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You want to go through bankruptcy to get a discharge. The problem is, you likely have no idea as to what that means.
In the real world, a discharge is grounds for a trip to the doctor.
But in the world of bankruptcy, a discharge is a legal release from personal liability for payment of a debt.
Doesn’t help? OK, how about this:
When the bankruptcy court discharges you from a debt, you don’t have to pay it back. Not now, not ever.
Of course, there’s more to it. Here’s your handy guide to the discharge in bankruptcy.
What Is The Discharge In Bankruptcy?
As with everything online, when defining a term we look to Wikipedia. It’s not always perfect, but this is fairly accurate:
A discharge in United States bankruptcy law, when referring to a debtor’s discharge, is a statutory injunction against the commencement or continuation of an action (or the employment of process, or an act) to collect, recover or offset a debt as a personal liability of the debtor. The discharge is one of the primary benefits afforded by relief under the Bankruptcy Code and is essential to the “fresh start” of debtors following bankruptcy that is a central principle under federal bankruptcy law.
Simply put, the discharge is what prevents a creditor from trying to collect money from you after the bankruptcy is completed.
What Debts Are Discharged In Bankruptcy?
The discharge differs based on the type of bankruptcy case you file.
In a Chapter 7 bankruptcy case, most of your debts are wiped out when the discharge is issued. There are, however, some exceptions such as:
- certain tax debts;
- debts for spousal support (alimony) or child support;
- debts to government agencies for fines and penalties;
- student loans;
- debts for personal injuries incurred as a result of DWI/DUI; and
- court fines and penalties, including criminal restitution.
In a Chapter 13 bankruptcy, some marital debts can be wiped out. In addition, the Chapter 13 Plan allows you to wipe out some second mortgages, catch up on arrears on mortgages and car loans, and pay off tax debts that couldn’t be wiped out in a Chapter 7.
There are some nuances, such as when you file a Chapter 13 bankruptcy and can’t complete the Plan. In that situation you may be able to qualify for a hardship discharge, which differs to some extent from the regular one in a Chapter 13 case.
There are also limits to your ability to get a discharge after a previous bankruptcy case.
Related:
- Chapter 7 Bankruptcy Explained
- Chapter 13 Bankruptcy Explained
- Hardship Discharge In Chapter 13 Bankruptcy
- Getting A Discharge After You’ve Been Through Chapter 7 Bankruptcy
When Does The Discharge Get Handed Down?
The discharge is handed down at the end of the bankruptcy case.
For Chapter 7 cases, that’s about 120 days after filing.
In the Chapter 13 situation, discharge occurs when the Plan is completed.
The Form Of The Discharge
The Discharge of Debtor is a one-page document that’s generated by the Clerk of the Court and stamped with the bankruptcy judge’s name or signature. It doesn’t list each debt on your bankruptcy, and looks like a form.
In fact, it is a form.
Related:
- How Long It Takes To Complete Chapter 7 Bankruptcy
- Click here to see the Chapter 7 Discharge form.
- Click here to see the Discharge of Debtor After Completion of Chapter 13 Plan
Collections After Discharge
Just because a debt has been discharged doesn’t mean the creditor will follow the law.
In fact, sometimes creditors will sell your debt to another company that will try to collect the debt from you.
That’s illegal under not only the bankruptcy laws but also under other state and federal collection laws.
Protect Your Discharge
For the most part, the discharge is forever.
Though there are some situations in which your discharge can be revoked (that is, taken away) by the bankruptcy court, that’s exceptionally rare. Learn about revocation of your bankruptcy discharge by clicking here.
It’s the most powerful remedy the law provides against creditors and debt collectors. By drawing a line in the sand and forbidding your creditors from crossing it, the discharge gives you peace of mind that lasts forever.
CREDIT One of the biggest concerns that I hear from clients who are interested in filing for bankruptcy is whether or not they’re going to be able to get credit again in the near future. It’s amazing that someone who is struggling financially will worry about future credit before they have even gotten out of+ Read MoreThe post Concerns From A Person Filing For Bankruptcy appeared first on David M. Siegel.
The main goal in filing a Chapter 7 bankruptcy case is to discharge your debts. However, to get a discharge, a debtor has to disclose all assets and provide an accurate valuation of the assets.
Last month, a court revoked the discharge of a debtor, Jerry Jones, who failed to be completely forthright about his assets. When Mr. Jones filed his bankruptcy schedules, he did not admit to owning several assets. Even when he testified under oath to the bankruptcy trustee, Mr. Jones omitted a number of assets and undervalued other assets, largely valuing them at zero.
Mr. Jones eventually got his discharge in due course. However, within a year of the date the discharge was granted, the United States Trustee discovered the debtor had omitted and undervalued assets in his bankruptcy schedules, and brought an adversary action to revoke the discharge. After two days of hearings, the bankruptcy court ruled that the debtor’s omissions and undervaluations violated 11 U.S.C. §727(a)(4) and revoked the discharge. On appeal, the Ninth Circuit affirmed.
Thus, it is crucial in filing bankruptcy cases that a debtor is honest about what she owns and that she provides a fair value of the items declared.
The name of the case discussed in this article is Jones v. U.S. Trustee, Eugene, ___ F.3d ___, 2013 WL 6224330 (9th Cir. 2013 Dec. 2, 2013 Dkt. no. 12-35665) Here is link to the Court's opinion: Jones case
Photo Credit: http://www.flickr.com
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for January 21, 2014 Divvy supplier rides its bikes into bankruptcy Hubway’s Canadian Supplier Files for Bankruptcy Retailer Dots Files for Chapter 11
Bankruptcy is known for providing financial relief in various ways that help debtors get a fresh start and regain financial control. You may be able to stop foreclosure, prevent or regain utility service, or avoid repossession. Even though there are different bankruptcy chapters you have the ability to get help you need through the following: [...]
The elderly are less prepared for retirement and deeper in debt than ever before.
The Employee Benefit Research Institute’s 2013 Retirement Confidence Survey reveals that only 46% have saved less than a total of $10,000 towards retirement.
The think tank, in its report entitled, Debt of the Elderly and Near Elderly, 1992–2010, found that the percentage of households with credit card debt headed by someone age 75 or older doubled from 11% in 1998 to 22% in 2010.
A 2010 study from the University of Michigan Law School, called The Rise in Elder Bankruptcy Filings, found that those 65 and older are the fastest-growing segment of the U.S. population seeking bankruptcy protection.
Is it a good idea, or just more of the same?
Caught Between A Rock And A Hard Place
It used to be that the elderly scorned debt. As children of the Great Depression, they knew all too well the dangers of being in debt.
Over time, however, the realities of declining economic fortunes set in. With fewer traditional pensions to fall back on, easy credit and a need to help younger family members survive financially, parents and grandparents began to march towards the red line of debt.
Bankruptcy Protects Social Security And Retirement Accounts
If you’re receiving Social Security benefits or have a retirement account, it’s not going to be taken when you file for bankruptcy.
In addition, the monthly Social Security benefits won’t be counted as income when deciding whether you make too much to file for bankruptcy to wipe out your debts without making payments through the court system.
Save Your Assets For Next-Of-Kin
You’ve been working your entire life. You want to be able to leave something to loved ones.
You may not be able to protect your assets from creditors in a probate proceeding to the same extent as would be possible in bankruptcy.
For that reason, it may make sense to use a bankruptcy filing as an estate planning mechanism.
Let The Golden Years Be Golden
You’ve got a choice.
You could spend your later years mired in debt, dealing with collection calls and letters from angry people demanding money.
Or you could enjoy some peace and quiet with loved ones, passing the days as you see fit.
