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Bankruptcy Discharge

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Bankruptcy Discharge in US Bankruptcy Law refers to the statutory injunction against the commencement or continuation of an action (or the employment of process, or an act) to collect, recover or offset a debt as a personal liability of the debtor. This is the primary benefit received by the debtor to eliminate his debts and get a fresh start. This is also believed to play an important role in credit markets by encouraging lenders, who may be more sophisticated and have better information than debtors, to monitor debtors and limit risk-taking.


One of the basic purposes of filing a Chapter 7 Bankruptcy is discharge. Once the discharge order is issued, you no longer owe your unsecured debts, and you can start working to rebuild your credit. Your creditors no longer have any legal right to seek payment. Some debts, however, are not released by a Chapter 7 discharge, and some persons are not eligible for a Chapter 7 discharge. In case, it is under Chapter 7 bankruptcy, the maximum time taken to discharge the debts is three months.
Now from the above discussion, it is clear that there can be two types of debts that come under Chapter 7 Bankruptcy - Dischargeable debts, and Non-dischargeable debts. Let us have a look at what they exactly include.


WHAT ARE THE DISCHARGEABLE DEBTS?


These are the debts that can be wiped out by the bankruptcy discharge. This implies after you file a bankruptcy under Chapter 7 Bankruptcy, your debts under this category are discharged and you no longer need to pay them. The creditors cannot pursue you in such cases. The debts that you will be eligible to discharge are the following:

 

  • Credit card debts

  • Medical debts

  • Attorney fees except for child support and alimony awards

  • Personal loans

  • Utility bills

  • Auto accident claim except drunk driving

  • Business Debts

  • Civil court judgement

  • Collection agency accounts

  • Dishonored checks

  • Lease agreement debts

  • Repossession deficiency balances

  • Revolving charge accounts

  • Social security overpayments

  • Tax penalties and unpaid taxes past a certain number of years  

  • Loans and overpayments of veteran assistance

 

You can discharge debts for federal income taxes under US laws if only you fulfill the following categories:

 

  • The tax is income tax

  • You have no record of fraud

  • You are in debt for a minimum of 3 years

  • You have filed a tax return

  • Your income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet.

 

WHAT ARE NONDISCHARGEABLE DEBTS?


As their name suggests, they are debts that cannot be discharged unless you can successfully argue that they should be. But obligations like fraud debts need the creditors to object to the discharge, prove fraud and bring court order for making these debts non-dischargeable. These debts include the following:

 

  • Child support and alimony

  • Criminal fines, penalties, and government-imposed restitution

  • Certain tax obligations like recent federal, state, and local taxes

  • Student loans unless repayment would cause the debtor and his or her dependents undue hardship

  • Debts acquired by fraud which creditors must prove fraud before debt will be deemed non-dischargeable

  • Debts or creditors not listed on the schedules filed at the outset of the case

  • Court fees

  • Debts resulting from personal injury damages or undue death damages caused to others from driving while intoxicated

  • Debts that were non-dischargeable in a prior bankruptcy

  • Debts owed to certain pension plans

  • Certain debts owed for condominium dues and fees

  • Debts not dischargeable in a previous bankruptcy because of the debtor's fraud

 

 

If you have questions about Chapter 7 Bankruptcy or bankruptcy discharge it is important to seek the advice and counsel of experienced bankruptcy lawyer Daniel Podkowa, who will guide you through the entire process, and ensure that it is as painless as possible.

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