If you are contemplating filing Chapter 7 or Chapter 13 bankruptcy, you will hear the term "discharge." What is a bankruptcy discharge and what does it mean to you as the debtor?
The bankruptcy discharge releases the debtor from personal liability from certain debts. Once a debt has been officially discharged through the bankruptcy, the debtor is no longer required to pay that debt.
The discharge is a permanent order that prohibits creditors from collecting on a debt and from engaging in any form of collection activity. This means creditors cannot call the debtor, they cannot mail collection letters, and they cannot file any lawsuits.
When does the discharge occur?
The timing of a discharge depends on which chapter the debtor files. In a Chapter 7 case, a discharge is usually granted about 60 days following the 341 meeting. Typically, this is around four months after the debtor files the bankruptcy petition.
With a Chapter 13 case, the debtor goes on a payment plan where they make monthly payments over a period of 3 to 5 years. In the case of a Chapter 13, the court usually grants a discharge as soon as practicable once the debtor has completed all of the payments under the plan. On average, this is about four years after the filing.
Can all debts be discharged?
Not all debts can be discharged through bankruptcy. The debts that can be discharged vary under each chapter; therefore, any non-dischargeable debts still have to be paid by the debtor. Generally speaking, the following debts cannot be discharged in a bankruptcy:
- Child support
- Spousal support (alimony)
- Student loan debt
- Court-ordered fines or penalties
- Victim restitution
- Debts for personal injury from DWI accidents
While a Chapter 13 debtor usually receives a discharge once they have completed all of their payments under the plan, there are circumstances where a debtor may request the court to grant what is known as a "hardship discharge," even though the debtor has not completed all of the payments.
Such a discharge is only available to debtors who are incapable of completing their payments due to circumstances out of their control. A hardship discharge is very similar to a Chapter 7 discharge in regards to the types of debts that can be discharged.
For more information about the bankruptcy discharge, contact a Schenectady bankruptcy attorney from DeLorenzo, Grasso & Dalmata. Our phone lines are open 24 hours a day, 7 days a week!