The bankruptcy discharge is an important part of the bankruptcy process which makes it important for a party filing for bankruptcy to understand. In essence, the bankruptcy discharge is the part of the bankruptcy process that provides debt relief and a fresh financial start to the party seeking personal bankruptcy protection.
The bankruptcy discharge comes at the end of the bankruptcy process and releases the filing party from personal liability associated with certain specified types of debts. The filing party is no longer required to pay debts that have been discharged through the bankruptcy process. The bankruptcy discharge is a formal order that prevents creditors from taking any collection action against the filing party related to the discharged debts which includes a prohibition concerning legal action against the filing party or communication with the filing party.
The timing of the bankruptcy discharge may vary but is usually 60 days following the meeting of the creditors in the Chapter 7 bankruptcy process and the discharge is typically granted as soon as is practical after the filing party has completed the repayment plan in a Chapter 13 bankruptcy process. This is because a Chapter 13 bankruptcy is a reorganization bankruptcy process which allows the filing party to repay debts over time according to a repayment plan and a Chapter 7 bankruptcy is a liquidation bankruptcy which calls for the filing party to liquidate assets to repay creditors.
Because there are different types of creditors, it is important to be familiar with what those types are the different rules that may apply to different types of debts. Discharges are typically automatic but because there are also complexities associated with which debts are discharged, it is important for parties considering personal bankruptcy protections to be familiar with all of the ins and outs of a bankruptcy discharge and how the can receive one to enjoy debt relief.