Bankruptcy Debt Discharge

The most common form of bankruptcy is Chapter 7. Bankruptcy debt discharge is essentially when the court officially releases a debtor of being held personally liable to repay debts incurred prior to filing bankruptcy. This occurs within a certain time frame following bankruptcy proceedings.  Not all debts will be discharged so it is wise to know in advance which types of debts you the debtor are still held personally and legally accountable for. Whether or not your bankruptcy debts are discharged also depends on if you’ve been through bankruptcy previously.  

The process of bankruptcy debt discharge normally takes place 60 – 90 days after the creditors involved in a bankruptcy hearing have met together regarding their relevant debtor. Although legally relieved of personal responsibility for a debt, a debtor may still voluntarily repay their creditors once they are financially able.  

Debtors need to be aware that not all debts are dischargeable. Liens placed on property by a court are not dischargeable so they can still be enforced by the creditor. Some liens are avoidable, such as judgment and garnishment liens. Liens may be partially avoided such as mortgage liens, when a home is worth less than the amount owed, that percentage of decreased value is avoided.

A lien on property prior to bankruptcy does not affect a debtor when acquiring property in the future.  



Other non-dischargeable bankruptcy debts include, but are not limited to; student loans, Alimony and child support, taxes and tax liens, Government-related fines or penalties, or in cases of fraud or embezzlement.  Be aware of the fact that if you have received a bankruptcy debt discharge within the last nine years, then your current debt discharge may be denied.  

Dischargeable bankruptcy debts mainly include unsecured debts. Some of these are medical bills, leases, negligence claims, business debts, vehicular accident claims, credit card debts, personal loans, or home improvement loans. As mentioned before, just because a debtor has been legally released of personal accountability, they can still certainly repay these debts voluntarily, over time, as it is the right thing to do to pay what you knowingly owe.  

Other bankruptcy chapters include Chapter 12 and Chapter 13. Chapter 12 covers farmers and fisherman; Chapter 13 is for sole proprietors or individuals who still have income but are now protected by bankruptcy from creditors legally pursuing them. In Chapter 13, there is also a repayment plan legally documented. Yet, some of the dischargeable debts can still apply in these cases of bankruptcy. 

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