A bankruptcy discharge implies that the debtor is no longer legally stipulated to pay any debts that were booked in the court. The signaling of discharge issue - a permanent order, indicates that creditors are prohibited from going on any type of collection drive on discharged debts including legal action or contacting the debtor through phone calls or e-mails.
Generally the bankruptcy discharge takes place around four months after the debtor files the petition with the clerk of the bankruptcy court. However, this is subject to certain legal conditions such as litigation involving some objections to the discharge. Barring such incidents, the debtor automatically obtains a discharge.
When the petitioner has a personal liability for a debt, a creditor with judgment can use legal processes like levy and garnishment to reach the petitioner's non-exempt assets and earnings even though these assets were not pledged as collateral and the debts were unsecured. The bankruptcy discharge eliminates the debtor's personal liability for a discharged debt. The discharge encompasses not only debts that were liquidated with the filing of the case but any liability that arises from events before filing as long as the affected creditors received the bankruptcy notice.
In chapter 7 bankruptcy case, the following types of debts are dischargeable:
Business debtsLeasesJudgment against the petitioner including car accident claimDeficiencies existing after repossession of vehiclesPersonal loansCredit card account balancesNegligence claimsLiabilities under guaranteed agreement
It is vitally important for the petitioner to be aware of the types of debts that are non-dischargeable in bankruptcy.
The most common types of non-dischargeable debts are:
Certain types of tax claimsDebts which were not exposed by the debtor in the documents and schedules that he / she had filed at the courtDebts for spousal or child support in alimonyDebts to governmental units for fines and penaltiesDebts for most government- funded guaranteed educational loansBenefit over paymentsDebts for personal injury caused by debtor's operation of motor vehicle in an intoxicated stateDebts owed to certain tax advantaged retirement plansDebts for certain cooperative housing fees
Adversary proceedings and contested matters are methods of handling disputes that arises in bankruptcy cases. An adversary proceeding is basically a civil trial within the context of a bankruptcy case. Contested matters are more informal. They are initiated by a motion and usually do not require a filing fee. The Bankruptcy Rules establish the type of disputes that fall into each category. For example, adversary proceedings include objections to discharge of debts while contested matters include objections to sales of the debtor's properties. The procedures used in the court include mediation, arbitration, early neutral evaluation, summary jury trial and settlement week.
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