Discharging debts while claiming bankruptcy refers
to honest debtors legally eliminating debt owed to creditors. A debt
refers to any money owed to any entity. But, don't think that claiming
bankruptcy means any and all debt that you have incurred will
disappear. There are some restrictions in what types of debts can be
erased.
The speed in which your debts are discharged can vary depending on the type of bankruptcy you have filed. Chapter 7 bankruptcy filings can have debts begin to be discharged in as little as four to six months. In a Chapter 11, the discharge happens once a plan has been agreed upon and confirmed.
Chapter 12 or 13 filings have debts discharged after the debtor
completes all of their payments under their specific Chapter 12 or 13
plan. These discharges usually occur in 4 to 6 years since repayment
plans for Chapter 12 and 13 are usually spread over 3 to 5 years.
Debts that usually can not be discharged:
Some of the most common types of debts that are not allowed to be discharged in a bankruptcy case are back money owed for child support and/or spousal support (alimony),
certain types of tax debts, debts that were not listed on the schedules
the debtor filed with the court for their bankruptcy claim, debts
incurred as a result of willful and malicious injuries to a person or
property, debts owed to the government in relation to fines or
penalties (such as unpaid tickets) and debts for most types of
government funded or guaranteed educational loans.
ADVERTISEMENT
Some possible credit card discharge issues:
Credit card debt is one of the most common types of debts claimed for a
discharge in bankruptcy. When you request a discharge on a debt owed to
a credit card company, they can challenge that discharge (called a non
discharge ability action), depending on the circumstances. In general,
the longer the amount of time between your last use of the card and
when you file for bankruptcy, the better.
If you bought a new TV on a card a week before you filed for
bankruptcy, you can bet that the creditor is going to challenge the
discharge. Other "red flags" for credit card companies that may cause
them to challenge your discharge can be: a newly issued card, large
cash advances made in the months leading up to your filing for
bankruptcy, the use of your card for recent vacations and some others.
However, just because a non discharge ability action is challenged does
not mean it will be granted. If you are concerned that a creditor may
try to block your request for discharge, you can try waiting to file in
order to put some time in between the last use and when you file
bankruptcy.
You can also challenge it in court, settle with any creditor who tries to block a discharge or convert to a Chapter 13
in which even debts that may have been incurred fraudulently can be
discharged. Do your research and make a decision that best fits your
situation.
For more information about discharges in bankruptcy, you can refer to Title 11 > Chapter 5 > Subchapter II of the United States Code. Click here if you need more information about how to file bankruptcy.
Related Articles:
+ Information about student loans in regards to bankruptcy
+ Learn how child support is treated during bankruptcy
+ Make sure you've exhausted all alternatives to bankruptcy before filing
+ Discharging credit card debt during a bankruptcy filing