This is it! The ultimate goal… discharging your debt. If a debt is discharged in either a Chapter 7 or a Chapter 13 bankruptcy case then you are no longer legally required to pay it.
There are certain exceptions carved out for what types of debts can be discharged or wiped out in either a Chapter 7 or Chapter 13 case and we will discuss that with you at your consult when we do the free case analysis for you. Examples would be secured debts for property you wish to retain such as auto loans or, mortgages, student loans, recent taxes, child support or other domestic support obligations, association dues for a town home or condominium you may have surrendered as long as you are on title to the property, etc.
A bankruptcy discharge in Chapter 7 happens fairly quickly. The total length of a typical Chapter 7 case is about 90 – 100 days in the normal course.
Of special note is the effect of a discharge in small business cases. First, if the Chapter 7 was filed for the business itself there is no discharge order entered or issued by the court. Reason being is that the business actually ceases to exist at the time of a Chapter 7 Bankruptcy case filing. At that point there is no entity to issue the discharge to. The effect though is still the same, the business is “liquidated” in the bankruptcy process and the debts are wiped out in the course of that liquidation.
Also, if a debtor in bankruptcy is running a small business it is important to know that doing a personal bankruptcy case will not relieve the business of any debt that it has whether it be organized as a corporation, a partnership, an LLC or even as a sole proprietor. It would take another bankruptcy case, one for the business itself in order for the business to be relieved of its liabilities. We can help with that.
Chapter 13 discharges are issued at the termination of the plan or reorganization. The payments go anywhere from 36 months at a minimum (unless all claims filed by creditors are paid in full in less than 36 months) or up to a maximum of 60 months.
Certain debts must be paid in full in Chapter 13 cases. These would be liabilities such as child support or alimony, certain obligations owed to the IRS or state tax authorities, secured debts being paid through the Chapter 13 plan, etc. The court will not confirm (approve) a Chapter 13 plan unless it provides for full repayment on those obligations. The good news is that for the rest of the debt any that remains unpaid of a certain type (unsecured loans/lines of credit, personal loans, medical bills, credit card debt, etc.) is discharged just as it is in a chapter 7 case. Some few debts survive. An example of that would be any student loans that were not paid in full during the course of your Chapter 13 bankruptcy. Any amount that survives is not subject to the discharge and you would still owe that as well. Other examples are cited above in the Chapter 7 Bankruptcy discharge information.
No matter what kind of bankruptcy case you file rest assured that we will do everything we can do in our power to assure that your experience with our office is as stress free and pleasant as possible. Our goal is to get you the debt relief that you need so you can get on with your life and breath a lot easier without all this debt hanging over you affecting every decision you make. If you have judgments recorded against you we can assist you in taking care of those with an action is state court to remove the record of the judgment once the bankruptcy discharge has issued so there are no lingering effects from those as well.