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The Bankruptcy Discharge Overview

A Debt Discharge could be the Key to Your Financial Future

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In bankruptcy, the debt discharge frees the debtor from all legal responsibility to repay certain debts. Typically, the debt discharge is the final step of the bankruptcy process.

Like the automatic stay at the beginning of the bankruptcy case, the debt discharge is a court order that protects the debtor from collection actions against the debt.

After bankruptcy, creditors cannot call, send letters or try to collect on debts that have been discharged. Legally, the debtor has no obligation to repay discharged debts.

However, the bankruptcy does not discharge all debts. Obligations to pay secured debts, such as mortgages or can loans, may continue after bankruptcy, unless they have been modified by the bankruptcy court, or the assets liquidated.

For more information on the debt discharge and how it can help you eliminate debts, connect with a local bankruptcy attorney. Simply fill out the form below or call 877-833-2410 today to learn more about the bankruptcy discharge.

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Debt Discharge in Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, unless there are objections by creditors, a debtor can typically expect to receive a debt discharge within five months of filing bankruptcy.

Receiving a debt discharge in Chapter 7 is relatively easy. Except for cases that are converted to Chapter 13 bankruptcy or dismissed, over 99% of Chapter 7 personal bankruptcy filings receive a debt discharge, according to the U.S. Courts web site.

Typically, the bankruptcy court will only deny a debt discharge if the debtor committed some form of bankruptcy fraud, such as leaving assets off of the bankruptcy petition, or illegally transferred property before filing.

Chapter 13 Bankruptcy Debt Discharge

Compared to a Chapter 7 bankruptcy, the debt discharge in Chapter 13 bankruptcy is more complex and includes several variables.

Generally speaking, the debt discharge is received after the debtor has completed the three-to-five year payment plan defined by the bankruptcy court, and taken the necessary Debtor Education Course.

There may be additional requirements by the bankruptcy courts before a discharge is granted, including proof that child support, alimony and other obligations had been paid throughout the payment plan period.

Chapter 13 Hardship Discharge

If after beginning a Chapter 13 bankruptcy plan, circumstances arise that prevent the debtor from completing the plan, the debtor may ask the court to grant a "hardship discharge."

Possible situations where the debtor could ask for a hardship discharge include injury or illness that prevents the debtor from earning significant income.

A hardship discharge may only be granted by the courts if:

  1. The debtor cannot continue payments due to circumstances beyond the debtor's control and through no fault of the debtor
  2. Creditors have received at least as much as they would have received in a chapter 7 bankruptcy through liquidation
  3. Modification of the payment plan is not possible

Learn More About Your Options with a Local Bankruptcy Attorney

If you're overwhelmed by debt, you don't have to wait another day to take action. A local bankruptcy attorney can explain what types of debts can be discharged by filing bankruptcy, and what you can expect during the bankruptcy process.

Connect with an attorney today. Simply fill out our free evaluation form or call 877-833-2410 to speak with a bankruptcy lawyer in your area who can evaluate your case.

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