The Bankruptcy Debt Discharge
If you're overwhelmed by debt and struggling to make minimum payments, maybe it's time to find out whether you can discharge your debts in bankruptcy. If you're in over your head, you're not alone.
In 2004 as many as 43% of American households were spending more than they earned each year—and the economy has only worsened since then. Last year alone, nearly 1.5 million people used bankruptcy to regain control of their finances and get a fresh start.
Financial problems can be stressful, but you don't have to face them alone. If you're struggling with debt, one of the best source of information may be a local bankruptcy lawyer.
Simply fill out our free bankruptcy case evaluation form below or call 877-833-2410 and you can connect with a local bankruptcy lawyer who can help you explore your options and determine whether bankruptcy may be right for you.
Chapter 7 Bankruptcy and the Debt Discharge
Chapter 7 of the U.S. Bankruptcy Code offers a fresh financial start by excusing filers from paying many of their unsecured debts. This forgiveness of debt is known as the debt discharge.
Chapter 7 bankruptcy is generally useful for people who have a lot of unsecured debt, such as credit card debt, medical bills and unsecured loans.
What to Expect from a Debt Discharge
You can expect two major changes after receiving a debt discharge from the bankruptcy court:
- You have no obligation to pay your discharged debts. Once the court has discharged a debt, you're free of it - no matter how much you owed, you have no responsibility to pay that creditor.
- You are protected from collection actions. A creditor or collection agency who tries to collect a discharged debt can face serious penalties.
Debt Discharge in the Personal Bankruptcy Process
If you decide to file personal bankruptcy, your bankruptcy lawyer will prepare your bankruptcy petition and other paperwork and file it with the court. You'll have to attend a meeting of your creditors and testify to the truth of your petition, but that's not a formal court appearance. You may never appear before a judge. After this meeting, you could receive your debt discharge in as little as two or three months.
Obstacles to Receiving a Discharge of Debts
Before filing your bankruptcy petition, you must complete a credit counseling briefing, and before you receive your discharge, you must complete a financial management course. If these requirements aren't completed at the right time or the right certificates aren't submitted to the court, your bankruptcy case could be dismissed or your discharge denied.
It's also critical that you provide complete and accurate information to your bankruptcy attorney and to the bankruptcy court. Errors, omissions or fraud could create costly complications, and possibly even cost you your discharge. A local bankruptcy attorney can explain the requirements in detail and guide you through the bankruptcy process.
The Limits of the Debt Discharge
Not all debts can be discharged in personal bankruptcy. Some debts that are typically non-dischargeable include:
- Spousal and child support payments
- Certain tax debts
- Educational loans
- DUI fines
- Other criminal penalties and fines
The Rest of the Picture: Secured Debts in Chapter 7 Bankruptcy
Secured debts like home mortgages and automobile loans are handled differently in Chapter 7 bankruptcy cases. There are a few options, depending on your circumstances:
- Redeem property: Property is generally redeemed by paying the fair market value of the property to the creditor in one lump sum.
- Reaffirm debt: A reaffirmation is basically a new agreement with the creditor to keep making payments on the debt in return for being allowed to keep the property.
- Surrender property: In some cases, reaffirmation and redemption would be too expensive. In those cases, the property can generally be surrendered to the creditor.
For Personalized Advice, Seek Help from a Bankruptcy Lawyer
Financial problems are stressful, but finding an attorney to advise you about bankruptcy doesn't have to be. It's as easy as filling out our free bankruptcy case evaluation form or calling us at 877-833-2410. We'll connect you with a bankruptcy lawyer near you.
It's time to pursue the fresh financial start you deserve.