The bankruptcy discharge is what releases the debtor from liability for debts. Once the debts are discharged, the debtor is no longer responsible for them.
What does discharge actually mean?
The discharge means that the individual is given a clean slate with all of the creditors included in the case. Once the order of discharge is signed by the judge, collections actions can no longer be taken against the debtor. In cases where secured property is concerned, the terms may actually vary. From then on, the debtor is protected from collection activity by all of the creditors listed in the case. The bankruptcy discharge represents the final step for the process. This last legal hurdle is what formally releases the individual from liability in the entire bankruptcy process.
When does the discharge happen?
The discharge actually happens when the judge signs the order releasing the debtor from liability. When the petition is signed, copies are made available to all parties included in the petition. The debtor also has access to a copy of the discharge as well. The discharge order is normally filed three months after filing of the bankruptcy petition.
Is it difficult to have certain types of debts included in a bankruptcy discharge?
Although a number of different types of debt can be included in a Chapter 7 bankruptcy, some debts cannot be included. Any outstanding debts stemming from traffic tickets have to still be paid. Individuals are still held responsible for student loan debts incurred. Alimony and child support cannot be included in a discharge for bankruptcy. Debts incurred by fraudulent means are not considered in bankruptcy cases. Depending on the year filed and the validity of the tax documentation provided, tax debts can be discharged in certain cases. Tax debts that result from the individual’s failure to file in a timely manner are generally not eligible for discharge.
How are the judgment liens handled in a bankruptcy discharge?
Judgment liens can be “avoided” that means wiped out as far as they “impair” an exemption. The Eastern District of Missouri this is done by your bankruptcy attorney filing a motion with the court. If you had and have real estate at the time a judgment was entered against you, it is likely that a judgment lien on your property. You might not know about it. Before you file bankruptcy, have a title company do a title search. If a lien in on your property, you bankruptcy attorney might be able to eliminate such a lien. This will be very important when you try to sell your home. All liens have to be paid and released prior to the transfer of your home to the new owner. A judgment lien can interfere with the sale of your home if it is not taken care of during your bankruptcy case.
The discharge is a formal court order signed by the judge signaling the end of a Chapter 7 bankruptcy proceeding. The individual no longer has any obligation to pay the debts owed to creditors included in the bankruptcy.