The court’s ruling declaring that you do not have to pay your debts to the creditors mentioned in your bankruptcy documents, as long as the court did not enter a non-dischargeability order, is known as a discharge. Student loans, child support, alimony/maintenance, government fines or penalties, most taxes, and a few other obligations are not dischargeable under the current laws.
If a debtor is obligated to pay child support or alimony/maintenance, they must file a certification with the Court after all Plan installments are made, stating that the payments are current, or they will not be discharged. (1328(a))
A discharge frees debtors from personal obligation for any dischargeable debts, while creditors whose debts are discharged are barred from collecting those debts from the debtors. A permanent federal injunction is what this is called. The discharge is not entered in a Chapter 13 case until all of your plan payments have been made and all of the terms of the plan have been met. The discharge can be withdrawn if the debtor commits fraud or fails to comply as required by law.
Even after a discharge, a creditor with a legitimate lien on a debtor’s property (such as a house, automobile, furniture, or jewelry) can normally reclaim the property or its value. However, if the debtor owns property that is subject to a judicial lien or a non-purchase—money security interest, the Debtor must bring the matter before the Court for an order removing the lien’s effect. A Motion to Avoid a Lien is the name for this action.
If a debtor wants to keep assets with secured liens (such as a house or automobile), he or she can either make regular payments to the lender or pay the lender a lump-sum payment equal to the item’s fair market value (redemption).
While the discharge remains on your credit record for ten years, it becomes less and less important in a creditor’s decision to offer fresh credit with each passing year.
By Diane Drain|Published On: June 29th, 2022|Last Updated: July 28th, 2022|
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