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My Ch 13 case was dismissed by court and 18 mo payments returned. Unsecured debt already charged off. Do I still have to repay?

Sacramento, CA |

July 2011: Filed ch13 to save home from foreclosure
Unsecured debts included 2 credit cards for a total of $9500
Dec 2011: Granted modification from mortgage
January 2012: Original plan confirmed by court.
Jan 2012: Modified plan submitted with new mortgage obligations, and adjusted monthly obligations (my old plan didn't consider car repair or savings for health & emergencies).
Jan 2012: Began paying trial mortgage payments DIRECTLY to mortgage company per CH13 rules.
Jan 2012: Began paying remainder new modified plan amount to Trustee.
Mar 2012: Permanent modification signed.
Mar, May & Aug 2012: Trustee claimed no explanation submitted for mod plan.
Dec 2012: Court dismissed case due to "payment default."
The Trustee claimed I was at default as they never confirmed the modified plan.

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Attorney answers 4


Your case was dismissed. That means that the bankruptcy has not changed any of your obligations to your creditors.

When a creditor charges off a debt, that means they consider it to be unlikely that they will collect. A charge off does NOT mean that you have no obligation to repay.

Short answer: yes, you still have to repay.


Your question is a little confusing to me. If 18 payments were returned to you, that means (a) your Plan was never confirmed or (b) no allowed claims were filed. If you "defaulted" on the payments, that suggests to me that your modified Plan called for a lesser monthly payment than your original Plan and you were making the lesser payments when you should have been making the larger payments.

In any case, you have not been discharged of any debts; but, of course, you will not have to pay them unless and until they ask for their money.


I would wait and see who actually wants to collect before paying. Sometimes charged off means forgotten. However, I agree, you still owe the $.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: for more information about my services.


If I understand your question correctly, you started the BK process primarily to save your home from foreclosure. If your loan mod now allows you to do that, without having to be in a Chapter 13 for 3 to 5 years, then I'd celebrate. You also said your unsecured debt was only the 2 credit cards. If they have charged them off, then it is possible they won't pursue collection. As other responses have already stated however, "charged off" doesn't mean forgiven or discharged. It is simply an accounting term used by the creditor to designate accounts they feel they have little or no chance of collecting on. At some point they may dust them off and try to collect, but hopefully by then you will be in a better financial situation and be able to negotiate a settlement on one or both of the accounts, again without having to file a BK.

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