The Arizona Bankruptcy Lawyer Blog has posted an article about what a bankruptcy discharge is and what it includes. The “discharge” of a debt means that it no longer exists and can’t be held against the debtor. However, debt discharge “has its limits” and doesn’t include every financial responsibility.
To begin with, debt discharge doesn’t deal with every debt. Child support, “spousal maintenance” and newer income tax debt can’t be discharged.
Even though the personal liability may no longer exist as a result of the “discharge”, liens recorded against the debtor’s property, may survive the bankruptcy unless they are modified or removed.
There are time limits that prevent a person from receiving continual debt discharges. The creditor has to be allowed time between bankruptcy filings to collect their money.
Not everyone needs bankruptcy for purposes of obtaining a discharge. Some need it for other reasons, like saving a home from foreclosure or restructuring the repayment of debt. These people don’t care as much about the discharge as others. For those debts like credit card, repossession related, old income tax and medical bill debt that are typically governed by it, not only are they “gone”, the discharge acts as a “permanent injunction” or a court order at the close of the case, against those same creditors. It replaces the “automatic stay”.
If creditors persist in attempting to collect after you have obtained a debt discharge, the creditors can be “punished”. Often this “punishment” means they have to pay the former debtor.
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