Bankruptcy still remains a mystery in the eyes of many consumers. This article will review the facts of bankruptcy as per written law. Some of the information in this article refers to a manual called Bankruptcy Basics published by the Administrative Office of the United States Courts and written by Leonidas Ralph Mecham, Director. What, When and How Does a Debtor Discharge His or Her Debts through Bankruptcy A discharge of an individuals debt is a release of an individuals liability from certain specified types of debt. The discharge is a permanent order to the individuals creditors that they refrain from taking legal, collection, written or verbal communication with a debtor regarding the collection of unpaid dollars. This means that once allowed a creditor is to cease all collection activities that they would normally pursue against the debtor. If a Chapter 7 bankruptcy is filed the courts typically give four months for creditors to file a complaint that object the filing. In Chapter 13 cases the courts typically discharge the debt on an average of about 4 years from the date the repayment plan has been entered by the debtor. Without any litigation regarding objections to the discharge, the debtor will automatically receive a discharge once the four month period has expired for chapter 7 filing or after the average four year payback through Chapter 13. What Types of Debt are Discharged? Not all debt can be discharged through a Chapter 7 bankruptcy. For example public fines and debts due to an individuals misbehavior such as drunken driving are not allowed. Certain types of tax claims are exempt. Also child support and alimony are exempt. Guaranteed educational loans or debts for certain condominium or cooperative housing fees would be disallowed. An individual may be able to reorganize some of the debts listed if filing Chapter 13. Can a Creditor Object to a Debtor Attempting to Discharge His or Her Debts? Yes a creditor may object to the filing of chapter 7 bankruptcy. An individual does not have an absolute right to a discharge of their debt. Creditors receive a notice shortly after the case is filed. A creditor who wishes to object has until the time specified in the motion to dispute the individuals filing. In Chapter 13 bankruptcy cases the debtor is entitled to a discharge upon completion of all payments under the plan. Creditors may object to confirmation of the repayment, but can not object to the discharge if the debtor has completed all payments under the plan. How Often May an Individual file for Chapter 7 Bankruptcy? Chapter 7 bankruptcy may only be filed once every 7 years. Chapter 7 bankruptcy will also be denied if a debtor has filed a Chapter 12 or 13 within six years prior to the filing of Chapter 7. |
