What’s the Chapter 7 discharge?

February 19, 2015 10:17 am Published by

While working through your bankruptcy in New York, you may have heard about something called the Chapter 7 discharge. This discharge is an important part of the Chapter 7 bankruptcy process. During discharge, some debts are eliminated by releasing the debtor from them.

When a discharge takes place, it prevents any further collection activities on the part of the creditor. That means that the debtor is no longer able to be sued or harassed about the debt. As far as the court is concerned, the debt has been resolved.

Individuals get debts discharged in over 99 percent of Chapter 7 cases. However, discharges can be blocked in some cases. For example if a debtor asks to discharge a debt, but the creditor files a complaint objecting to the discharge, it’s possible that the court will deny that discharge. A court could deny a discharge if financial records haven’t been kept properly, if a bankruptcy crime has taken place, or if the debtor failed to follow the orders of the court.

Not all debts can be discharged. One example is a secured debt like a home. It’s possible to reaffirm that debt, which means that you’d take the debt back on after bankruptcy, but dismissing the debt completely is unlikely. This process is available to prevent the creditor from taking the home or other assets in lieu of debt forgiveness.

The reaffirmation of a debt needs to take place before the court orders a discharge of the debt. You’ll need to file it with the court and then have it agreed to by the judge who maintains your case.

It’s essential to know your rights and the law around Chapter 7 bankruptcy. That’s why legal guidance is important when you are considering taking this step.

Source: US Courts.gov, “The Chapter 7 Discharge” accessed Feb. 19, 2015

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