Being in debt and receiving endless calls from creditors can be devastating. Declaring bankruptcy stops these calls, protects you from legal actions and ends wage garnishment through a temporary stay or order to halt those actions from the court.
When you successfully file for bankruptcy, the court will – in due time – enter an order that discharges most or all of your debts. Here is what you should about a bankruptcy discharge:
The discharge is a permanent bar to collection efforts
When a bankruptcy case is closed and a discharge is granted, creditors are permanently barred under the law from taking any kind of action to collect on those discharged debts.
A creditor who attempts to collect a discharged debt may be held in contempt of court, and they may be required to pay damages to the debtor.
Not all debts can be discharged
It’s important to know that not all debts are dischargeable under bankruptcy proceedings. For example, debts that are secured by real property, certain liens, most student loans, certain tax debts, child support and alimony arrears cannot be discharged.
In addition, a debt may not be discharged if the creditor successfully challenges a debtor’s right to relief in bankruptcy court. While this rarely happens, it sometimes comes up if a debtor ran up a big bill on a credit card or took a personal loan after they knew they were insolvent. A debtor who otherwise abuses the bankruptcy process, such as by hiding their assets, may also be denied a discharge.
Being discharged is the goal when filing for bankruptcy. It helps to have legal guidance that’s specific to your situation if you’re considering this step.