
While filing for bankruptcy can be intimidating for many due to the impact it can have on your credit score, you’ll find that a discharge of your debts, this process can offer much-needed financial relief. If you’re unsure what a bankruptcy discharge is, what debts qualify, or why working with a Shelby County, TN bankruptcy lawyer is in your best interest during these complex legal and financial matters. You’ll also discover how debt discharges vary based on the Chapter of bankruptcy you file, which can help you make the most informed decision about which option to pursue.
What Is a Discharge for Bankruptcy?
A bankruptcy discharge essentially removes your legal obligation to pay back a debt that you owe. Once your debts have been discharged and you are no longer legally liable for repaying them, you’ll find that creditors for discharged debts can no longer legally contact you. This includes sending letters, making phone calls, or showing up on your doorstep to collect the remaining funds. If this occurs, it is a violation of the Fair Debt Collection Practices Act (FDCPA), which is a federal law that regulates how debt collectors can interact with consumers.
When your discharge will take place depends on the kind of bankruptcy you file. As consumers are typically restricted to Chapter 7 and Chapter 12, you’ll find that this will occur around four to six months for Chapter 7, as this involves the liquidation of your assets. For those who chose the Chapter 12 repayment plan, your discharge will occur when you make your final payment, which typically happens three to five years after you file, depending on the specifics of your repayment plan.
Are Certain Debts Exempt?
In general, you’ll find that the majority of your personal, unsecured debts like medical bills or personal loans, will be discharged during the bankruptcy proceeding. However, not all debts will be forgiven. You’ll find that you will still be responsible for the following debts after your bankruptcy case is closed:
- Taxes
- Secured debts (those in which property is used as collateral, like a car loan or mortgage)
- Alimony
- Child support
- Victim restitution (if you are held civilly responsible for a personal injury or crime)
- Undeclared debts
- Fines and fees
It’s also important to note that if you are found to have fraudulently petitioned for bankruptcy, such as hiding assets or otherwise lying about debts, you will likely be barred from discharge as well.
Even though some debts may not be discharged during bankruptcy, it’s still important to understand that during this process, your creditors must abide by the automatic stay, which prevents them from pursuing collection efforts against you. This gives you an opportunity to catch up on payments, which can be beneficial when the bankruptcy process is over.
As you can see, filing for bankruptcy has many important considerations that must be made, which is why connecting with an experienced attorney with the Arnold Law Firm is in your best interest. We will do everything possible to help you through these complicated matters so you can receive financial relief. Connect with us today to learn how we can fight for you.