Debt discharge in bankruptcy is legal process to eliminate debt. You receive a discharge if you complete your bankruptcy case successfully. The final paperwork from the Sacramento Bankruptcy Court, or wherever someone files, is an order. It is a discharge order. That is an order issued by the United States Bankruptcy court forever discharging your debts. It also forever bars your former creditors from collecting on that debt. If your creditors try to collect on discharged debt, they can be sanctioned by the bankruptcy court. And if you catch your creditors collecting on discharged debt you can be reimbursed for attorney fees for your efforts. That can add up.
Though the debt discharge in bankruptcy eliminates your debt, it cannot eliminate all debt. Certain debts cannot be discharged. Income taxes, DUI damages or family support cannot be discharged. Similarly, student loans cannot ordinarily be discharged in bankruptcy. But stay tuned on student loans. As this recent news story points out, bankruptcy laws may allow some student loans to be discharged.
You can reduce your non dischargeable debt in some bankruptcy cases. Chapter 13 bankruptcy provides for the repayment of a portion of your debt. That debt repaid can include non dischargeable debt. So even if you cannot get a debt discharge in bankruptcy for certain debt, you may be able to pay some of it off through your bankruptcy case.
You cannot eliminate all debt. You must also be eligible to discharge your debt. There are several factors to evaluate eligibility, though one of the most common is prior filings. You are not eligible for a debt discharge in bankruptcy if not enough time has passed between bankruptcy filings. Each client and case are different and, as such, require different considerations. But, as always, the best way to know is to contact me for a free consultation, or any other Sacramento bankruptcy attorney.