What Is Bankruptcy Discharge?

A bankruptcy discharge is the order relieving the debtor from having to repay debts that have been discharged. Read on to learn more.

Once discharged creditors can no longer try to collect on the discharged debts. Liens can still be enforced attached to debts that are secure, they may also repossess and sell all the property put up as loan collateral. There are some disadvantages to filing for bankruptcy. It will damage your credit and you will need to satisfy the court this bankruptcy is essential.

How It Works

The discharge order will be mailed to the creditors and to the US Bankruptcy Trustee who is handling the case as well as their attorney. It is important to maintain a copy and it can be used to correct any credit report issues or errors. When a creditor tried to collect, you may file a motion with the court for the case to be reopened and the creditor may face fines if it is determined they are in violation of the discharge injunction.

Types of Bankruptcy Discharges

Individuals may file for Chapter 7 or Chapter 13 bankruptcy protection. In a Chapter 7, the trustee will liquidate assets that are not exempt and divide the proceeds to your creditors. Any remaining debt will be discharged. In Chapter 13, you will agree to a five year plan of repayment – at the end of those five years, any remaining debt will be canceled. Chapter 13 allows some debts to be discharged that cannot be discharged in Chapter 7. This includes debts from a divorce agreement (but not alimony or spousal support) and tax related debts, court fees condo or HOA fees and debts unable to be charged in a previous bankruptcy.

Source: https://www.thebalance.com/bankruptcy-discharge-what-is-it-and-when-does-it-happen-960064