Chapter 13 Discharge Pre-BAPCPA

Pre-BAPCPA Discharges. For cases commencing prior to October 17, 2005, 11 USC 1328 provides that a discharge may be granted in one of two ways to a Chapter 13 debtor:

Super Discharge. When all plan payments are completed the debtor receives a "super discharge" of all pre-petition liabilities.

Hardship Discharge. Exigent circumstances may force the debtor to request a "hardship discharge" when the plan cannot be completed. IRM 5.9.17.15.2, Chapter 13 Hardship Discharge, provides a detailed discussion.

Tax Debts Discharged. Generally, when a super discharge is granted on cases filed prior to October 17, 2005, all tax debts "provided for" in the plan are discharged, as well as any disallowed tax claims (for example, untimely filed claims). The super discharge in the pre-BAPCPA case also discharged any unpaid balances on 11 USC 1305 claims when the debtor modified the plan to include the post-petition liability and a discharge was entered upon completion of the plan.

Even when IRS will not receive full payment under the plan, the IRS is bound by the terms of the plan.

Whenever possible, the best corrective action is to object to confirmation of the proposed plan.

Plans must be reviewed prior to confirmation so a timely objection may be filed when the plan does not provide for all tax claims as required by the Bankruptcy Code.