What is Debt Discharge?
What Is A Discharge and Why Is It Important?
Probably the most important reason you do any type of bankruptcy is to obtain a discharge. Many people want to know what a discharge is. Simply put, a discharge is a very powerful Federal Court order which prohibits or stops any creditor listed in your bankruptcy schedules from doing anything to try and collect a debt from you. The creditor cannot call you, write you, sue you, or contact you concerning the discharged debt. Should a creditor attempt to collect a debt after it is discharged, they face serious consequences. You should contact your bankruptcy lawyer if this happens.
Once the case is filed and before the discharge issues (in a Chapter 7 approximately 3 to 4 months) a temporary discharge protects you. This is known as the automatic stay. It comes into effect when the case is filed and ends when the discharge is issued. The automatic stay is extremely important because it can stop wage garnishments, law suits and other attempts to collect money from you.
Some types of debts are what we call non-dischargeable. This means that the discharge does not apply to the debt and the creditor can still collect the debt from you.
1. Child support
2. Student loans
3. Most taxes
4. Municipal fines
5. Criminal fines
You can also agree that this discharge will not affect a particular debt, particularly a secured debt. You can enter into a reaffirmation agreement with a creditor. This means you agree that the discharge does not apply to the debt. We do not recommend this and it should only be done with extreme caution.
Should you have any questions about what debts are dischargeable or how the discharge works, please give us a call.
At Illini Legal Services, we offer a free in person consultation to each of our clients. During your consultation, we will take the time to listen to your financial concerns and assess your case and individual situation. We have four locations to serve you. Contact us today for help!
Illini Legal Services is engaged in the private practice of law and is not a public legal aid agency. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.