The Bankruptcy Discharge: Good-Bye Debt – Hello New Lease On Life!
The final decree at the conclusion of a chapter 7 bankruptcy case is a Court Order entitled: DISCHARGE OF DEBTOR(S). It is signed by a bankruptcy judge and states the debtor(s) are hereby granted a Discharge of all dischargeable debts. It prohibits any further collection activity on discharged debts and outlines the penalties any creditor is subject to for a collection effort. Each creditor listed in a bankruptcy receives a copy of the Discharge.
Once the Discharge comes through, being about four months after filing the case, my clients are no longer legally responsible for their debts, with certain, narrow exceptions, being:
1.) student loans
2.) IRS debts less than 3 years old
3.) child support or alimony obligations
4.) a D.U.I. or fraud judgment
As discussed in another of my blogs, secured debts (autos that are liened, home mortgages and equity lines, etc.) can be discharged, but the car or home must be surrendered back to the lender. Alternatively, these types of assets can be retained by my client, but the payments must be be kept up and we will enter into a Reaffirmation Agreement with the lender confirming this.
But the effect of the Discharge is that all the unsecured debt, such as credit cards, payday loans, unsecured lines of credit (no collateral pledged), medical bills and the like are forever gone. My clients now have a fresh start, a clean slate, a new lease on their lives.
I am going to toot my own horn here, but the truth is I cannot recall any client who has regretted filing. As an experienced South Florida bankruptcy attorney I have made the process as comfortable as can be, I have explained everything that has been asked, and in the end the people I help are just relieved to no longer have to scrape to just get by. Especially free from further anxiety are those clients whose wages or bank accounts have been seized and garnished, as the Discharge not only prohibits any further garnishments or seizures, it additionally wipes out or renders null and void the existing judgment by which the creditor was able to garnish in the first place.
The Discharge also allows a person who has had their driver’s license suspended due to not having auto insurance at the time of an accident (in Florida called the Financial Responsibility law and a Financial Responsibility DL suspension) to have their license reinstated without having to pay anything to the party (insurance company or lawyer) who caused the license to be suspended and, best of all worlds, voids whatever monetary claim is owed to the insurance company. Absent this or payment to the satisfaction of the insurance company, the license remains suspended. These amounts are usually fairly large and payment arrangements can be made, but like a huge credit card or medical bill, you are going to be paying forever.