Discharge Debt In Chapter 7 Bankruptcy
If you have already filed Chapter 7 bankruptcy, you are probably looking forward to the Chapter 7 debt discharge. To discharge debt in Chapter 7 Bankruptcy, 60 – 90 days will need to pass after your 341a meeting of creditors.
If you think about it this is quite early in the bankruptcy process, which is good news for bankruptcy filers. To better understand how to discharge debt in chapter 7 bankruptcy, we will discuss what the discharge is, what can be discharged and the exceptions to the discharge rule.
First, let’s discuss what the debt discharge is. Basically the debt discharge will release the debtor from all liability of the debt that has been discharged. Upon discharge the creditor will not be allowed to collect on the debt or take part in any collection activities.
In a Chapter 7 bankruptcy most debts will be discharged, however, there are always a few exceptions to the rule. All debts that are not discharged remain active and the debtor will maintain liability for them until they are repaid.
Non Dischargeable Debts
- Spousal or child support
- Criminal restitution orders
- Student loans
- Debt incurred as a result of personal injury caused by the debtor
If you have any secured debt that you wish to keep after your bankruptcy, you will need to reaffirm that debt. What is secured debt? Secured debt is tied to personal property such as your car or your home.
If you choose not to reaffirm the secured debt, the creditor can repossess or foreclosure on the property to collect on the unpaid amount owed. If you choose to reaffirm the debt, you will sign an agreement with your creditor that you will continue to remain liable for the debt and set up a payment plan for that debt. You will be required to reaffirm the debt prior to the discharge being entered and you will be required to submit a written reaffirmation agreement.
Your bankruptcy attorney can assist you with the reaffirmation agreement and provide guidance on this process and the required disclosures. Your bankruptcy attorney is required to certify that they have counseled you on the consequences of reaffirming your debt and verifying that the reaffirmation will not create an undue hardship on the debtor.
There are also rare occurrences when a debt discharge can be revoked. This can occur as a result of a request by the trustee or a creditor. If the creditor or the trustee feels the debtor received the discharge fraudulently by misstating the evidence, failed to comply with a bankruptcy audit, failed to surrender property to the bankruptcy estate or did not follow the court’s orders, they can petition the bankruptcy court to revoke the discharge.
The creditor or trustee must make a petition within one year of the discharge. If the court agrees with the trustee or creditor and revokes the discharge you will remain liable for the debt and you will also be assessed a penalty by the bankruptcy court. In some instances debtor can also be criminally prosecuted if they are found to have committed an egregious fraud.
Speak with a qualified bankruptcy attorney today for more information on how to discharge debt in chapter 7 bankruptcy.