What is a discharge, and how do I get one?

As a consumer, your ultimate goal in bankruptcy is to get a discharge of your debts. But what does that mean? From a legal standpoint, it means that the Court has eliminated your personal obligation to repay the debt. The debt is still there. You could still pay it if you wanted to do so. But you have no legal obligation to pay it. From a practical standpoint, this means the creditor can’t come after you about it. They don’t call you, send you letters, take you to court, or make any attempts to pursue the debt further. Usually, they write it off and move on to someone else. But that only applies to dischargeable debts!

There are a wide variety of debts that are not dischargeable, particularly if you incurred them by fraud or theft. The most common non-dischargeable debts are taxes, child support/alimony, and student loans. These debts are handled a bit differently in bankruptcy. They will remain with you after the bankruptcy, and need to be paid in full, except in very unusual cases of undue hardship.

Bankruptcy can still be helpful if these creditors are hounding you, trying to garnish your wages, or seizing your assets.If they are allowed to continue, it can prevent you from paying other debts like your mortgage or car note. Bankruptcy will stop these collection methods immediately when you file through an automatic stay (injunction). These creditors then have to get in line with every other creditor and wait their turn. This puts them in line behind other creditors like your mortgage and car loan so you will have a place to live and a way to get to work.

While these debts will remain your personal obligations when you emerge from bankruptcy, your other debts will be addressed and allow you a more solid financial position allowing you to pay these debt in full.

If you want to know how your debts would be handled, call us today for a free, no obligation consultation to discuss your options for the future.