Call Now For A Free Consultation! 888-8-HELP-US (888-843-5787)

Chapter 7 Debt Discharge Explained

In bankruptcy, the term “discharge” refers to clearing the debtor’s slate of all, or most, past debts. Although many people expect that filing bankruptcy will wipe out all their debts, that is not always the case. Bankruptcy only discharges certain debtors of certain debts. The availability of discharge depends on the type of bankruptcy proceeding involved, who the debtor is, and what type of debts the debtor has. An experienced bankruptcy attorney can advise clients as to which debts will be discharged by a Chapter 7 bankruptcy and which debts will remain.

A Discharge Provides Great Relief, But Not A Clean Slate

In a Chapter 7 liquidation case, if the debtor was in some way dishonest or uncooperative, such as by making fraudulent transfers or failing to keep adequate records, discharge may be denied. Even after discharge is granted, however, certain debts remain. The timing of the debt is one factor in determining whether it will be discharged. In Chapter 7 cases, only debts that arose before the date of the order for relief will be discharged. Section 523 of the Bankruptcy Code sets out other exceptions to discharge applicable in Chapter 7 cases. Many of these exceptions relate to debts involving some type of fraudulent conduct by the debtor.

When a discharge is granted, it protects the debtor from any further liability on the discharged debts. No legal action may be taken against the debtor to collect on discharged debts, and no collection calls or letters may be sent with regard to such debts. A discharge does not actually cancel or extinguish the debt, however; it merely extinguishes the debtor’s personal liability. Also, a discharge does not automatically discharge co-debtors’ or guarantors’ liability.

A bankruptcy discharge also has no effect on liens. Take, for example, the situation in which the debtor owes the creditor $5,000 and the debt is secured by the debtor’s car, which is worth $3,000. If the debtor files for Chapter 7 relief and receives a discharge, the discharge does not extinguish the creditor’s security interest. In other words, the creditor can still repossess the car. It cannot, however, go after the debtor for the $2,000 difference between the debt and the value of the security. That is the personal protection afforded to the debtor by the bankruptcy discharge.

Contact The Experienced Bankruptcy Lawyers At Rauser & Associates Legal Clinic LLP

A lawyer with experience in bankruptcy law can explain whether debts will be discharged by bankruptcy and can also advise creditors on how debts owed to them will be affected by a bankruptcy discharge. If you are considering bankruptcy, call Rauser & Associates Legal Clinic LLP at 888-843-5787 or fill out our online contact form to set up a consultation.



Contact us and start a future free from debt!

By submitting your phone number, you are authorizing phone calls and text messages.

Rauser & Associates Legal Clinic LLP

Call: 888-8-HELP-US (888-843-5787) Fax: 216-263-6202

Akron Office

1 Cascade Plaza
Suite 1410
Akron, OH 44308
Map & Directions

Canton Office

401 W. Tuscarawas
Suite 400
Canton, OH 44702
Map & Directions

Cleveland Office

1468 W 9th St.
Ste. 300
Cleveland, OH 44113
Map & Directions

Columbus | Dayton Office

5 East Long Street
Suite 300
Columbus, OH 43215
Map & Directions

Toledo Office

316 North Michigan Street
Suite 420
Toledo, OH 43604
Map & Directions

Youngstown Office

26 Market Street
Suite 306
Youngstown, OH 44503
Map & Directions

Business Hours:
Monday – Friday: 9:00am – 6:00pm
Saturday: 9:00am – 1:00pm

During business hours, please expect a phone call within 5 minutes. If you are submitting a request after business hours, expect a call the following business day.