Chapter 7 Bankruptcy

What is a Chapter 7 Bankruptcy Discharge?

The court order grants a ‘discharge of debts’ to the debtor. It is not a dismissal of the case and it does not determine how much money, if any, the trustee will pay the debtors. Read on…

Collection of discharged debts is prohibited by creditors

The Chapter 7 discharge prohibits any attempts to collect from the debtor any debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor. In cases of community property, there are special rules to protect certain community property owned by the debtor’s spouse, even if that spouse did not file a bankruptcy case. A creditor who violates this order can be required to pay damages and attorney’s fees to the debtor.

A creditor may, however, have the right to enforce a valid lien, such as a mortgage or security interest, against the debtor’s property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. Also, a debtor may voluntarily pay any debt that has been discharged by the court.

Debts that are discharged

The chapter 7 discharge order eliminates a debtor’s legal obligation to pay a debt that has been discharged by the court. Most, but not all, types of debt are discharged if the debt existed on the date the bankruptcy case was filed whether the debt was included in the schedules or omitted from them.

Debts that are not discharged

Some of the common types of debts which are not discharged in a chapter 7 bankruptcy petition are:

  • Debts for most taxes
  • Debts that are in the nature of alimony,
  • Debts for most student loans
  • Debts for most fines, penalties, forfeitures, or criminal restitution obligations
  • Debts for personal injuries or death caused by the debtor’s operation of a motor vehicle while intoxicated
  • Some debts which were not properly listed by the debtor
  • Debts that the bankruptcy court specifically has decided or will decide in this case are not discharged
  • Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts.

This information is only a general summary of the chapter 7 bankruptcy law. There are exceptions to these general rules. Because this law is complicated, and due to be revised soon, you should contact us immediately so that we may advise and assist you in preparing for this or any other bankruptcy petitions.

You don’t have to go through this alone. Get the facts … know your options… contact the attorneys at the Law Offices of Martin Gross today.

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