Bankruptcy Discharge Spelled Out

Posted on January 2, 2012
Filed Under Debt Relief, Personal Finance, Refinancing Solutions | Leave a Comment

To wipe out debts is the main purpose of anyone filing for Chapter 7. The legal obligations to pay for the money owed can be wiped out. While a person can be cleared from her or his financial obligations, not all of them will be forgiven. Due to an automatic stay, the properties of the person declaring bankruptcy can’t be repossessed by lenders until a discharge is given by the court.

A liquidation in Chapter 7 will be undertaken as a way to pay for the financial debt of the person who petitioned for bankruptcy. Declaring a bankruptcy implies that one is going to fix her / his monetary issues and get a new beginning. What happens is that the assets of a person who has secured debts are going to be kept from being foreclosed up until the individual is discharged of her / his financial obligations in a bankruptcy. Concerning liquidation of properties and assets, the non-exempted ones will be sold to obtain cash to pay the outstanding debts. In case there are still unsettled financial obligations after the liquidation of properties and assets, they are going to be removed.

Under Chapter 13, a person’s property won’t be liquidated. A home foreclosure could even be prevented under this kind of bankruptcy. A person in debt will have to repay the money owed with a repayment plan which has to be accepted by the bankruptcy court. It requires 3 to 5 years to complete a repayment schedule. Any leftover financial obligations that are not paid under the repayment program are going to be cleared. This is going to happen after all the repayments has been finished.

Automatic stay is important while the court hasn’t yet given a discharge order. The creditors are prevented from doing any measures that are against an individual who is under a bankruptcy. The automatic stay will require the lenders to obtain the authorization of the court before they try to seek out debt repayments. More often than not, the bankruptcy courts don’t permit exceptions to the automatic stay. In case a discharge has not yet began, the automatic stay does not change.

There are debts that can be discharged and there are also non-dischargeable kinds. Financial obligations pertaining to education loan and family support are among the non-dischargeable financial debts. The education loan may only be discharged if a person can prove to the court that he or she can no longer repay it as a result of “undue hardship”. The bankruptcy law won’t likewise discharge domestic obligations even in extreme debt difficulties because such monetary support may be needed by the dependents.

After the final order of discharge has been made, the collectors of the financial obligations that were discharged, can no longer collect repayments and if ever they try to, they will be charged for contempt.

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References:

- Laredo Bankruptcy Attorney

- Bankruptcy Attorney San Antonio