Debt discharge occurs when a court rules that the debtor is no longer liable for certain debts that they previously owed. It can often be the case in individual bankruptcy cases under Chapter 11.
This blog will serve as a brief overview on how debt discharge works in more detail, and will answer some commonly asked questions.
How does a debtor get a debt discharge granted?
Discharges usually happen automatically in accordance with Chapter 11 bankruptcy guidelines. The Federal Rules of Bankruptcy Procedure says that the bankruptcy court clerk should mail a copy of the order of discharge to all creditors and other stakeholders involved.
When does the debt discharge occur?
Under individual Chapter 11 bankruptcy cases, the court typically grants the debt discharge as soon as possible after the debtor has completed his or her approved plan to repay some of his or her debts.
Are all debts discharged or only some?
All debts are never discharged completely. The purpose of debt discharge is mainly to make it possible for an individual to get back on track financially while repaying as many debts as is realistically possible. There are some types of debts that are under no circumstances dischargeable, and these include:
- Spousal or child support debts
- Debts from property settlements in divorce
- Certain types of tax claims
- Debts for malicious injuries to a person or property
- Debts that were not declared by the debtor in his or her filing for bankruptcy
If you have more questions about debt discharge or are considering filing for Chapter 11 bankruptcy, an experienced attorney can help you learn more about the process.
Source: FindLaw, "The debt discharge in bankruptcy faq," accessed Aug. 1, 2017