How is a bankruptcy discharged?

A bankruptcy discharge refers to a court order that permanently relieves you from payment of your debts listed in the bankruptcy petition. The order is issued only after you have completed all your obligations. Once you have the discharge order from the court, creditors or lenders are permanently prohibited from contacting you via phone calls, letters, email, or suing over the debt. Having said that, if there are any liens attached to the debts, creditors enjoy the right to enforce these liens by repossessing or selling any property attached to the lien, even after you have discharged the debt through bankruptcy. You can contact a qualified bankruptcy lawyer in Cleveland to learn more about the possible actions that creditors can take to reinforce liens.

In this context, it is important to check with your Cleveland bankruptcy attorney about the debts that can and cannot be discharged through bankruptcy. Usually, the debts that can be discharged include credit card debt, medical bills, personal loan, unsecured debt, or lawsuit judgments. The debts that cannot be discharged under Chapter 7 include child support, alimony, debts accruing from marriage settlement, student loan, fines/penalties due to criminal activity, some applicable taxes such as property tax, court costs, outstanding dues to residents’ association, debts not discharged in previous bankruptcy, and debts not listed for current bankruptcy.

Under Chapter 13, you can discharge certain debts that cannot be discharged under Chapter 7. These include debts accruing from divorce settlement(excludes alimony and child support), specific debts related to taxes, debts to residents’ association, retirement loans, and debts that were not discharged in previous bankruptcy. The debts that cannot be discharged through Chapter 13 bankruptcy include child support, alimony, taxes, penalties, debts due to malicious actions, debts not listed on bankruptcy, fraud, recent luxury purchases, student loan, etc.

The time it takes to discharge the bankruptcy depends on the type of bankruptcy your Cleveland bankruptcy law firm suggests you file. For instance, in Chapter 7, it may take about four to twelve months to discharge bankruptcy from the date of filing a bankruptcy petition. Your non-exempt assets are divided among the creditors and remaining debts are discharged. Chapter 13 bankruptcy usually takes five to seven years to discharge after all the payments, as proposed in the fresh repayment plan, have been made. In Chapter 13 bankruptcy, you are required to propose a fresh repayment plan to discharge most of your debts. At the end of this plan, the remaining debt is discharged.

Once you have paid up your debts (or debts have been discharged), the court issues a discharge order, which is sent to all creditors, the US trustee of your bankruptcy, and the trustee’s attorney. Through this order, all recovery activities from creditors are stopped and they can be punished for contempt should they try to collect a discharged debt. While bankruptcy discharge removes your liability from debts, creditors can contact and even sue the co-signers, if any, to recover the outstanding dues. To protect the co-signer, you may consider paying off the debt in full. You must keep the discharge order in safe keeping. If you lose the order, you can get a copy on payment of a fee. Alternatively, you can create an account on the PACER system and download the order after paying the applicable fees.

Your bankruptcy is automatically discharged if creditors do not raise objections or there is no litigation. As soon as you file for bankruptcy, creditors are intimated about the petition and allowed a certain deadline to raise any objections. Creditor(s) can choose to file a lawsuit called “adversary proceeding” if they have any objections.Rubinstein Law Firm, your trusted Cleveland bankruptcy law firm, can negotiate with the creditors to avoid raising any objections to ensure speedy discharge of bankruptcy.

It is possible that the court denies discharge of your bankruptcy (Chapter 7 or Chapter 13) for reasons outlined in the Bankruptcy Code. This may include, but not limited to, failure to provide required tax documents, concealing a property to hinder the process or defraud creditors, destroying books of records, perjury, other frauds, failure to take a financial management course, and so on. You can expect denial of discharge for bankruptcy if you already received a discharge under Chapter 7 or Chapter 11 filed within last eight years (and last six years for Chapter 12 and Chapter 13) of the current bankruptcy petition.In a few situations, the court also enjoys the right to revoke bankruptcy discharge. These include fraudulently obtained a discharge, failure to disclose acquisition of property that could become the property of bankruptcy estate, and any other acts as described in section 727(a)(6) of the Bankruptcy Code.Therefore, it is prudent to discuss all aspects in detail with your bankruptcy lawyer Cleveland to ensure your bankruptcy is discharged without hitting any roadblocks.

Your credit report continues to bear bankruptcy marks till seven years from the date of filing for Chapter 13 and about 10 years from the date of filing for Chapter 7. The law prohibits employers – both government and private – from discriminating against a person who has discharged a bankruptcy or became insolvent. Employers cannot discriminate during hiring, or deny, revoke, suspend, or decline a fresh contract solely on the basis of filing a bankruptcy. Talk to a Cleveland bankruptcy attorney at Rubinstein Law Firm to report any such discrimination, to initiate an appropriate legal action.

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