Many people have the misconception that all of the debts they have will be erased when they file for bankruptcy. Under the bankruptcy code, there are some debts that are dischargeable while others are nondischargeable. Which debts are discharged in bankruptcy may also depend on whether the debtor files for protection under Chapter 7 or Chapter 13 of the bankruptcy code.
What is a discharge and how does it work?
In bankruptcy cases, a discharge of debt means that the debtor is no longer responsible for paying it. While the debt does not disappear, the creditor is prohibited from trying to collect on it and the debtor is not legally obligated to repay it. Liens that are secured by your real or personal property are not discharged and will remain. This means that the lienholder may take action to recover the property if payments are not made by the debtor.
In a majority of Chapter 7 bankruptcy cases, the debtors automatically are granted discharges at the end of their cases. The discharge is normally granted by the bankruptcy court 60 days following the meeting of creditors, which means that a discharge in Chapter 7 bankruptcy will happen somewhere between four and six months after you first file your petition.
Chapter 13 bankruptcy cases are different. In Chapter 13 cases, the debtor makes payments on his or her debts over a period of time lasting between three and five years. At the end of the repayment plan, his or her remaining dischargeable debts are then discharged.
Dischargeable debts in Chapter 7 bankruptcy
While some types of debts are nondischargeable, most of your debts are likely to be discharged under Chapter 7. Only those debts that were incurred prior to the Chapter 7 filing debt may be discharged, and any new debts you incur after you file will be your responsibility.
Under the bankruptcy code, there are categories listed of debts that are nondischargeable. Any debt that you have that isn’t in one of those categories may be discharged unless you committed fraud or another type of misconduct in incurring them.
Here is a listing of common types of debt that are dischargeable: