Some or all of your previous debt may be dismissed under Chapters 7, 11, 12, and 13 of the United States Bankruptcy Code. A “discharge” is a term that refers to the act of “This means you are not personally responsible for the money and are not required to repay it. Once a debt is permanently dismissed, the creditor you owe, such as a hospital or credit card company, cannot contact you or initiate collection action against you.
Note: To get rid of credit card debt and get debt relief, most consumers will declare a Chapter 7 bankruptcy. If you’re unfamiliar with the Chapter 7 bankruptcy process, you can learn more about it and what to expect. If you file Chapter 13 bankruptcy, you will be required to repay the majority of your debts under a repayment plan. Some debts may be discharged in bankruptcy, but you may still be personally liable for others.
Chapter 7 bankruptcy frequently entails the liquidation (or sale) of assets in order to pay off previous debts. Only once you’ve finished this process will you be able to get your eligible debts forgiven. Federal and state bankruptcy exemptions shield some assets from liquidation. Many people who file for Chapter 7 bankruptcy can keep the majority of their assets. Your attorney and bankruptcy trustee will determine what you can keep, what creditor deals you can make, and what you must give up in your bankruptcy case.
The courts usually discharge debts as soon as assets are liquidated. This occurs around four months after you first apply for Chapter 7 bankruptcy. Keep in mind that you must attend debt management education classes between filing and receiving your discharge, or the judge may deny your debt discharge.
Debts that can’t be forgiven
There are numerous exceptions to the debts that can be discharged in Chapter 7 bankruptcy. For a thorough examination of your individual debts, you should speak with an experienced attorney.
The following are examples of debts that cannot generally be discharged:
- Child support and alimony
- Several tax debts
- Loans for students
- Debts related to education
- Loans for individuals
- Debts owing as a result of a personal injury case
- Debts owed in connection with certain criminal restitution orders
According to state and federal law, these debts must be repaid.
Stop your creditors from seizing your property by using reaffirmation.
Even after a discharge, certain creditors may be able to preserve their claims on your property. This can happen in a number of ways, one of which is through a “lien.” A lien can be used by a creditor to obtain payment or reclaim property.
Let’s imagine you have some valuable secured property, such as your car. A lien may be used by your creditor to reaffirm the obligation. This “reaffirmation” is important “occurs if both you and the creditor agree:
This debt will remain your responsibility.
You will repay a debt in part or in whole.
Even if the debt would be discharged in bankruptcy, you continue to pay.
As long as you keep paying the loan, the creditor will not take your property.
Prior to the entry of a discharged debt order, reaffirmation is required. If you wish to keep a car or other property, you should talk to your creditor as soon as possible. Your attorney may take care of this for you and try to work out a reasonable payment plan.
Possessions that may be taken prior to a discharge
Bankruptcy is meant to help you get out of debt, so removing all of your assets would be counterproductive, as you’d have to repurchase a car or other stuff.
Property deemed vital for modern life may be excluded from creditors’ repossession. However, you may need to petition a judge to have them stopped.
The following are some instances of property that a creditor can try to reclaim:
- A second car or a motor vehicle
- A vacation home or a second residence
- Expensive attire
- Furniture for the home
- Tools that you utilize at work
- Instruments of music (unless you can prove you are a professional musician)
- Cash, bank accounts, stocks, bonds, and other assets are all available options.
- A percentage of your home’s equity
- A fraction of unpaid pay that has been earned.
- Benefits from the government that have accrued in a bank account
- Personal injury damages granted
- Heirlooms from the family
While this list may appear frightening, keep in mind that creditors may attempt to seize these items, but they are unlikely to succeed. Because it is necessary for business or daily living, much of this property is covered under your state’s exemptions or wildcard exemptions.
A notice will be sent to your creditors stating that your debts have been dismissed. If they don’t agree with the discharge, they might try to reaffirm these items or sue you for debt.
Things are considered finished once the debt is discharged. You cannot be sued, have your property taken away, or be harassed by a creditor.
How to Get a Debt Forgiven
Bankruptcy is a difficult decision to make, but it is sometimes required. You might begin by inquiring with an attorney about what property is prohibited from a Chapter 7 bankruptcy and what may be included. They can inform you what a creditor might be looking for and how to stop them legally and effectively.
Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale
Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced professionals will work with you to obtain the best possible outcome. You can on the firm to represent you well so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business Bankruptcy, Chapter 7 Bankruptcy, Creditor Representation, Chapter 5 Claims, Chapter 13 Bankruptcy, Business Restructuring, Chapter 11 Bankruptcy, and more.
*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.