Are you currently facing debt? If you have any outstanding credit card balance, medical bills, or other personal debt, knowing that there’s a way to permanently get rid of this is perhaps the best news you can have. And bankruptcy discharges gives you a unique opportunity to start anew. How can you get this order that wipes out your debt? Read on to learn if you are eligible, how soon you can get debts discharged, what it does and doesn’t do for you.
As soon as a discharge has been entered in the bankruptcy court, you will no longer be legally liable to repay any of the discharged debts. Moreover, your creditors will be barred from harassing you, demanding payments, suing you, or even reporting nonpayments to credit reporting agencies (which can ruin your credit history). As such, the bankruptcy discharge is the most important part of any bankruptcy filing.
Eligibility for Discharge
But before you can attain a discharge, you will need to satisfy all bankruptcy requirements and meticulously follow the bankruptcy process. This means going through:
- Filing your bankruptcy petition and submitting required documents
- Declaring your debts, assets, and income
- Attending the required meeting of creditors
- Getting credit counseling from an authorized agency
- Enrolling in a financial management course
- Following the terms of your repayment plan (for Chapter 13 bankruptcy)
If you satisfy all needs and if there are no objections to your filing, the order of discharge will be sent to you in hardcopy by mail.
Timeline of Bankruptcy Discharge
Receiving the discharge order does not mean that your bankruptcy case is already closed. In contrast, it will remain open as long as the bankruptcy trustee has not yet liquidated the available money to your lenders.
If you filed bankruptcy under Chapter 7, the court may typically send the order within 3-4 months. On the other hand, if you have a Chapter 13 bankruptcy filing, the notice will only arrive once your three to five-year repayment plan is completed, which means only outstanding debt at that time can be eliminated.
Information on Your Discharge Notice
One of the most common misconceptions about the bankruptcy discharge order is that it contains a list of specific debts that the court is discharging. However, the discharge also gives you a general listing of debt categories that cannot be eliminated through bankruptcy, called nondischargeable debts. A non-dischargeable debt is something that you remain responsible for payback. Examples are spousal support and child support payment obligations, student loans, tax debt, criminal restitution, fines and penalties related to criminal activity, retirement plans loans, and those covered by reaffirmation agreements.
Other information you’ll find on the piece of paper which you should take note of are your bankruptcy case number, filing date, and discharge date. You’ll see the case number and filing date at the top of the document, and the discharge date on the left-hand side of the discharge order next to the name of the issuing judge’s name. The case number is on the top box. These will be useful when a lender demands a copy, or when you decide to get a home mortgage in the future. This can also help prove to persistent debt collectors that your debt has been forgiven.
For some types of debts, the lender may file a lawsuit requesting the bankruptcy judge not to declare a debt dischargeable. This happens in cases where the debt was incurred fraudulently.
Limitations of Discharge Orders
Liens Remain. Although you will no longer need to pay off dischargeable debts, any liens on your properties will remain, which means a creditor can repossess the property. If the creditor has a lien, he or she can sell the collateral to recover the unpaid money. This can occur even after the discharge paperwork has been released. Some liens can be removed after filing a bankruptcy case. If you want to know more about what happens to property liens, consult a Washington or Oregon bankruptcy attorney.
Creditors can collect nondischargeable debts. After receiving the court discharge, lending agencies may continue their collection activities for loans that have not been discharged. However, a creditor that attempts to wrongfully collect a discharged debt is subject to paying for any resulting losses.
The discharge can be denied or revoked. Failure to cooperate with the bankruptcy trustee appointed by the court, or misrepresenting any information about your assets or properties can lead to denial or revocation of the discharge. To avoid these from happening, it is recommended that you have a bankruptcy lawyer representing your case.
Understanding the bankruptcy process, filing documents completely, and cooperating with your bankruptcy trustee can make or break your chance at removing your outstanding debts. Don’t risk the possibility of debt relief. Work with our trusted bankruptcy attorneys from Northwest Debt Relief Law Firm and ask About our $0 attorney fees before filing a payment plan.