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Bankruptcy discharge basics -- part 1

Many Tennesseans have heard of bankruptcy, and understand the gist of the process. But few dig into the details and mechanics. To learn more about each without picking up a shovel, keep reading.

What is a bankruptcy discharge? In brief, a bankruptcy discharge is the moment a person goes from debtor to debt-free. This discharge is supported by a permanent court order that forbids creditors from ever trying to collect on the discharged debt. No more lawsuits, no more harassing phone calls, no more piles of letters with past due notices.

Does a discharge cover all debt? No, not all debt. For example, certain valid liens placed on specific property to secure a loan or other debt may survive the bankruptcy. So too certain debts cannot be forgiven via bankruptcy. But the bulk of debts are dischargeable.

When does a discharge occur? It depends. In the case of Chapter 13 bankruptcies, courts typically issue the discharge order as soon as possible after the debtor has made all of his or her payments under the repayment plan. But sometimes the court will delay; for example, if the debtor did not complete a required financial-management course (assuming an exception to the course requirement does not exist).

Tennesseans interested in knowing more about whether filing for bankruptcy is right for them may benefit from discussing their situation with an experienced bankruptcy attorney. Doing so can be an important first step in understanding the process and how it might apply to their circumstances. Application of that knowledge could be just what they need to obtain a fresh financial slate.

Source: United States Courts, "Discharge in Bankruptcy - Bankruptcy Basics," Accessed Jan. 11, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
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