ABI Journal

Chapter 13 Discharge Rates

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Copyright © American Bankruptcy Institute Discharge Rates in Chapter 13 April 2019 BY LINDA B. GORE AND BRADFORD CARAWAY T he success of the implementation of the chapter 13 bankruptcy statute is unquestioned by those who work in this area of law daily and who deal directly with the debtors during their arduous journey through bankruptcy. Chapter 13 trustees routinely receive telephone calls, letters and cards of gratitude from debtors who appreciate the patience, advice and empathy that aided their efforts in bringing their plans to successful conclusions. While a certain percentage of chapter 13 cases might be unsuccessful, when a case is successful, many stakeholders benefit. Debtors Debtors who receive a discharge are thankful for the "fresh start" and are justifiably proud of their efforts to pay as much of their debts as possible over the term of the plan. There is nothing easy about successfully completing a chapter 13 plan, and the effort involved requires perseverance and discipline. One of the primary benefits of filing for chapter 13 is the automatic stay, which allows the debtor some much-needed breathing room for reorganizing their budgets and determining how they shall proceed. The automatic stay also diminishes the constant threats of aggressive collection efforts, which shadow debtors who find themselves in financial straits. An unexamined feature of a successful discharge is the beneficial impact that it might have on the debtor's psyche: With a discharge, the debtor knows that they have not failed but have worked hard to accomplish the repayment of as much of their debt as they could repay. They did not simply walk away from their obligations, but chose to work through their financial problems with the help of chapter 13. This effort works to restore their self-esteem. Creditors Creditors also express gratitude at being able to collect all or a portion of their debts in a process that is overseen by the bankruptcy court and trustee's office. Overall, the creditors are relieved of the burden and costs of hiring collection agencies or otherwise having to locate debtors. The orderly process of receiving distributions directly from the trustee further saves creditors time and expense. Domestic-Support Creditors Domestic-support creditors also routinely call and express thanks for the payments they receive, as they have often given up hope of being paid and feel that the chapter 13 process, with the trustee collecting and disbursing, is the only way they would have been paid on their support claims. Debtors are often tempted to divert these funds elsewhere, but the structure of the chapter 13 plan makes that less likely to happen. Bradford Caraway Chapter 13 Trustee Birmingham, Ala. Linda B. Gore Chapter 13 Trustee Gadsden, Ala.

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