What is a bankruptcy discharge?
A discharge is the primary reason why people file a bankruptcy case. Upon the successful completion of a bankruptcy, you will receive a “discharge” of your debts. This discharge prevents creditors from ever trying to collect the debt again. There are certain types of debt that are not usually or ever discharged and some types of debt for which the discharge has only a partial impact. There are of course other reasons to file a bankruptcy, such as the opportunity to catch up payment on secured debts, but discharge is the primary “reward” for filing. Discharge prevents creditors from collecting, but it does not prevent you from voluntarily repaying the debt if you so choose. Discharge binds the creditor, not you.
What can be discharged in a bankruptcy?
Typically, although circumstances may vary, all credit card debt, medical bills, service contracts, taxes over three years old (subject to circumstance and nature of tax debt) and most other forms of “unsecured” debt are discharged by a bankruptcy. You can also discharge “secured” debts, such as vehicle debt, home debt and other debt for property purchased, IF you are willing to surrender the property. You cannot keep a home or car and not pay for it. A bankruptcy discharge only discharges you of debt for property that you are not keeping. Of course, your individual circumstance and the facts of your case may have an impact on this information.
Which debts are not discharged?
The primary debts that are not discharged that affect many people are debts for child support, alimony, taxes that are less than 3 years old and student loans. Other types of debt can be non-dischargeable as well. The facts of each case vary and you will need to consult with a qualified, experienced attorney to be certain.
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