The final part of the bankruptcy process is when it’s discharged. That means all eligible debt listed in the case is gone and you’re no longer responsible for it. After your bankruptcy discharge, you can start anew rebuilding your credit free of crippling debt. But also know circumstances that might lead to a discharge revocation and what to do if you find yourself facing this situation.
Getting a Fresh Start after a Bankruptcy Discharge
For most people, you can expect an opportunity to begin rebuilding your credit and start with a clean slate. Any debt listed in the case is no longer your responsibility, which means creditors can’t attempt to collect on it. This can free you up to repair your credit score and get back in the credit reporting agencies’ good graces.
Eventually, if you stay on track, spend responsibly, pay bills on time, and make other smart financial decisions, you may be able to purchase a home, get a new car, or make other financially viable purchases.
The relief from creditors is also much welcomed for many debtors. They can’t call or send notices demanding payment. The creditors can’t file a lawsuit against you. And they can’t report the debt to a collections or credit reporting agency.
Keep in mind this only applies to dischargeable debt that’s included in the bankruptcy case. You may still have to repay your student loans even after a bankruptcy discharge. And it doesn’t apply to liens on secured property.
While most people in Plano can expect the bankruptcy process to end after discharge so they can start repairing their finances, that’s not always the case for others; it’s possible the court will revoke it in some cases.
What Debts are Discharged in Chapter 7 Bankruptcy?
In general, the following types of debts are dischargeable in bankruptcy:
- Credit card debt: If you have accumulated significant credit card debt, discharge in bankruptcy can provide relief and eliminate your obligation to repay the debt.
- Medical bills: Medical expenses can quickly accumulate and become overwhelming. Discharge in bankruptcy can help alleviate the burden of medical debt and provide a fresh start.
- Personal loans: Personal loans, such as loans from family or friends, can be discharged in bankruptcy, freeing you from the obligation to repay them.
- Utility bills: Outstanding utility bills, such as unpaid electricity or water bills, can be discharged in bankruptcy, giving you a chance to start anew.
- Past due rent: If you owe rent arrears to your landlord, discharge in bankruptcy can relieve you from the obligation to repay the outstanding rent.
What Debts are not Discharged in Bankruptcy?
The following types of debts are typically non-dischargeable in bankruptcy:
- Student loans: Student loan debt is generally not dischargeable in bankruptcy unless you can prove that repayment would cause undue hardship, which is a difficult standard to meet.
- Child support and alimony: Debts related to child support and alimony obligations cannot be discharged in bankruptcy. You must continue to fulfill your financial responsibilities in these areas.
- Tax debts: Most tax debts, including income taxes and property taxes, are not dischargeable in bankruptcy. However, there may be exceptions for older tax debts or under certain circumstances.
- Court-ordered fines and penalties: Debts resulting from criminal fines, restitution orders, or civil penalties imposed by a court are generally non-dischargeable.
- Debts incurred through fraud or willful misconduct: If you obtained debts through fraudulent or willful misconduct, such as credit card fraud or intentional damage to property, those debts may not be dischargeable.
Revoking a Bankruptcy Discharge
Revocations of a discharge can come from creditors, bankruptcy trustees or the U.S. trustee. This can happen for a few reasons, like learning of a circumstance that would have caused the court during the case to deny it. A common example is providing false testimony or inaccurate information in the bankruptcy paperwork.
The party requesting a denial must show they were unaware of fraud until after the discharge. Two other examples that could result in a revocation are failing to follow court orders or failing to turn over relevant documents.
There are time limits in which a party can request revocation of a discharge. With Chapter 13 bankruptcy, it’s within one year of the discharge.
The same is true for Chapter 7 in cases of fraud. In cases of failure to report assets or disobeying court orders, then the deadline to request revocation is the later of one year from date of the discharge or date the case closed.
What happens after a revoked discharge?
If the discharge is revoked, the debt remains your responsibility. Instead of a clean slate and a new beginning, you’re back in the same financial mess. But it could also result in more serious consequences when the reason for revocation was fraud. You may have to pay fines or other penalties. It could result in criminal prosecution. If it was a matter of hiding assets, you may face forfeiture.
Bankruptcy cases in themselves come with challenges that require help from an attorney. But with more complicated issues (such as a discharge getting revoked), it’s especially important to seek legal advice. Call Warren & Migliaccio if you’re in need of bankruptcy legal assistance: 888-584-9614.