A Rhetorical Question...

[kornellred]

I have come to understand that some debtors in Chapter 13 actually pay 100 percent of their unsecured debt.

Why, then, would a discharge of debt be necessary if the debt is paid off?

[Flamingo]

All debt is included in a BK filing. While a mortgage or vehicle may be paid outside a Chapter 13 plan or reaffirmed in a Chapter 7, it is still part of the BK filing and is included as part of the BK.

[justbroke]

Here's a perfect example. You file bankruptcy and on Schedule F (Unsecured General Creditors), you put down 20 creditors and you owe them $200K. However, only 10 of the creditors -- representing $100K of the total on Schedule F -- file a claim or are "allowed" a claim. This reduces your "allowed" claims to 10 and total to $100K. The discharge would discharge the $100K in disallowed or un-filed claims.

Trust me... some creditors never even file a claim! I have had at least $40K or so in claims that were never filed and they received notice. A creditor doesn't need to file a claim, but I will let you know this. If your proposed plan indicates that you're going to potentially pay a 100% dividend to the unsecured creditors... they are MORE likely to file a claim. In my 0.2% proposed plan, I can see why some of the creditors didn't want to waste their time and effort to "potentially" collect less than how much it costs them to file a claim.

Best of luck.

(Edited to add... why post a rhetorical question? Methinks a blog is better for such. )

[newbie2]

I have come to understand that some debtors in Chapter 13 actually pay 100 percent of their unsecured debt.

Why, then, would a discharge of debt be necessary if the debt is paid off?

It's a legal closing of the accounting and administration of the debt repayment plan. It's also a reassurance that interest, late fees, legal fees, etc cannot be tacked on later and hound the debtor.

[lrprn]

Why, then, would a discharge of debt be necessary if the debt is paid off?

One more reason to add to JB's - a few folks file a 13 to save property assets that have payments in severe arrears or to pay a large amount of overdue taxes through their plan's debt reorganization that takes the pressure off paying in a lump sum and stops collection attempts and garnishments. Not all 13s are filed to deal with unsecured debts.

[jetsfan2010]

One more reason to add to JB's - a few folks file a 13 to save property assets that have payments in severe arrears or to pay a large amount of overdue taxes through their plan's debt reorganization that takes the pressure off paying in a lump sum and stops collection attempts and garnishments. Not all 13s are filed to deal with unsecured debts.

Back taxes and payments on homes/cars can be an amazing motivator to file a 13