Q: How and when is a credit card debt declared non-dischargeable repaid in a chapter 13 case?
If part of a credit card debt is declared non dischargeable, how does the debtor repay that amount? Is it paid out over the plan repayment period, does the debtor have to pay it up front, or does the card account stay open and the debtor continues to pay? Please help.
Thanks
Michael H
A: The nondischargeable credit card debt is still an unsecured debt. All unsecured debt must be paid in the same manner through the chapter 13 plan. If you are paying 10% to unsecured creditors, that is all that the nondischargeable will receive through your chapter 13 plan. However, the unpaid portion of he nondischargeable credit card debt will be owed by you once you receive your chapter 13 discharge. The amount that is owed at that time will include any interest that were incurred during the bankruptcy. At that point, you need to set up a payment plan with the credit card bank and live up to the terms of the installment payment plan. Most installment plans have a provision that says if you default on one payment, then the bank can garnish and take any other action to collect the debt allowed under state law.
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