Chapter 7 Discharge
The primary benefit of Chapter 7 bankruptcy is the discharge of certain debts. Removing certain debts from your plate would free up your finances and provide you with a fresh start. There is a catch, of course.
Only certain debts are eligible for discharge under Chapter 7, and you will have to endure the bankruptcy process before you can reap its benefits. You will also have to complete a financial course, and hope creditors and the trustee do not object your discharge. Speak with a bankruptcy attorney if you need help having your debts discharged.
Bankruptcy Attorney in Dallas County
Bankruptcy is not a DIY project. Many people who try to represent themselves find the process is overwhelming. Linda Littlefield has been helping consumers and small businesses with bankruptcy for nearly 25 years. She will guide you through the process and help you understand what happens after your case is closed.
Call (972) 812-0900. Littlefield Law Firm is available to answer any questions you have. Linda Littlefield assists clients with bankruptcy in Dallas County, Collin County, Kaufman County and Rockwall County.
- What is Discharge?
- Debts Eligible for Chapter 7 Discharge
- Debts Not Eligible for Chapter 7 Discharge
- Additional Resources
What is Discharge?
A bankruptcy discharge is a court order issued at the end of a Chapter 7 case that relieves you of obligations for certain debts. Essentially, you are no longer legally required to pay any debts that have been discharged. A discharge is a permanent court order that also prohibits creditors from making any efforts to collect payments on the discharged debts. This can include legal action and communication such as phone calls, personal contact and letters.
All eligible debts will be discharged 60 days from the date of your meeting with creditors and the trustee (341 meeting). However, you will have to complete a debtor education course before the debts are waived. You will have 60 days from the date of the 341 meeting to complete the course. Failing to do so will result in your case being closed without discharge, and you will have to start the bankruptcy process over from the beginning.
Debts Eligible for Chapter 7 Discharge
Most unsecured debts can be discharged by Chapter 7 bankruptcy. Unsecured debt is any debt without a lien attached to it, such as credit card balances and medical bills. Secured debts such as car loans and mortgages, can also be discharged but the collateral property will either need to be returned to the creditor or sold off to pay off the secured interest.
Listed below are debts eligible for Chapter 7 discharge:
- Credit card debt
- Medical bills
- Personal loans
- Promissory notes
- Most debts from a car accident
- Lease and contract obligations
- Lawsuit judgements, but not associated liens
Some creditors may not be keen on you filing for bankruptcy and may attempt to convince a bankruptcy judge certain qualified debts should be labeled non-dischargeable. A judge has the discretion to declare qualifying debts as non-dischargeable on their own accord or by requests from creditors.
Unsecured debts that may be labeled non-dischargeable include:
- $750 or more of luxury purchases on credit within 70 days of filing
- $1,000 or more of cash loans or advances taken within 90 days of filing
- Debts incurred from fraud
- Debts from breach of trust, larceny or embezzlement
- Debts incurred from malicious behavior
- Debts from a divorce, unless
- The debtor could still not afford the debt after bankruptcy; or
- The benefits of discharging the debt outweigh debts to the ex-spouse
Debts Not Eligible for Chapter 7 Discharge
The Federal Government does not allow all debts to be waived by Chapter 7 discharge. The majority of ineligible debts are those stemming from other legal issues such as family law matters and criminal proceedings. Many people are shocked to find that student loan debt cannot be discharged by Chapter 7. The only time student debt is eligible for chapter 7 discharge is if paying back the loan would cause undue hardship.
Other unsecured debts that cannot be waived by Chapter 7 bankruptcy include:
- Backed family support such as child support and alimony
- Income tax debts from the past three years
- Debts from a personal injury or wrongful death case caused by driving under the influence
- Penalties and fines from a criminal conviction, traffic tickets and restitution
- Debts you fail to disclose in bankruptcy proceedings
Bankruptcy Basics | United States Courts – Visit the official website of the United States Courts to learn more about discharge in bankruptcy cases. You can find answers to questions such as can a discharge be revoked, if a debtor can pay a discharged debt once a case is closed and what a debtor can do it a creditor tries to collect discharged debts.
Liquidation | United States Code – Follow the link provided to read the section of the U.S Code over Chapter 7 bankruptcy, also called liquidation. You can learn about the duties of a trustee, see when a debtor will not be granted discharge and how a trustee will treat certain liens. The statute can be read on the Legal Information Institute website, an online legal resource provided by Cornell Law School.
Bankruptcy Lawyer in Dallas
The trustee and creditors have the power to ask the court to revoke your discharge. Linda Littlefield is 100% devoted to bankruptcy law, and she will stop at nothing to ensure you receive the financial relief you deserve. Contact Littlefield Law Firm today if you are having a difficult time having your debts discharged.
Call (972) 812-0900 to schedule a consultation. We are based in Dallas, but regularly represent clients in areas such as Plano, Kaufman and Heath.