Monday, June 29, 2015

Bankruptcy - What is a "Discharge?"

I talk about it all the time with clients and sometimes they stop me and ask "what is a discharge?" Discharge is the ultimate goal of filing bankruptcy. Discharge is the release from unsecured debt. It is important to understand when discharge occurs.

Discharge usually occurs at the completion of  a personal bankruptcy. In Chapter 7, the discharge is granted about 60 days after the creditors meeting. In Chapter 13, the discharge of debt happens at the end of the payment plan, which is 3 - 5 years depending on the circumstances. As one can see, there is time to get in trouble between filing and discharge.

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Once a case has been filed, it does not end there. The trustee will require documents and may have questions. If these documents are not provided within the bankruptcy code's timelines or questions answered in a timely manner, a case can be dismissed. If a case is dismissed before a discharge is granted, the automatic stay is lifted and all the debts, interest and fees come back to the debtor.

Some of the documents requested are past tax returns and bank statements. If you own a house, the trustee usually wants to see a mortgage, deed, a recent statement showing the mortgage balance. After reviewing the information in the document provided by a debtor, a trustee may have questions or request additional documents that need to be answered.

Debtors must also complete a second credit counseling course; personal financial management. And Chapter 13 debtors must make monthly payments on their plans until completion. Failure to do any of these things can result in a case being dismissed. The filing of a bankruptcy case does not signal the time to coast and stop working with your attorney.

It is important to understand that secured debts, debts where a person has used property as collateral like a house or car, are not generally discharged in bankruptcy. Taxes and government debts may or may not be discharged either. Also, if a person is seeking a discharge of student loans, additional steps within the bankruptcy case need to be taken and student loans are nearly non-dischargeable as well.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at

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