Guidelines On Bankruptcy Discharge

December 23, 2011 by  Filed under: Bankruptcy 

A discharge from bankruptcy is the main reason why anyone would file for bankruptcy, particularly Chapter 7. If the debt has been discharged a debtor will be released from his or her legal responsibility to pay it. Nearly all kinds of debt can be discharged; however, there are debts which survive bankruptcy. Automatic stay is closely associated with bankruptcy discharge since the properties of an individual are going to be put on hold up until the discharge becomes legally effective.

Chapter 7 Liquidation

Liquidation comes about when an individual files for Chapter 7 bankruptcy. It basically implies that an individual is starting over money wise, immediately on the date of filing. Almost all of individual’s debts that one has at the time of the filing are put on hold in the automatic stay and after the close of bankruptcy the debts are discharged. Meanwhile, the non-exempt properties are going to be sold by a court appointed bankruptcy trustee to sell them and then use the money to repay the financial obligations up until it runs out. Those debts that are unpaid are going to be discharged so a debtor does not have to pay them unless one wants to.

Chapter 13 Repayment Plan

In Chapter 13 bankruptcy, an individual’s property will not be liquidated. A debtor will also have an opportunity to prevent a home foreclosure. A debtor will have to pay the debts through a repayment plan which is going to be approved by the bankruptcy court. The duration of a repayment plan is three to five years. Whatever remaining financial obligations that are not paid under the repayment plan are going to be discharged. But of course, an individual should make all of the required payments.

Automatic Stay

The automatic stay differs from the debt discharge but it aids the discharge by holding off everything starting on the date of bankruptcy filing. The creditors are halted to take any action against an individual who has declared bankruptcy. The automatic stay will require the creditors to ask for the permission of the bankruptcy court before they attempt to ask for debt payments that an individual owes them. More often than not the bankruptcy courts do not permit exceptions to the automatic stay. The automatic stay is not going to be changed before the discharge begins.

Exceptions to Discharge

There are certain debts that are not be subjected to discharge. The most common debts which are exempted from discharge are student loan and family support financial obligations. The student loan can only if an individual can prove to the court that he or she can no longer pay due to “undue hardship”. There is also no known case where the court has discharged domestic obligations such as spousal maintenance, alimony, and child support.

Once the final order of discharge has been issued, the creditors of the debts which have been discharged can no longer collect payments and if ever they attempt to, they will be charged for contempt.

Tom A. Higgin has published articles in the legal field for many years. He has had experience with Chapter 7 Bankruptcy as well as Chapter 13 Bankruptcy. He enjoys sharing information he has acquired by working legal professionals. Tom’s goal is to educate people, so that they can make more informed decisions that can affect their life.

Article Source:
http://EzineArticles.com/?expert=Tom_A._Higgin

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