When it comes to filing for bankruptcy, having your debts completely discharged is the desired goal. Unfortunately, what makes for a total discharge is not often clear. The type of debts you have, your actions, and other factors all affect your chances for discharge. Read on to find out more about what a discharge is and why you may have to settle for partial relief under a chapter 7 filing.
What Is a Discharge?
For you, a discharge means that you no longer have to pay a debt. Legally, however, it means that you are no longer liable for the debt. You cannot be taken to court, have your wages garnished, have liens placed on your property, or have to deal with letters and phone calls. You must understand, however, that there is no such thing as getting something for nothing.
If your debt was based on collateral (known as a secured debt), you may end up losing property if you fail to pay for it. Homes and vehicles are two common pieces of property that might be in jeopardy when you fail to make your payments on them, whether you declare bankruptcy or not. For example, if you get behind on your mortgage payments and then declare bankruptcy, you may still lose your home. You may have a temporary reprieve against foreclosure actions because of the bankruptcy, but that freeze is only temporary. You must make arrangements to get caught up on your secure debts, or you might lose them.
Other Discharge Issues to Consider
Only debts you listed on the creditor matrix when you filed your chapter 7 bankruptcy paperwork are eligible for discharge. Any debts you leave out or incur after you file will remain after the bankruptcy is final. Another issue to consider is fraud or wrong-doing on the part of the filer. You must be honest about your property holdings, your debts, your income, and everything else or you might find certain debt or even your entire bankruptcy thrown out of court.
Taxes and Other Debts
Before you file your bankruptcy paperwork, make sure you understand what can and cannot be discharged by speaking with your bankruptcy attorney. One major debt that many people need to discharge but cannot is federal tax debts. The potential for shedding an IRS tax debt depends on how old it is and other factors. Child support is another debt that must be paid, no matter what. To learn more, contact a law firm.