If you are considering filing for bankruptcy, you may know that a bankruptcy discharge releases you from personal liability for certain debts. This means that when a debt is discharged, a debtor is no longer legally required to pay it. The discharge is a permanent order prohibiting the creditors from taking any further collection action. Any communications, such as telephone calls, letters, and personal contacts, are no longer allowed because the debt no longer exists.
To get a discharge order, you must fulfill the requirements of the court. Keep in mind that bankruptcy does not discharge all debts. The two main types of bankruptcy, Chapter 7 and Chapter 13, differ in which debts they cancel out.
When Does the Discharge Occur?
The timing of the discharge varies based on the type of bankruptcy filed. In a Chapter 7 case, for example, the court usually grants the discharge about four months after the date the debtor files the petition with the clerk of the bankruptcy court. In Chapter 13 bankruptcy, the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. This usually takes three to five years.
The Discharge Process
The bankruptcy court issues a discharge order and notifies you, your lawyer, the creditors whose debts have been discharged, your case’s trustee, and the trustee’s lawyer. The notice informs creditors that they can no longer contact you for payment on discharged debts. If a creditor continues to contact you, you can file a court motion that could bring them sanctions.
Within a few months of the discharge, your credit reports should be updated to reflect zero balances on the discharged accounts. However, in the case of secured debt — loans that use property as collateral — creditors have the legal right to seize that property after a discharge. Those creditors, who may include mortgage lenders and auto loan companies, may no longer seek delinquent payments from you, but they can seize your house, car, or other collateral in accordance with your loan agreement and local laws.
If you are concerned about property being seized and wish to keep it, you should ask your bankruptcy attorney about reaffirming those debts as part of your bankruptcy. By reaffirming your debt, you are promising to repay the debt in exchange for the lender allowing you to keep the property. However, you need to act quickly because once a discharge order is entered in your bankruptcy, you can no longer sign reaffirmation agreements. This means your property could be seized.
Discharge is the best thing you can hear when it comes to Bankruptcy
One of the best words to hear in bankruptcy is discharge. A discharge is an order from the court that releases the debtor from personal liability for qualified debts. That means they are no longer legally required to repay those debts. Once a debt has been discharged, creditors are prohibited from taking any form of collection action on that debt. It releases you from debt and allows you a fresh start with finances. If you are drowning in debt, see how The Law Offices of Adam M. Freiman can help you live debt-free.
