Discharging Debts in Bankruptcy Cases

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.

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