Chapter 7 Discharge

Discharge can be defined as the legal elimination of debt through a bankruptcy case. When a debt is discharged, the creditor cannot attempt to collect the amount from the debtor. Individual debtors get their discharge within 6 months of filing for bankruptcy. The discharge affects dischargeable debts that existed at the time of filing the case. If you file for chapter 7 case, you should be aware that not all debts are eliminated or discharged at the end of the bankruptcy process. Following debts are not discharged: -

·         Debts or creditors which are not on the pre-decided list at the start of the case.

·         Most of the student loans, if repayment would cause major deprivation to the debtor.

·         Taxes and other federal charges.

·         Alimony.

·         Government-imposed reimburses and penalties.

·         Court fees

·         Debts those were non-dischargeable in a prior bankruptcy.

·         Debts owed to certain pension plans.

·         Non-dischargeable debts because of the debtor’s fraud.

A discharge releases individual debtors from personal responsibility for most debts. After this, debtors are protected from any collection actions taken by the creditor because a chapter 7 discharge is under the dominion of many exceptions. Debtors should consult an adroit legal counsel before filing to discuss the scope of the discharge.

An individual debtor can be denied for a discharge under chapter 7 case in rare situations. If the court finds that the debtor has failed to keep or produce ample books or financial records, failed to explain any loss of properties in a convincing manner, committed a bankruptcy crime such as lying under oath or failed to complete any financial management instruction course, a debtor can be denied for a discharge. Secured creditors may keep possession of some rights to grab property securing a repressed amount of debt even after a discharge is granted.