What a Discharge in Bankruptcy Really Means

Federal Bankruptcy Courthouse.

When you seek protection under Chapter 7 of the bankruptcy laws, you can permanently “discharge” certain debts in exchange for the sale of some of your personal property. In fact, you may even be able to discharge some debt in a Chapter 13 reorganization. What is a discharge? What does it mean and what doesn’t it mean?

In essence, a discharge means that you are no longer legally obligated to pay the debt. Once a debt is discharged, the creditor will no longer have legal standing to sue you for payment of the debt, or to call or write you in an attempt to collect the debt. Here are some other things you should know, however, about the scope of a discharge in bankruptcy:

• The discharge relieves you of the debt, but not of any liens or encumbrances. If property is secured, the lender will be prevented from suing you to collect any amounts unpaid, but will still have the right to enforce the lien. For example, if you have a mortgage debt discharged, but the mortgage is still in place, the lender may initiate foreclosure proceedings.
• The discharge of a debt does not necessarily end your bankruptcy proceedings. It’s actually pretty common for debts to discharged on a periodic basis, as the trustee acquires and sells assets to satisfy creditors.
• You can still make payments to a creditor, even if the debt has been discharged. Assume that you borrowed money from a friend, but had the debt discharged in bankruptcy. You can continue to pay your friend, even though the debt has been discharged. The continued payment won’t be considered a reaffirmation of the debt, either.
• When all debts that will be discharged have been discharged, the automatic stay will be lifted. Creditors will then be allowed to resume collection efforts for any debts not discharged.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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