Your Guide To Bankruptcy Discharge

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Your Guide To Bankruptcy Discharge

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Bankruptcy and discharge are sometimes synonymous with many bankruptcy filers. A discharge basically means the settlement of some of the debts due to the inability to pay for them. Basically, the evil debts which were the cause of nightmares vanish once the bankruptcy spell is used on it. In terms of definition, any debts which no longer continue or are dissolved post-bankruptcy from the credit score and from the debtor list are called a bankruptcy discharge. To know more about bankruptcy and its related terms, do not forget to log on to

What are the types of bankruptcy discharge?

A bankruptcy discharge is the final stage of bankruptcy. Once, the bankruptcy court weighs in on the request, and documents, and verified the exempt assets, a discharge notice is issued to all the parties associated with the case. Under most circumstances, the discharge occurs for unsecured debts. In case a debtor is unable to keep up with the payments for an asset, the asset could be liquidated, and the debt could be settled. The unsettled portion of secured assets which could not be recouped despite the sale of the asset is also said to be discharged.

The discharge can be further classified based on the chapter inducing the discharge. They can be listed as follows-

  • Chapter 7 discharge

Chapter 7 is one of the chapters that facilitate the highest discharge as it leaves almost nothing with the debtor. There can be a common misunderstanding that chapter 7 bankruptcy can discharge almost all debts. This is one of the very reasons why many bankruptcy filers under chapter 7 are unable to get even a single dollar discharge. Some of the non-dischargeable debts under Chapter 7 bankruptcy can be alimony, child support, any other marriage settlement dues, fines, penalties, income taxes, property taxes, court expenses, HOA, retirement plan/education loans, etc. Any debt which has not been listed on the bankruptcy form will also not be discharged.

  • Chapter 13 discharge

The non-dischargeable debts list is similar to Chapter 13 as well. The only key distinction between chapter 7 discharge and chapter 13 discharge is the quantum and type of discharge. The debts being discharged will be significantly higher in chapter 7 and on most occasions, unsecured debts will be fully discharged. On the other hand, the quantum of debt discharged in chapter 13 is very less and in most likelihood, all the secured debts will be reaffirmed and not discharged. Considering the net household income, some unsecured debts may also be reaffirmed with a help of a revised 3-5 year payment plan.

Potential drawbacks of a bankruptcy discharge

If your debts have a co-signer or have joint account owners, bankruptcy or bankruptcy discharge isn’t good news for the co-signer or the joint account holder. The personal liability of the debtor is addressed with bankruptcy however, it puts co-signers and joint account holders fully liable for the debt. The second major drawback personally for the debtor is the credit score. The higher the discharge the larger impact it will leave on the credit score. The impact isn’t a short-term one it could go on for a period of 10 years despite your efforts to rectify the score.

The final drawback is the cool-off or seasoning period of about 6 years or more before availing of another discharge. Once a discharge has been availed, a debtor cannot avail of bankruptcy discharge again even after filing for bankruptcy in that cool-off duration. So, if bigger financial trouble mounts on the debtor soon, he won’t have bankruptcy to shield him for some years. These bankruptcy terms can be dicey. To have experts handle your case and facilitate sound suggestions, dial 888-297-6203 to book an appointment with leading attorneys in Los Angeles & Dallas, TX.