A discharge is an injunction issued by the bankruptcy court that prevents creditors from taking any action to collect a debt or to take property from you. If no objection to discharge is filed to prevent you from obtaining forgiveness from your debts within 60 days of the 341 meeting, the court will enter an order granting the “discharge” of all dischargeable debts that existed on the date the case was filed. It is extremely important to note that, if you are behind on making your payments, Chapter 7 will delay but not permanently prevent a repossession or foreclosure because the automatic stay that prevents a creditor from repossessing or foreclosing upon your property expires approximately 60 days after your Chapter 7 bankruptcy case is filed. Only Chapter 13 allows you to cure delinquent payments and keep your property.
You'll want to take your time in deciding whether Chapter 7 bankruptcy is for you. Under the new law, the automatic stay does not necessarily prevent repossession or foreclosure of your property after the dismissal of a case, so choosing the wrong time to file or the wrong way to file can ruin your chances of filing again when it is absolutely necessary. If you choose wisely, it can be a quick, efficient way to get a fresh financial start.
Not all Debts are Dischargeable
Not all debts are dischargeable in bankruptcy. The types of debts that can not be discharged vary slightly between the different chapters of the Bankruptcy Code. Generally, and with some exceptions the following types of debts are non-dischargeable:
Debts for taxes owed to local, state or federal agencies for which the due date for filing the return including extensions was less than three years before the bankruptcy petition is filed, the tax return was not filed by the taxpayer or was filed less than two years before the bankruptcy petition is filed, or the assessment was less than 240 days plus any time an offer in compromise was pending plus 90 days;
Debts for money, property, services, or an extension, renewal, or refinancing of credit, which was obtained fraudulently;
Debts which were neither listed nor scheduled or which the debtor waived discharge;
Debts which are owed to a spouse, former spouse, or child of the debtor, for alimony, maintenance, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record;
Debts owed for willful and malicious injury by the debtor to another person or property owned by another;
Debts for educational loans;
Debts for death or personal injury caused by the debtor's drunk driving or from driving while under the influence of drugs or other substances;
Debts incurred after a bankruptcy was filed.