The ultimate goal of filing a Chapter 7 bankruptcy is to receive a discharge of your debts. While the procedures and processes involved in a bankruptcy filing can be complex and puzzling, the discharge itself is actually a pretty straightforward concept. Specifically, a discharge releases a debtor from personal liability for certain specified types of debts (discussed further below). In plain English, a discharge eliminates your personal responsibility to pay back most of your financial debts. It is also a permanent order from the bankruptcy court prohibiting creditors from taking any form of collection action against you, including lawsuits, letters, or telephone calls.
California Chapter 7 Bankruptcy Discharge
In California, the discharge is issued at the conclusion of your bankruptcy case, after your creditors have had an opportunity to object to your bankruptcy discharge and your meeting with the court appointed Trustee.
As noted above, although most of your debts can be discharged, not all of them can be. The types of debts that are most easily discharged are unsecured debt. An unsecured debt is debt that is not secured or collateralized by a piece of property that you own. The most common types of unsecured debt are credit card debt, medical bills, and cash advances. However, not all unsecured debt is dischargeable. Some exceptions fall into a category called unsecured priority debts. These are debts that Congress has determined to be not dischargeable for public policy reasons. Examples include child support, certain types of tax claims, debts for willful and malicious injury to person or property, or governmental fines and penalties.
Chapter 7 Bankruptcy Discharge of Secured Debts
Secured debts may also be discharged in bankruptcy. Secured debts are debts that are attached to a piece of property that you own, whereby if you default on repaying the debt, the creditors can take possession of the property securing your debt. The most common examples of secured debts are car loans and mortgages. In both cases, if you default, the creditor can repossess your vehicle or foreclose on your home. A Chapter 7 bankruptcy can eliminate your personal liability for any deficiencies owed on the debt if you are willing to surrender property securing the loan.
The chapter 7 bankruptcy discharge should be seen as the end state of you bankruptcy case. Contact Orange County Bankruptcy attorneys at Tran Bankruptcy Law for more information regarding bankruptcy