What does it mean when a debt is discharged?

If you’ve been having a difficult time meeting your financial obligations, you may be considering filing for bankruptcy. When you file for bankruptcy, the ultimate goal is to get your applicable unsecured debts discharged, which means that you will no longer be legally obligated to repay those debts. A debt discharge is a court order that can only be obtained by going through the process of filing for bankruptcy. In other words, a debt discharge means that your unsecured debt to creditors is canceled, and the lenders are no longer legally allowed to attempt to collect any outstanding debt.

Discharged in Bankruptcy

If you are having a difficult time paying your bills and are considering filing for bankruptcy, contacting an experienced Florida bankruptcy attorney can be one of the most important steps you take in order to regain control over your financial life. Contact an attorney from Hoskins, Turco, Lloyd & Lloyd to schedule a free consultation so you can get personalized advice about how to best proceed in your case.

What Is the Process of Filing for Bankruptcy?

If you are looking to get your debt discharged, you will need to file for bankruptcy.

For most individuals, Chapter 7 bankruptcy is the most popular form of bankruptcy relief. However, not everyone will be able to qualify for Chapter 7 debt discharging. If you are unsure about whether or not you would be eligible for Chapter 7 debt discharging, contact your bankruptcy attorney. They should be able to help guide you through this process and help you make the best choice for yourself and your family.

Once you have determined if you qualify for Chapter 7, you’ll be ready to file your case. Here are the steps to expect:

1. File Your Petition for Bankruptcy

Your case will officially begin once you submit a bankruptcy petition to the court. Your petition will need to include documents that show all aspects of your financial situations from the last ten years of your life, including your income, expenses, debt, property, and property transfers.

You will also need to include a certificate of completion, which shows that you have completed a credit counseling course from a court-approved agency within the last six months. Generally speaking, these courses take a few hours to complete and can be completed online.

2. You Will Receive an Automatic Stay

Once you submit your petition, you will be granted an automatic stay. The automatic stay prohibits your creditors and lenders from taking any actions against you in order to collect the debt.

This means that they will no longer be able to call you, email you, or collect money from you. A stay may also prevent a creditor who wishes to repossess your vehicle, foreclosing on your house, or putting a lien on your property. It is important to note that there are exceptions to the automatic stay, but creditors will have to go to court in order to have the stay lifted. If you have questions or concerns about the automatic stay and any exceptions to it, contact your bankruptcy attorney for help or clarification.

3. You Will Attend a Meeting of Creditors

After submitting additional paperwork that supports the information submitted in your petition for bankruptcy (such as tax returns, pay stubs, and bank statements), you will be required to attend a meeting of creditors, or a 341 hearing. The bankruptcy trustee will hold this meeting in order to verify your identity and also to seek additional information about your petition and your finances. Though it is not common, creditors can also send a representative to ask questions during this meeting.

At this point, the case trustee assigned to your case will assume control of all non-exempt assets and place them into a bankruptcy trust. This property may then be liquidated for the purposes of repaying a portion of your debts, pro-rata, to creditors in order of priority. However, many Chapter 7 bankruptcies involve “no asset” cases where all available assets are exempt, meaning this step may be skipped.

4. Complete a Financial Management Course

In addition to the credit counseling course that was required to file the bankruptcy petition, everyone who files for bankruptcy is also required to take a financial management course before receiving a discharge for their debt. It is important to complete this step, as it can delay or even cancel your discharge if it is not completed within the time frame given by the court.

5. The Court Will Discharge the Debt.

After the petitioner has completed the above steps, the court will grant a debt discharge, and the automatic stay will end. The court will automatically send a copy of your discharge to all your creditors, which you will have listed when initially filing for bankruptcy.

It is important to note that not all debt is able to be discharged — alimony, child support, and student loan debt are all examples of debt that survive Chapter 7 discharges. In addition, any debts secured with collateral are still eligible for at the very least seizure of the collateralized assets. Once the court sends out the discharge, it also alerts these creditors to the fact that your automatic stay has ended, and they will be able to begin collection attempts again.

The Court Will Close Your Case

Shortly after discharging the debt, the court will move to close your case unless there are mitigating circumstances, such as lingering asset distribution or bankruptcy litigation.

Contact an Experienced Treasure Coast Bankruptcy Attorney

If you have had to deal with harassing creditors, non-stop phone calls and emails, or other collection attempts from credit agencies and are ready to do something about it, contact an experienced bankruptcy attorney.

An attorney can help advise you about how to best move forward in your case so that you can move on with your life. Though considering filing for bankruptcy can be a stressful time in your life, hiring a Treasure Coast bankruptcy lawyer can help ensure that you are doing everything you need to in order to take back control of your financial situation.

Hoskins, Turco, Lloyd & Lloyd have been representing clients in bankruptcy cases for over 30 years in the Treasure Coast region of Florida. With four convenient office locations in Port St. Lucie, Okeechobee, Vero Beach, and Fort Pierce, our experienced bankruptcy attorneys are ready to hear from you 24/7.

When you reach out to our office, you will be able to schedule a free, no-obligation consultation with one of our attorneys who will be able to provide you with personalized feedback on your bankruptcy case. Whether you would prefer to meet virtually or in person, you can schedule your consultation by calling 866-460-1990 or visiting our website.

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