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WHAT IS A BANKRUPTCY DISCHARGE?

A bankruptcy discharge is a court order.  Such order grants a "discharge" (forgiveness and elimination of all or certain debts) to the persons named as the "debtor" in the bankruptcy petition.

A bankruptcy discharge releases the debtor from personal liability for certain types of debts. Stated another way, the debtor no longer must pay any discharged debts. 

The discharge is permanent.  Such order prohibits creditors from taking any action to collect on discharged debts.  Legal action must stop.  Communications (telephone calls, letters, and personal contacts) with the debtor must cease.

Valid Liens Survive Bankruptcy:

However, after the bankruptcy discharge, a creditor may have the right to enforce a valid lien. 

Example of such liens typically include a, such as a mortgage or security interest against the debtor’s property such as a car.  

But certain types of liens may be avoided in bankruptcy.  If a particular lien can be and is avoided or eliminated in the bankruptcy case, then the creditor has no lien to enforce after the bankruptcy.  

Thus, although a debtor is not personally liable to pay money for discharged secured type of debts, a valid, enforceable (non-avoided) liens will remain after the bankruptcy case. If that occurs, a secured creditor may enforce the lien to recover the property secured by the lien. This area of the law can be complex and confusing.  Therefore, you may want to consult with a lawyer regarding a particular secured debt in relation to bankruptcy. 

When does the discharge occur?

See article: How Long Does the Bankruptcy Process Take?

How does the debtor receive a notice of discharge?

The debtor and the debtor's attorney typically receive copies of the discharge order by mail. 

Are all of the debtor's debts discharged or only some?

In many cases, all debts are discharged.  Sometimes, however, not all debts are discharged (forgiven, eliminated).   The Bankruptcy Code states that certain types of debts are not dischargeable for public policy reasons (based either on the type of the debt or due to improper behavior of the debtor in incurring the debt).

What about debts I did not list?

Summary

This information above is only a very general summary of the bankruptcy discharge. There are greater specifics as well as exceptions to these general rules. The law is complicated.  You may want to consult an attorney to determine the exact effect of the discharge in this case.

See sample bankruptcy court discharge order.

Related articles: Chapter 7 Discharge, Chapter 13 Discharge.

Contact Christian bankruptcy attorney Matthew B. Tozer for a free and confidential bankruptcy consultation.  

Copyright 2010

 Disclaimer

Under the new bankruptcy laws, Mr. Tozer is a debt relief agency because he helps people file for bankruptcy relief under the Bankruptcy Code.

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