these creditors separated as both secured and unsecured (different amounts). The secured portion is paid in full; the unsecured is not. Will the unsecured portion be wiped out and disappear after discharge? Or because we reaffirmed the debt, will the remainder goes back into repayment?

Yes, the unsecured is discharged upon the court entering an Order of Discharge.

You may want to speak with your attorney and have them clarify. They may be using a standardized "form letter" which says that "long term debt" and and ongoing IRS obligations will continue to be your responsibility and will not be discharged.

Maybe the attorney sent you a letter that goes to Chapter 7 clients. I can't do anything but speculate and it's not a good thing to sit around and "guess" and "wonder". Just contact your attorney and have them explain just what is a "discharge" in a Chapter 13, and what will be discharged in your case.

[coolcory41]

Thank you very much for the response! We will definitely be calling our attorney come Monday morning for more clarification. I will post a follow up after our call.