WHAT IS BANKRUPTCY DISCHARGE AND HOW DOES IT OPERATE?
One of the reasons people file for bankruptcy is to get a “discharge.” A discharge is a Court order that states that you do not have to pay most of your debts such as credit cards, personal loans, medical bills and judgments. Basically, a bankruptcy is a way to eliminate debts. However, some debts cannot be discharged. For example, you cannot discharge debts for:
- Most taxes
- Child support
- Most student loans
- Court fines and criminal restitution
- Personal injury caused by driving drunk or under the influence of drugs
In order to qualify for a Chapter 7 Bankruptcy, you must pass a “means test.”
You can only receive a Chapter 7 discharge once every eight years. Moreover, you cannot be made to pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not have to sign a reaffirmation agreement or any other kind of document to do this.
Some creditors hold a secured claim (for example, the bank that holds the mortgage on your house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, however, the creditor can still take the property. So, you should consider reaffirming that debt in order to keep the property (i.e. car).
The discharge prevents creditors from attempting to collect a debt from you.