Chapter 7 DischargeA discharge lets go of debtors that are individuals from liability that is personal for many debts and stops creditors from taking actions of collecting against that debtor. Due to the fact that a discharge of chapter 7 has lots of exceptions, it is a good idea for debtors to find counseling from competent legal counselors before filing to talk about the discharge's scope.
In general, not including cases that are converted or dismissed, debtors that are individuals get a discharge in over 99% of cases of chapter 7. For most cases, unless any party of interest has a complaint file that objects to this discharge or has a motion to prolong the objection time, the court of bankruptcy issues an order of discharge pretty early in a case - in general, about 60 to about 90 days after the first date set for the creditors' meeting.
The requirements set to deny a debtor that is an individual a discharge in cases of chapter 7 are tough and are defined against the party that is moving. The court has the option of denying a discharge if the court finds out the debtor: didn't have sufficient financial records; didn't explain loss of assets in a satisfactory manner; committed a crime of bankruptcy; didn't obey an order of the law of the court of bankruptcy; concealed, transferred, or destroyed property fraudulently which would have turned into the estate's property; or didn't finish an instructional course that was approved about management of finance.
Secured creditors may keep some rights to take property that is securing a debt even after there is granted a discharge. Based on circumstances of the individual, if the debtor wants to retain certain property that is secured, she or he could do something called reaffirming the debt. This is agreeing between the creditor and the debtor so that debtor shall stay liable and shall pay a portion or all the money that is owed, although the debt would've been discharged in bankruptcy anyway. The creditor will promise that the creditor won't repo or take an automobile or some other property as long as that debtor keeps paying the debt.
In the event that the debtor chooses to have a debt reaffirmed, she or he has to have it done before there is an entered discharge. The debtor has to sign an agreement of reaffirmation and have it court filed. The Code of Bankruptcy mandates that agreements of reaffirmation have a vast amount of disclosures detailed in section 524(k). These disclosures have to inform debtor of the debt amount that is reaffirmed and the method of calculation and this reaffirmation will have the personal liability of the debtor not be bankruptcy discharged. These disclosures also mandate that the debtor has to file and sign a statement of her or his income that is current and expenses that show the income balance expenses paying is enough to pay the debt that is reaffirmed. If this is not enough to repay the reaffirmed debt, there is a hardship presumption, so the court could decide to not approve agreement of reaffirmation. The judge of bankruptcy has to approve the agreement of reaffirmation unless that debtor is attorney-represented.
In the case that a debtor has an attorney to represent them, with the agreement of reaffirmation, that attorney has to, in writing, certify that she or he counseled that debtor of the consequences and effect of that agreement, which has a default included. The attorney also has to certify that this debtor was informed fully and made this agreement voluntarily and the debt reaffirmation won't start the undue hardship that is for the debtor or his or her dependants. The Code of Bankruptcy needs a hearing of reaffirmation in the case that the debtor was not attorney-represented in the agreement negotiation, or if that court does not approve the agreement of reaffirmation. The debtor can voluntarily pay any debt even if an agreement of reaffirmation is present.
An individual gets a discharge that discharges most of the debts that are in a case of chapter 7 bankruptcy. A creditor can no longer continue or initiate any action, legal or not, against that debtor for the collection of discharged debt. Not all the debts of the individual in chapter 7 are discharged. Debts that aren't discharged are such as debts for child support and alimony, some taxes, debts for some benefit of education overpayments or the loans guaranteed or created by a unit of government, debts for malicious and willful injury started by the debtor and inflicted upon some other entity or to the entity's property, death debts or injury that is personal that is caused due to the operation of the debtor of a vehicle that is a motor vehicle during alcohol intoxication or some other substance, and the debts that are for some orders of restitution of criminals. The debtor shall keep being liable for those kinds of debts for the extent of them not being paid in the case of chapter 7. Debts that are for property or money gained by pretenses that are false, debts that are for defalcation or fraud while being in a capacity of fiduciary, and debts that are for malicious and willful injury perpetrated by that debtor to some other entity or to some property of some other entity shall be discharged except for the case where a creditor files in a timely manner and succeeds in the action for these debts to be declared as non-dischargeable.
The court can revoke a discharge of chapter 7 by a creditor, the trustee's request, or by the U.S. trustee in the case that the discharge became obtained by fraud due to the debtor, in the case that the debtor secured property that is the estate's property and fraudulently and knowingly did not report the property's acquisition or give up the property to that trustee, or in the case that the debtor creates a misstatement that is material or does not to give information or documents that are in connection with the audit of the case of the debtor.