The way that Chapter 7 bankruptcy offers relief is through the discharge it provides. The discharge is the main reason people use Chapter 7, and it is very important to understand how this works if you plan to file for bankruptcy. Here are three things you should understand about the discharge before meeting with a lawyer for an evaluation of your finances and situation.
What it means
The discharge you receive when your case is complete is a legal term that states that you no longer owe the money for the debts included in the discharge. The discharge eliminates, forgives, and wipes out the debts you have that are included in it. When you receive a discharge for any of your debts, you will never legally have to repay them. The deal is done when the court issues the discharge, and you will never again be responsible to pay these debts. The discharge makes it as if they had never existed.
The debts it includes and excludes
The discharge from a Chapter 7 case may include a lot of the debts you owe, but there is a good chance it will not include all the debts you have. Courts will only approve a discharge for debts they consider qualifying debts. An example of this is credit card debt. Most unsecured debts fall into this category too. Debts that are not qualifying debts will not receive the discharge, which means that you will still owe the money for them if you file for bankruptcy. You should find out before you file which category your debts will fall into so that you know which ones will be forgiven and which ones will not.
There is a chance you will lose assets
Receiving a discharge of your qualifying debts is the top reason you are probably thinking about using bankruptcy, but you should know that there is a trade-off for this for some people. If you have assets that are worth money and have equity in them, you might be told that you must surrender these things. The trustee can take them to sell and will repay discharged debts with the money collected from selling your things. If you have nothing to sell, then you will not lose any assets.
If you are interested in learning more about bankruptcy discharges and the types of branches available to use, contact a Chapter 7 bankruptcy attorney to schedule a free evaluation of your situation.