How a bankruptcy discharge works

Bankruptcy in McClain County, Oklahoma is a legal means that gives debtors relief from certain debts. Two popular types of bankruptcy include Chapter 7 and Chapter 13. Chapter 7 involves selling assets to pay creditors while Chapter 13 lets the debtor slowly repay debts. Though they differ, the debtor gets a discharge.

How Bankruptcy Discharge Works

A discharge means the debtor has no obligation to pay creditors. Once creditors are paid under Chapter 7 by the trustee, the debtor does not owe the remaining debt. The court will review the case to ensure the debtor has followed all proceedings. This includes filing the petition, completing financial management courses and attending creditor meetings or a confirmation hearing.

A discharge commonly occurs four months after Chapter 7. Under Chapter 13, a debtor gets the discharge once they complete a three or five year repayment plan.

As required by federal law, the court clerk sends the notice to trustee, the trustee’s attorney if applicable and creditors. Creditors can no longer pursue the remaining debt after the court issue a discharge, or they may face contempt of court.

Dischargeable Debts in Chapter 7

Certain unsecured debts, or debts without collateral, can be discharged under Chapter 7. These debts include medical bills, payday loans, past due rent, past due utility bills and credit cards. If new laws get passed, it will be easier to discharge student loans. While student loans can currently get discharged, the process is more complicated.

Non-fraudulent lawsuit judgments, child support, alimony, money borrowed from certain retirement accounts, gambling debts and current tax debts cannot be discharged. Bankruptcy does not relieve a co-signer or a joint account holder from making payments.

Bankruptcy gives debtors a fresh start, but filing can be complex, and errors can get the case dismissed. An attorney may be able to assist with the paperwork and help the process run smoother.