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When a debt is discharged, the debtor is no longer liable for the debt and the lender is no longer allowed to make attempts to collect the debt. Debt discharge can result in taxable income to the debtor unless certain IRS conditions are met. A debt discharge occurs when a debtor qualifies through bankruptcy court.
Generally, a discharge removes the debtors' personal liability for debts owed before the debtors' bankruptcy case was filed. Also, if this case began under a different chapter of the Bankruptcy Code and was later converted to chapter 7, debts owed before the conversion are discharged.
What happens when a creditor files an objection? A creditor's objection does not automatically prevent a discharge of debt. The debtor gets a chance to file an answer to the objection, and the court may hold a hearing to decide the issue. This is called an adversary proceeding, and it works much like any other lawsuit.
Creditors cannot collect discharged debts Creditors who violate this order can be required to pay debtors damages and attorney's fees. However, a creditor with a lien may enforce a claim against the debtors' property subject to that lien unless the lien was avoided or eliminated.
Except as otherwise provided in subdivision (d), a complaint to determine the dischargeability of a debt under §523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under §341(a).
The Process of a Debt Discharge The bankruptcy court will look at your plan and decide whether it is fair and in ance with the law. You will also need to work with a trustee who will distribute these payments to the creditors. The trustee will pay creditors ing to priority.
Creditors are also warned that they will be held in contempt of the court if they attempt to collect on the discharged debts.
What is a discharge in bankruptcy? A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged.