What Is A Discharge In Bankruptcy?

In Willy Wonka and Chocolate Factory, everyone was hunting for the Golden Ticket so they could get a tour of the chocolate factory.  The Golden Ticket in every chapter 7 bankruptcy in Fresno, and everywhere else, is the Discharge Order.  

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts, like credit cards, medical bills, and missed payments.  In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order!  No creditor of the debtor is allowed to make any collection effort with the debtor, including lawsuits, wage garnishments, telephone calls, letters, and personal contacts.

Unfortunately, the Golden Ticket, "Discharge Order", does not erase valid liens such as property mortgage liens, car liens, or even dishwasher liens if you bought them from Home Depot.  Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.  They are allowed to repo the car, the Kirby vacuum cleaner, and foreclose on the house.

WHEN DOES THE DISCHARGE OCCUR?

In a chapter 7 bankruptcy, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting). Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court.

HOW DOES THE DEBTOR GET A DISCHARGE?

Unless a lawsuit is filed in the Chapter 7 bankruptcy, the debtor automatically receives a discharge. The debtor does not have to do anything, except wait by the mailbox.  A copy of the discharge order also is mailed to all creditors named in the bankruptcy petition.  The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection.
They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt.

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