As far as I’m concerned, the latter seems like the better choice. Even if you’ve got nothing that the creditors can take, the peace of mind offered by the protection of the bankruptcy laws is a powerful tool.
With the start of a new year, many consumers considering bankruptcy may wonder when it is a good time to file. You may be surprised to learn that now may be the best time. Discussing your options with a bankruptcy attorney may help you understand timing more accurately and how it can help your personal [...]
Want to buy a home after bankruptcy and qualify for a mortgage?
Thanks to various government programs, you can – and a lot faster than you would expect.
The government knows how many people file for bankruptcy each year, and recognizes that preventing them all from becoming homeowners would kill the real estate market.
Luckily there are a number of programs out there to help you get a mortgage after bankruptcy.
FHA Mortgages As Soon As 1 Year After Bankruptcy
Under the Federal Housing Authority’s Back To Work – Extenuating Circumstances program, you can qualify for an FHA mortgage if you filed for bankruptcy as a result of an economic hardship that caused more than a 20% drop in household income:
- for a Chapter 7 bankruptcy, a minimum of twelve (12) months have elapsed since the date of discharge;
- for a Chapter 13 bankruptcy that has gone to discharge, all required bankruptcy payments were made on-time;
- for a Chapter 13 bankruptcy that’s still pending, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time.
In all other situations, you must wait two (2) years after a Chapter 7 bankruptcy discharge and one (1) year after a Chapter 13 bankruptcy has been discharged or dismissed.
Related:
Mortgages For Veterans
The U.S. Department of Veterans Affairs helps Servicemembers, Veterans, and eligible surviving spouses become homeowners by guaranteeing various home loans provided by private lenders.
Generally, Chapter 7 and Chapter 13 bankruptcies discharged more than 2 years ago may be disregarded for the purpose of a VA loan.
For bankruptcy cases discharged between 1-2 years, the lender will look to your recent post-bankruptcy history of satisfactory consumer payments as well as evidence that the bankruptcy was caused by circumstances beyond your control.
For people in a current Chapter 13 bankruptcy, the lender must document that the applicant has satisfactorily paid on the plan for at least 12 months. Court approval of the new loan is also required.
Related:
Going To Fannie And Freddie After Bankruptcy
Conventional mortgages tend to be originated under guidelines established by Fannie Mae and Freddie Mac.
If you filed a Chapter 7 bankruptcy, you’ll typically have to wait at least two years to be eligible for a mortgage if your bankruptcy was caused by extenuating circumstances. If no such circumstances exist, then you’ll have to wait four years.
If you filed a Chapter 13 bankruptcy then the minimum waiting period could be as little as one year from discharge.
Not Too Long To Wait
When you get out of bankruptcy there’s a good chance that you don’t have a lot in the way of savings. Take the time to get together a downpayment as well as a cushion to avoid future financial difficulties. By the time you’re ready, you’ll likely be able to apply for – and receive – a mortgage without much trouble at all.
In Oregon, the court imposed filing fee for a Chapter 7 bankruptcy is $306. Chapter 7 Bankruptcy filers have the option of paying this filing fee after their cases are filed. Our office prepares the required application for you so that you can get your case filed quickly and pay the filing fee later. If you do choose this option, the Oregon Bankruptcy Court will impose an installment payment schedule that will enable you to make three monthly payments of $102 in the three months after your case is filed
It is critical to remember a couple things. First, while the court is happy to accept payments, it is not going to work with you when it comes to their timing. Your case will likely be dismissed within moments if it does not arrive on time. It is critically important that the payments be made on time. Second, the court is not going to take a credit card or debit payment over the phone, the payment must be received by the due date. The repercussions for not making the payment on time are severe. Your case will be dismissed and can only be reopened if the entire filing fee is paid in full plus the reopen fee of $260. If you can pay off the filing fee early, do so.
When it comes to Chapter 13 Bankruptcy cases, the court filing fee is $281. The installment arrangement is available. The court requires that $125 be paid up front and the remaining $156 be paid off within the next 45 days.
