Obtaining a discharge in Chapter 13 bankruptcy will not eliminate all debts. Exceptions to a Chapter 13 discharge include, generally:

• Claims for child support and spousal support (alimony);
• Educational loans;
• Drunk driving liabilities;
• Criminal fines and restitution obligations;
• Certain long-term obligations, such as home mortgages, that extend beyond the term of the plan; and
• Any debts not provided for in a wage-earner plan.

More on these exceptions to the Chapter 13 discharge follows below.

Spousal and Child Support

The effect of a discharge on child and spousal support obligations varies somewhat depending on whether the debtor filed a Chapter 7 or a Chapter 13 bankruptcy. Whereas a Chapter 7 filing will have little effect on such obligations, a Chapter 13 proceeding may stop the collection activities, at least temporarily. The difference between chapters arises because, although all bankruptcies stop or "stay" creditors' efforts to collect debts, the Bankruptcy Code excludes actions to collect child support or spousal maintenance from the stay unless the creditor attempts to collect from the "property of the estate," and the different chapters of the Code define this term differently.

Under Chapter 13, the Bankruptcy Code considers the debtor's earnings as property of the estate, since the wage-earner plan is based on making payments from the debtor's current income rather than from liquidated assets. As a result, support collections may be stayed. The court can decide to remove the stay to allow for withholding alimony and child support from the debtor's income. Whether it does so may depend on how well the wage-earner plan provides for child and spousal support. If the plan does not, in the court's opinion, include adequate provisions, it may decide to lift the stay.

In any event, the 2005 revision to the Bankruptcy Code made the collection of domestic support obligations a much higher priority. Domestic support obligations are now specifically excepted from discharge. A Chapter 13 case may be dismissed if the debtor fails to pay any domestic support obligation that becomes payable after the filing of the petition. Domestic support obligations that are assigned to a governmental unit may be paid less than 100% but only if disposable income is dedicated to the plan for a full five years. The gist of the change is that a Chapter 13 debtor must certify the payment in full of domestic support obligations or that the confirmed plan provides for payment of prebankruptcy domestic support obligations. Also, the priority of domestic support obligations was moved to the top of the list of priorities, and the preference provisions were amended to protect domestic support transfers from avoidance.