Discharging Of Debts During Bankruptcy

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Discharging Of Debts During Bankruptcy

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The word discharge is more of a relief than victory in case of bankruptcy. It usually depicts that the borrower is no longer liable for the debt and is free of any kind of recovery stints a lender might consider. Discharge usually is determined after the bankruptcy court ruling. Discharge can occur while filing for chapter 7 chapter 13 or chapter 11 bankruptcy. However, many people would relate discharge with chapter 7 as the quantum of debt released is way higher compared to other chapters. Learn more facts about different chapters at https://www.recoverylawgroup.com/bankruptcy/.

How is the bankruptcy court judgment regarding discharge?

It is unfortunate that the bankruptcy court does not clearly specify or highlight which debts have been discharged in its judgment. This often leads to several disputes between the lenders and the borrowers to prevent the discharge of a particular debt. The judgment can be referred to as beating around the bush and difficult to interpret as there are many ifs and buts and a lot of exemptions, exclusions, provisions, etc. Bankruptcy trustee and your attorney can flag peace with the lenders once the judgment is out.

What kind of debts can be discharged generally?

Debts that are dischargeable and do not fall under the category of non-dischargeable debts can be discharged. Under the bankruptcy code, there are certain debts like child support, alimony, education loan, etc., that cannot be discharged and hence, they shall continue to be debts and not be discharged. Any debt highlighted in the judgment by the bankruptcy court that shall not be discharged can also not be discharged. There must be a reason why the bankruptcy court has disallowed the discharge of that debt.

Sometimes, the lenders who are not satisfied can initiate an adversary proceeding to review the discharge of their debt. In case, the bankruptcy court provides a ruling in favor of the lenders, such debt can also not be discharged. In circumstances, where the bankruptcy filer decides to reaffirm the debt to retain a particular debt, such a debt cannot be discharged. The general rule of thumb is that all unsecured debts or debts that are not backed by any asset are released or discharged first. To retain an asset, the debt also must be retained. Know more about discharge and asset safeguard by calling top attorneys from Los Angeles & Dallas, TX at 888-297-6203.