If you are already reading about bankruptcy, it likely means you are in a precarious financial position. And it would not surprise you to encounter the phrase bankruptcy discharge in your research. So, is there any difference between bankruptcy and bankruptcy discharge?
What is a bankruptcy discharge?
Bankruptcy is a legal recourse aimed to help a person or business who is unable to repay debts. It can be employed through bankruptcy discharge or creating a repayment plan. Bankruptcy discharge aids a debtor by releasing them from paying certain debts. A court order gives you a reprieve from paying your debts except for debts on:
- Child support
- Alimony
- Student loans
- Taxes
- Fines imposed by the court or due to criminal restitution
- Personal injury that you caused due to alcohol or drugs
Instead, a bankruptcy discharge does help you with largely considered unsecured debts such as credit card bills, medical debt, personal loans from others, rent that’s past due, as well as utility bills and debts from civil court judgments. However, it would be best to remember that these creditors may have the right to contest your bankruptcy discharge depending on the type you have filed.
How does a bankruptcy discharge work?
You should list all your property and debts in the document so the judge can include them in the discharge list. Take note that you can only include debts that arose before the date you filed. Also, any debt related to fraud gets excluded from the discharge list.
Two of the most common bankruptcy types are Chapter 7 and Chapter 13. A Chapter 7 discharge case can take four to six months to process and, upon approval, automatically discharges eligible debts unless there are legal contests from creditors. Meanwhile, Chapter 13 is a debt restructure or repayment plan that lasts between 3 and 5 years, depending on factors of the individual’s finances. The remaining unsecured debt is generally eliminated after the repayment plan is successfully completed.
Either way, getting solid legal support to handle a bankruptcy discharge should be your first step toward financial freedom.