Worcester Bankruptcy Attorney
Law Office of Robert W. Kovacs, Jr.
  • Home
  • Bankruptcy Law
  • Firm Profile
  • Practice Areas
  • FAQ
  • Videos
  • Testimonials
  • Contact Us
  • Call Today
  • Email Us
  • Our Map
  • Menu
Free Evaluation 508.645.4073
Bankruptcy Blog 2016 August Debt Discharge
Previous Post  |  Next Post

Debt Discharge

Posted By Robert Kovacs || 25-Aug-2016

Regardless of what type of bankruptcy you decide to pursue, your ultimate goal is to achieve what is known as debt discharge. Discharge is often the beginning of your new financial future free of your past debts. Bankruptcy cases are normally closed once the discharge has been granted.

Most people file bankruptcy under one of two chapters of federal bankruptcy law, commonly referred to as Chapter 7, or liquidation bankruptcy, or Chapter 13, known as repayment plan bankruptcy. While the ultimate goal of both types of bankruptcy are debt discharge, each has its own discharge process with different pros and cons.

In Chapter 7 bankruptcy, many of the debtor’s personal assets are sold, or liquidated, and the resulting funds distributed to pay as much of the total aggregate debt owed to creditors as possible. The amount paid each creditor is determined by a court-appointed trustee. The trustee’s main role is to handle the liquidation and issue payments to the creditors.

Debts owned to creditors will be paid from the proceeds of the liquidation. Once those funds are exhausted and the court is satisfied that the debtor has paid all they are capable of paying, the judge will issue a formal discharge in the case.

What the discharge does is create a permanent injunction against any creditor whose debts were included in the bankruptcy settlement from pursuing any and all future debt collection actions against the creditor. This means than any portion of the debts not paid by the liquidation are considered null and void, the debtor is no longer liable for those debts, and the creditor can never again attempt to collect payment on those debts from the debtor.

Discharge is considerably different in Chapter 13 bankruptcy. In Chapter 13 bankruptcy, the debtor is not required to liquidate their assets. Instead, the debt is consolidated and the debtor is required to make regular payments to the court-appointed trustee for distribution to the creditors. In this form of bankruptcy, the debtor keeps their property, and creditors collect a percentage of the total debt owned them.

One advantage of discharge under Chapter 13 is that it allows you discharge a broader range of debts, including many that would not be dischargeable under Chapter 7. This includes such things as debts incurred to pay for non-dischargeable debt – for instance, using a credit card to pay for an outstanding tax bill. Taxes are not considered dischargeable, but, if you pay the taxes with a credit card or with a cash advance obtained with a credit card, the resulting credit card debt is considered dischargeable. Also, while child support or alimony are not dischargeable, any debt you acquired in order to pay those obligations is, as are any debts that may have been assigned to you as part of a divorce settlement.

Deciding which type of discharge best suits your personal position can help you decide which type of bankruptcy is right for you.

Deciding to file for bankruptcy is not a decision to be taken lightly.

Contact our experienced legal team today to see if bankruptcy is right for you.

Categories: Bankruptcy , Debt

Share Post

  • Avvo
  • BBB

Contact us today

Send My Message

Bankruptcy Law

How Can We Help You?

  • Bankruptcy
  • Chapter 7
  • Chapter 11
  • Chapter 12
  • Chapter 13
  • Bankruptcy Mistakes
  • Bankruptcy Myths
  • Consumer Protection
  • Cram Down
  • Credit Card Debt
  • Credit Reports/Scores
  • Debt Collection Defense
  • Debt Settlement
  • Discharging Your Debt
  • Do I qualify?
  • Exemptions
  • Foreclosure
  • Large Business Bankruptcy
  • Life after Bankruptcy
  • Loan Modification
  • Newsletter Archives
  • Relief from Tax Liens
  • Self-Employed Bankruptcy
  • Small Business Bankruptcy
  • The Process
  • Wage Garnishment
  • Warning Signs
  • Why Hire an Attorney?
  • Will I Lose My Home?

Blog Feed

  • Three Best Rated® Lists Robert W. Kovacs, Jr. Among the Top 3 Bankruptcy Lawyers in Worcester, Massachusetts

    If you are looking for an exceptional Bankruptcy ...

  • Raising Your Credit Score After Bankruptcy

    When you make the decision to file for bankruptcy, ...

  • How Can I Prevent Foreclosure On My Home?

    At Law Office of Robert W. Kovacs, Jr., we are ...

Read More
Law Office of Robert W. Kovacs, Jr.

Call Today
(508) 645-4073

Law Office of Robert W. Kovacs, Jr.
Worcester Bankruptcy Attorney
131 Lincoln Street,
Worcester, MA 01605
View Map

Website: https://www.rkovacslaw.com/
© 2019 All Rights Reserved.
  • Home
  • See Our Practice Areas
  • Site Map
  • See What People are Saying
  • Privacy Policy
  • Meet Our Team
  • Contact Us
  • Get a Free Case Evaluation
Internet Marketing Experts