Learning More About Bankruptcy Discharge

When you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you are doing so because you have substantial debts and ultimately want to have those debts discharged. For many debtors, it can be confusing to understand how and when a discharge occurs, and what types of debts are not eligible for discharge. The U.S. Courts provide important information about bankruptcy discharge, and we want to go over some of that information for debtors who are considering consumer bankruptcy in Oak Park.
How Does the Law Define Bankruptcy Discharge?
What is a bankruptcy discharge? In short, it is a wiping away of debt. Bankruptcy discharge is a term that refers to a situation in which the debtor is released from his or her personal liability for certain debts incurred. To put it another way, a bankruptcy discharge means that the debtor does not have to pay for any of the debts that are discharged, and the creditors cannot seek to obtain any money owed on the debt once it is discharged. While the debtor’s credit and financial record can be affected by a bankruptcy discharge, it cannot continue to be impacted by debts owed that are discharged. It is almost as if the debtor never had the discharged debts in the first place, and the discharge is permanent.
Once a debtor receives a bankruptcy discharge, the creditor cannot try to collect on the debt, file a claim against the debtor, or even call the debtor to try to obtain money.
Bankruptcy Discharges Happen at Different Times
A debtor who files for bankruptcy does not immediately get his or her debts discharged once the bankruptcy filing occurs. Instead, the timing is dependent upon the type of consumer bankruptcy.
In a Chapter 7 bankruptcy, the court usually grants the debtor a discharge once the creditors are no longer able to object to the discharge. In most cases, this is about two months after the “341 meeting,” and about four months after the debtor files for bankruptcy.
In a Chapter 13 case, the discharge does not occur until the debtor fulfills the terms of the payment plan. Most Chapter 13 payment plans cover a period of anywhere from three to five years. Once the debtor completes the terms of the payment plan, the court can grant a discharge. However, if the debtor does not fulfill the terms of the payment plan, the court can deny the bankruptcy discharge. The court can even deny the discharge if the debtor abides by the terms of the payment plan for one or two years but then fails to complete it.
Debts That Typically can Not be Discharged
Under Section 523(a) of the U.S. Bankruptcy Code, there are 19 different categories of debt that are identified as “exceptions to discharge.” This means that the debts are not dischargeable through bankruptcy. Generally speaking, there are more exceptions to discharge for a Chapter 7 bankruptcy case than for a Chapter 13 bankruptcy case. Some examples of debts that are exceptions to discharge can include:
  • Certain tax debt;
  • Debts owed for family support;
  • Debts owed for malicious injury to another person or property; and
  • Drunk driving debts.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about filing for consumer bankruptcy, an experienced Oak Park bankruptcy attorney can speak with you today about your options. Contact the Emerson Law Firm for more information.
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