DISCHARGING YOUR DEBT IN BANKRUPTCY

 

The purpose of filing Bankruptcy is to give a debtor a fresh financial start. This is accomplished by the U.S. Bankruptcy Court issuing a "Discharge" of debts. When a debt is "Discharged", this means that the debt is erased and the debtor is no longer liable for paying it. The creditor may take no further action against the debtor for this debt because it has been formally Discharged, or erased, through the Bankruptcy process.

 

In a Chapter 7 Bankruptcy, all eligible, unsecured debt is Discharged after the objection to discharge date has passed and after the debtor has completed a financial management course with an approved provider.

 

In a Chapter 13 Bankruptcy, all eligible debt is Discharged after the completion of a successful repayment Plan that may last for 36 months (3 years) or 60 months (5 years). In either a Chapter 7 or Chapter 13 Bankruptcy, the end result is a debtor who is free from the debts erased in Bankruptcy.

 

Imagine, finally being completely free from debt. You owe nothing. You can start enjoying life again. Filing Bankruptcy not only immediately stops all collection efforts against you, but it also offers you the opportunity to erase all eligible debt. This may include unsecured debt such as cell phone bills, credit card bills, utilities, personal loans, medical bills, etc. Some debt may not be affected by Bankruptcy. This includes debt, such as certain types of taxes, child support, spousal support and student loans. These debts are typically not eligible to be Discharged through the Bankruptcy process, although some tax debt may be Discharged depending on the type and age of the tax debt. It is also possible to include some debts in a Chapter 13 repayment plan, but this will vary depending on the case.