What is a bankruptcy discharge?

 

A:

Simply put, a bankruptcy discharge is what wipes out your debt and gives you a fresh start.  It also acts as a permanent injunction against creditors from coming after you to collect that debt.  Any creditor violating the discharge injunction can be subjected to serious sanctions by the bankruptcy court.  This discharge wipes out different kinds of debt, depending on the type of bankruptcy you file, and there are exceptions.

Chapter 7

A chapter 7 discharge wipes out most types of debt, but there are exceptions you should be aware of, such as:

• Certain taxes (or debts incurred to pay same, like a personal loan or credit card)
  
• An obligation incurred through fraud
• Alimony and child support (or anything considered to be a "domestic support obligation.")
• A debt arising through the willful and malicious injury to person or property
• Student loans (absent a showing of "undue hardship")
• Death or injury caused by driving while impaired (drugs, alcohol, etc.)
• Criminal restitution and fines
  
• Debts and obligations incurred as a part of a divorce
• NJ Motor Vehicle Surcharges

Chapter 13

A chapter 13 discharge is broader in scope, but still excepts:

• Taxes where the debtor didn't file a return or filed a fraudulent return
• An obligation incurred through fraud
• Alimony and child support (or anything considered to be a "domestic support obligation.")

• Student loans (absent a showing of "undue hardship")

• Death or injury caused by driving while impaired (drugs, alcohol, etc.)

Many debts are discharged in a chapter 13 because they have been paid, at least in part.  This is not an exhaustive list, however.  If you have questions about whether a debt you have can be discharged in bankruptcy, please contact my office to schedule an appointment to discuss it.

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Have more questions about bankruptcy?  Get the answers to the most frequently asked questions by downloading my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey.  It will give you the answers you need all in one place.  Then call me at 888-857-8418 or contact me through this site for an appointment for a free consultation to discuss your case.