What is a Bankruptcy Discharge?

 

The general objective in filing a consumer bankruptcy is to eliminate debts.  At the conclusion of a Chapter 7 or Chapter 13 bankruptcy case, the consumer receives a discharge.

 

The bankruptcy discharge releases the debtor from personal liability for most debts.  That means the consumer is no longer legally required to pay these debts.  Certain debts are non-dischargeable such as most taxes, student loans, alimony, child support and traffic tickets.

 

The discharge comes at the conclusion of the bankruptcy case.  For Chapter 7 filers, that is typically about three and a half months after the bankruptcy petition is filed.  For Chapter 13 filers, this typically occurs a month or two after the Chapter 13 payment plan is completed.

 

The actual discharge is in the form of a permanent court order, signed by the bankruptcy judge assigned to the case.  The Bankruptcy Court sends a copy of it to the debtor and all creditors and parties listed in the petition.

 

The order of discharge prohibits creditors from taking any action to collect a debt.  This means that it becomes forever illegal for creditors to phone the debtor, send collection letters, sue the debtor or take any other action to collect the debt.

 

If a creditor has a secured debt, such as a mortgage or car loan, the creditor is still prohibited from collecting the debt.  However, the creditor has the right to recover the collateral.

 

 

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