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A bankruptcy discharge is a court order that releases an individual or business from specific debts and obligations they owe to creditors. In other words, it's a legal process that eliminates the debtor's liability to pay certain types of debts they owe before filing the bankruptcy case.[1]
Once a bankruptcy discharge is granted, the debtor is no longer legally required to pay back the discharged debts, and creditors are prohibited from attempting to collect on those debts. This means that the debtor can have a fresh financial start and move forward without the burden of overwhelming debt.[2]
Although the debtor is not personally liable for discharged debts, a secured creditor can claim any liens or property interest in the debtor's property that have not been made unenforceable by the courts. For example, if the debtor sells a property lien, the secured creditor is entitled to receive payment from the sale.[3]
It's important to note that not all debts are dischargeable in bankruptcy. Additionally, there are specific requirements that a debtor must meet to be eligible for a discharge, such as completing credit counseling and complying with other legal requirements. A debtor who has received a discharge may voluntarily repay any discharged debt, even though the debt is no longer legally enforceable. This is common when the debtor has a special relationship with the creditor, such as a family member or doctor.[4]
If the debtor loses the discharge order, the debtor can request a copy of the document from the clerk of the bankruptcy court that entered the order. Typically, fees are associated with the retrieval and certification of the documents. Some bankruptcy courts may use the PACER system, where the debtor can access the discharge order electronically.[5]
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| Bankruptcy in the United States |
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- ^ Howard, Margaret. "Theory of Discharge in Consumer Bankruptcy, A ." Ohio State Law Journal, vol. 48, no. 4, 1987, pp. 1047-1088.
- ^ Contino, Michael, "Bankruptcy Basics: A Prime", Congressional Research Service, Oct. 12, 2022
- ^ Discharge in Bankruptcy - Bankruptcy Basics. USCourts.Gov
- ^ Sousa, Michael D. "The Principle of Consumer Utility: A Contemporary Theory of the Bankruptcy Discharge." University of Kansas Law Review, vol. 58, no. 3, March 2010, pp. 553-614.
- ^ Discharge in Bankruptcy - Bankruptcy Basics. USCourts.Gov
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