If you are filing for a bankruptcy, you have most likely come across the word ‘discharge.’ This word is used to explain how debts are ‘discharged’ or removed from your record, leaving you with a clean credit report. In many cases, your liability regarding the debts on your discharge is pretty much removed. The nuts and bolts of a discharge are not quite as clear. For example, in many cases, you may only request a discharge for particular types of debts. This determination is typically made by what type of bankruptcy you file for, Chapter 7, Chapter 11 or Chapter 13. Other factors include your past record and your identity. It is important to recognize this as well as the fact that not all of your debts will be erased, even after you receive a discharge under chapter 7.
How to Qualify for a Discharge
Anyone hope to receive a Chapter 7 discharge, must first qualify by meeting several criteria.
· You can only request a discharge one time in any given nine year period
· BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) requires that all individuals who apply for a discharge must successfully participate and complete a money management class.
· Your record must be error free and exhibit signs of honesty. If you have engaged in fraudulent money or security practices, previously ignored court orders or have notably bad record keeping, a court is unlikely to grant your request for a discharge.
After You Are Granted A Discharge
Once your discharge is approved, you will be offered protection in several forms.
You cannot be sued for any of the debts covered by your filing. Other legal actions against must cease as well.
Your creditors must immediately stop contacting your regarding your debts. This includes both written and verbal communications.
Unfortunately, your discharge may not completely wipe away debts. This is especially true in the case of guaranteed loans. If you have a co-signer or guarantor on a loan, your discharge may make you not liable for the loan, but your co-signer is not offered the same protection and your creditors may go after them to collect the loan.
Liens are not covered by discharges. Carefully review your finances and note any liens. Consider this: if you took out a $3000 loan and used a car worth $1000.00 to secure it, you can claim the loan on your discharge, but the item you used to secure the loan, in this case the car, is not covered by the loan. Once your discharge is granted, the loan, less the $1000.00 secured amount, will be cleared; however, the security, the car will still be liable for repossession.
Revocation of Discharge
No discharge is set in stone. There are several reasons why a court may choose to revoke a previously granted discharge – most involve dishonest behavior of the debtor.
· A creditor or trustee may request the discharge be revoked
· If the debtor provided fraudulent or misleading information to the auditor in an attempt to sway the decisions, a revocation may be granted.
· If the debtor failed to provide information on all of their assets to the trustee, their discharge may be revoked