An individual who is unable to pay back any outstanding debts to creditors may choose to file bankruptcy as the last resort to solve debt problems. It is a great opportunity for a bankrupt person to have a fresh start and obtain financial freedom. Filing bankruptcy will allow you to pursue debt settlement, reorganize your finances, and pay off a creditor.
Bankruptcy filing gives you a chance to be relieved of some of your debts through a bankruptcy discharge. It is a permanent court order that frees a debtor from personal liability for specific types of debts. Most individual debtors consider it as the most significant part of bankruptcy cases since it “wipes out” your qualifying debt including medical debt, credit card debt, or utility bills. The bankruptcy court releases a debtor from the obligation to repay debts. In this case, creditors are prohibited to call, file a lawsuit, report nonpayment to credit collection agencies, send demand letters, or take any actions to pursue debtors for any outstanding debt.
There are certain requirements that you need to meet before you can become eligible for a bankruptcy discharge and the timing depends on the bankruptcy type that you have filed. Before you receive a bankruptcy discharge, you have to ensure that you have completed the process of filing your bankruptcy chapter. You need to fill out the required forms and file the official petition. You are obliged to disclose your financial information including your assets, debts, liabilities, monthly income, and other financial dealings. A reliable Kentucky bankruptcy lawyer can assist you in such filing.
The court usually grants the discharge as soon as possible. Chapter 7 bankruptcies generally receive a discharge after three or four months from the time the bankruptcy petition is filed, while a Chapter 13 bankruptcy discharge is issued between three to five years or after the debtor completes all monthly payments under the repayment plan.
The bankruptcy court will send you an “order of discharge” by mail. This order does not mean that your case is already closed. Your case will remain open until the end of any outstanding bankruptcy litigation or until the appointed bankruptcy trustee disperses your collected funds to creditors.
A bankruptcy discharge order cannot wipe out all your debts. You will still be responsible for paying non-dischargeable debts including student loans, tax debts, child or spousal support, criminal restitution, penalties, and fines from personal injury cases, retirement plan loans, or any liability covered by a reaffirmation agreement from the court. After the court issued the discharge, creditors are still allowed to carry on with their collection efforts only for the remaining non-dischargeable debts.
Although the bankruptcy discharge has relieved you from paying your debts, you cannot get rid of a creditor’s lien on your property. A creditor can use a lien to repossess, sell, and liquidate your collateral in exchange for money to recover some of your unpaid debts (even after the court has discharged your debt). Some liens can be removed even after the bankruptcy case closure.
The court has the absolute power to approve or deny a bankruptcy discharge. Failure to turn over your assets, inability to follow court orders, concealment, or dishonesty with your paperwork or testimony can result in denial of discharge. A qualified Kentucky bankruptcy attorney can help you avoid denial of the discharge.
It is recommended to keep a copy of your bankruptcy discharge order documents. If you apply for a home mortgage, the lender might request a copy of the discharge. If a creditor contacts you to collect any of your discharged debt, you may provide them your bankruptcy case number, filing date, and discharge date. These details can be found on the top left-hand side of the bankruptcy discharge order next to the name of the issuing judge. Debt collectors can use this information to verify the bankruptcy discharged debts and resolve collection issues quickly.
The bankruptcy filing date is important because it is used as the basis to identify your qualifying debts. Debts that you have incurred before filing for bankruptcy can be qualified for a discharge. Debts that you have acquired after filing bankruptcy will not be included.
Bankruptcy filings are complex and complicated; however, all your efforts will be worth it in the end. A bankruptcy discharge will lighten your burden of paying back your debts. It is important to have basic knowledge about the rules of bankruptcy discharge to ensure court approval. For legal help, do not hesitate to contact Farmer & Wright, PLLC, and schedule a consultation with our experienced Kentucky bankruptcy lawyers to help you achieve the financial freedom that you deserve.
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