If you can pay off the applicable filing fees prior to filing by all means do so. If you do want to pay them in installments that’s fine too, just keep in mind that the court is not a flexible creditor. You will receive an order in the mail shortly after your case is filed spelling out the forms of allowable payments, the due dates and the payment address. Be on the look out for it(unfortunately while it comes in a very official looking envelope, it is flimsy enough to get caught up in your junk mail). Save it and if you lose it, call us immediately so that we can get the information to you.
If you do have any questions about the Oregon Bankruptcy Filing Fees, please do not hesitate to call me directly at 503-860-6868.
The original post is titled Oregon Bankruptcy Filing Fee Installment Plan , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Your creditors can force you into bankruptcy – literally and figuratively.
At least twice a week someone tells me that they’d never file for bankruptcy if only their creditors would “work with them.”
It’s as if the credit card companies, car lenders and mortgage banks are conspiring against you.
What you don’t know is that in some ways, they are doing just that.
Creditors Often Don’t Care If You File For Bankruptcy
When you go past due on a debt, the creditor will try to collect for awhile. Then, after 180 days, the creditor is required to charge-off the debt.
That doesn’t mean you don’t owe the money anymore, however. Charge-off is nothing more than an accounting term that means, “we don’t reasonably expect that this debt is going to be paid voluntarily.”
When the debt is charged off, most creditors will sell the account to a debt buyer. Often, the deal is done years in advance by means of a forward flow agreement (sometimes called a future flow agreement).
The creditor makes back some of the losses, takes a tax write-off for the rest of the unpaid balance, and is out of it entirely. If you pay the debt, the money goes to the debt buyer as profit.
Sometimes, Creditors Want You To File For Bankruptcy
If you file for a Chapter 13 bankruptcy, your creditors will get paid back some of what’s owed to them. Secured creditors will be paid in full, as will folks like taxing authorities.
If you file a Chapter 7 bankruptcy and have non-exempt assets that the trustee takes and sells, your creditors will be paid through the proceeds of sale.
In both situations, creditors are happy with the prospect of you filing for bankruptcy.
Involuntary Bankruptcy – A Rare Situation
In very limited situations, creditors can formally force you into bankruptcy under either Chapter 7 or Chapter 11. This is called an involuntary bankruptcy, and can happen only in limited situations.
Related:
If you have fewer than 12 creditors, just one creditor can file an involuntary bankruptcy petition against you. If you’ve got more than 12 creditors, at least 3 of them need to come together to file a bankruptcy case against you.
In order for a creditor to file an involuntary bankruptcy proceeding against you, that creditor must have a debt that’s not in dispute and prove to the court that you’re not paying your debts as they come due.
Involuntary bankruptcy is rare for individuals, and it’s used primarily if the creditors get together and see that you’ve got major assets that you’re trying to hide – assets they could get if you were in bankruptcy.
It’s rare because most people have institutional consumer creditors – Citibank, Chase, Wells Fargo and the like. These companies have procedures in place for the sale of debts, recovery of money and other collection actions.
Involuntary bankruptcy is more expensive for them given the relative low debt level associated with each account.
Psychological Terror Tactics More Common
Though creditors don’t often force people into involuntary bankruptcy, it’s not uncommon for people to feel as if that’s exactly what’s happening.
Collection calls, threats of lawsuits and wage garnishments, and the general fear of uncertainty makes it feels as if they’re forcing you into a corner.
For some, bankruptcy provides an escape hatch. The law operates as a steel gate, slamming down between you and the companies that are terrorizing you day and night.
It happens far more often than involuntary bankruptcy, and that’s good because it provides you with control over your financial situation.
Your Remedy, Your Choice
In the end, bankruptcy is seldom truly involuntary. People who need the relief may feel as if they’re being forced into bankruptcy, but the reality is far different.
Look at your choices for debt relief and decide which one works best for you.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.