What is Bankruptcy Discharge? - How Important Is Your Finance

Bankruptcy Discharge

Not every debt can be discharged, which means the debts that are not discharged must be paid in full.? Bankruptcy discharge allows a debtor to be free from certain debts, meaning that the debtor is not required to pay debts that have been discharged.? Once the discharge has been instated creditors are no longer allowed to have contact with the debtor.? Even though a debtor is not responsible for the debts that have been discharged, the debtor is still responsible to the secured creditors for valid liens.

Timing of a Discharge

A discharge is filed at a different time under each chapter.? Under Chapter 7, which is liquidation, the court will rule the discharge quickly to keep a complaint from being filed, which is usually around four months.? Under Chapters 11, 12 and 13, the discharge will be as soon as the debtor repays all the debts under the plan that was decided by the court.? Since Chapter 12 and 13 are a payment based plan that typically last between three to five years, the discharge will be made four years after the initial filing.? If a debtor does not adhere to the rules of attending the financial management course under Chapters 7 and 13, the discharge will be overruled.? There are very reasons for a debtor to get out of the financial management course requirement.? They are; there are not enough courses near them, they are incapacitated or they are on military duty.

What Does the Debtor Do To Get a Discharge?

The debtor will receive a discharge when all payments are made unless there is something that they have not followed during the bankruptcy process.? It is Federal Law that a copy of the discharge is sent to all the creditors, the U.S. trustee, the case trustee and the attorneys of the trustees and the debtors.? Creditors are not allowed to collect from the debtors once they receive the discharge letter.? If they try to collect from the debtors after the discharge, they will be punished.? If the secretary forgets to send a copy of the discharge to someone, it does not mean that the debtor is not discharged.?

Non-dischargeable Debts

-Tax claims

-Debts that are to be filed with the court

-Debts that are for spousal alimony and child support

-Debts for willful injuries

-Debts to government for fines or penalties

-Debts for government funded educational loans

-Debts for injury from driving intoxicated

-Debts owed to retirement plans that are tax advantageous

-Debts for condominium or housing fees

V. Kunze enjoys covering topics like bankruptcy and also writes about the topic ?bankruptcy attorney woodland hills.?

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Source: http://www.howimportantisyourfinance.com/2012/10/23/what-is-bankruptcy-discharge/

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