Everything You Wanted to Know About Bankruptcy Discharge

  • Bankruptcy Discharge

Everything You Wanted to Know About Bankruptcy Discharge

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People reeling under the effects of debts often consider filing for bankruptcy. Despite the ill effects of denting your credit history, there are numerous benefits associated with bankruptcy, like, the automatic stay and discharging of debts. A bankruptcy discharge releases you from paying back certain debts after you file for bankruptcy. According to lawyers of Los Angeles based bankruptcy law firm Recovery Law Group, the legal order also prevents creditors from taking any action to collect the outstanding debts which have been discharged by the court. You can live a threat-free life after getting a bankruptcy discharge. The discharge occurs at different times depending on the chapter of bankruptcy.

Individuals can file for bankruptcy under either Chapter 7 or Chapter 13. In the case of Chapter 13, a repayment plan is involved, through which the debtor pays back certain debts. The duration of this plan is generally 3-5 years and bankruptcy discharge is given after completion of this plan. In Chapter 7, since no repayment of loans is involved, the discharge is given within 4-6 months of the filing of the bankruptcy petition. This timeframe can change if any objections are raised by creditors. However, it is important to know that all debts cannot be discharged in bankruptcy. Certain debts survive bankruptcy and depending on the chapter you have filed under; you will have to pay for them.

Debts discharged during bankruptcy

Once you qualify for a chapter of bankruptcy, certain debts can be discharged, provided you are eligible for them. These include:

  • Medical bills
  • Credit card debt
  • Utility bill debt
  • Personal loans from family or friends
  • Business debt
  • Contractual debts
  • Unsecured debts
  • Judgments
  • Attorney fees
  • Missed rent payments
  • Some tax debts
  • Civil court judgments
  • Debts due to your malicious injury of a person/thing

Debts which survive bankruptcy

Certain debts, however, cannot be discharged. These depend on the chapter of bankruptcy you have filed under.

Chapter 7 bankruptcy

  • Student loan
  • Criminal fines
  • Court fees
  • Car loans
  • Child support and alimony
  • Debts secured by a lien
  • Debts resulting from malicious injury to another person or thing
  • Debts due to DUI resulting in death or personal injury
  • Mortgages

Chapter 13 bankruptcy

  • Child support and alimony
  • Mortgages
  • Student loan
  • Some tax debts
  • Criminal fines
  • Debts due to personal injury or death caused due to driving under the influence

Certain debts can be discharged, provided a creditor does not file a motion against them, resulting in them being declared non-dischargeable. These include civil court judgments and debts which were a result of fraud.

Life after bankruptcy discharge

Official copies of the discharge are sent by the court clerk to all creditors named and listed during bankruptcy proceedings. Apart from this, copies are also sent to the bankruptcy trustee and their lawyer as well as debtor and their lawyer. Bankruptcy discharge notice prevents creditors from pursuing any collection action for debts discharged. Any attempt to contact you to collect payment can result in action against creditors. However, creditors with a loan secured by a lien can repossess the property even after discharge if you do not make regular payments. Consulting a lawyer, in this case, might be essential. You can call 888-297-6023 to consult with experienced bankruptcy lawyers.

Once you get your bankruptcy discharge, it appears on your credit report and remains on it for a duration of 7-10 years depending on the chapter of bankruptcy you filed. While Chapter 7 bankruptcy remains for ten years, Chapter 13 for seven years from the date of filing. This has a negative effect on your credit score and hampers your chances of getting credit. The accounts discharged as a result of bankruptcy should show that status on your credit report. In case it is not so, you can get it updated through credit bureaus by providing them with the “schedule” document from bankruptcy records.