The bankruptcy discharge is generally the goal of a debtor’s bankruptcy. The bankruptcy discharge is the cornerstone of the fresh start and debt relief promised by the bankruptcy laws. The discharge is a permanent court injunction prohibiting creditors from enforcing certain obligations against the debtor. That may seem simple and straightforward enough, but the devil is in the details.
First, the bankruptcy discharge does not “erase” a debt; it simply prohibits collection against the debtor personally. Since the debt still exists, the creditor can take any legal action so long as he does not collect from the debtor personally. That means no legal action and communications with the debtor. The creditor is permitted to contact or sue a co-debtor, or repossessing property if it secures a debt. For instance, if the debtor’s car loan is discharged in bankruptcy, and the debtor does not pay for the vehicle, the car can be repossessed after the case closes. However, the creditor cannot try to collect any money from the debtor.
Second, the discharge does not apply to all debts. Some debts, like child support obligations, are not dischargeable. Other debts, like taxes owed to the government, may be discharged under certain circumstances. To avoid any confusion consult your attorney regarding the extent of your discharge. Additionally, debts that occur after the bankruptcy filing date are usually not covered by the bankruptcy discharge.
The order of discharge generally occurs at the end of the debtor’s bankruptcy case and copies of the discharge order are mailed to all of the debtor’s creditors by the bankruptcy court. The discharge order informs creditors generally that the debts owed by the debtor have been discharged and that they should not attempt any further collection. If a creditor does try to collect from the debtor personally, the debtor can complain to the bankruptcy judge and the creditor may be held in contempt of court.
The bankruptcy discharge is usually the culmination of the bankruptcy case and relieves the debtor of the burden of overwhelming debt. An experienced bankruptcy attorney can help explain the extent of the bankruptcy discharge on your debts and help clearly define your fresh start under the bankruptcy code.
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