What happens when a debt is discharged in bankruptcy?

What happens when a debt is discharged in bankruptcy?

One area where a lingering “lien” after a bankruptcy discharge rears its ugly head is in the form of a judgment lien. When a creditor files a lawsuit to collect a debt that is owed, and the court determines the creditor is owed the money, a judgment is entered against the borrower.

What happens when a customer files for bankruptcy?

Sooner or later virtually all businesses face the specter of a customer who owes them a significant amount of money filing for bankruptcy. Many businesses face a customer’s bankruptcy proceeding with an attitude like that of a condemned soul in Dante’s Inferno, where the sign above the entrance reads: “Abandon all hope ye who enter here.”

Can a fraud claim be discharged in bankruptcy?

The Bankruptcy Code provides that some types of claims are not entitled to a discharge in bankruptcy. This includes claims based on fraud or other dishonest behavior by the debtor.

What is the end goal of filing bankruptcy?

Generally, in filing bankruptcy, ABC’s end-goal is to restructure and/or obtain a “discharge” of the debts owed to you and others.   Think of this as a cancellation of ABC’s obligation to repay the pre-bankruptcy debt owed to you.

Can a judgment lien survive a bankruptcy discharge?

The “debt” can be discharged in bankruptcy but without further steps taken by a qualified bankruptcy attorney, the “lien” may survive the bankruptcy discharge. One area where a lingering “lien” after a bankruptcy discharge rears its ugly head is in the form of a judgment lien .

Can a bankruptcy debtor request a hardship discharge?

Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., “confirmed”) repayment plan, there are some limited circumstances under which the debtor may request the court to grant a “hardship discharge” even though the debtor has failed to complete plan payments.

Can a discharge be denied in a Chapter 7 bankruptcy?

The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed.

Can a unlisted debt be discharged in a chapter 13 bankruptcy?

The reasoning being that the unlisted creditor did not get a chance to get paid from the trustee liquidating the debtor’s property. If the unlisted creditor is in a chapter 13, the debt will probably not be discharged unless it can be shown that unsecured debts did not get paid anything in the chapter 13 case.

What happens if I leave a secured creditor off my bankruptcy mailing list?

The debt is discharged even though it wasn’t included and the creditor will no longer have a right to collect. If you leave a secured creditor off your creditor mailing list, the consequences are more serious. You may still face collection after your bankruptcy discharge.

Can a debtor be discharged in a Chapter 7 asset case?

In a chapter 7 asset case, the trustee liquidates some of the debtor’s assets and uses the monies from the liquidation to pay of the creditors. So, if the case is a no asset case, the unlisted debt is discharged even though it wasn’t listed on the bankruptcy petition. If the case is an asset case, the unlisted debt probably will not be discharged.

Can a Bankruptcy Court revoke a discharge order?

In chapter 11, 12, and 13 cases, if confirmation of a plan or the discharge is obtained through fraud, the court can revoke the order of confirmation or discharge. May the debtor pay a discharged debt after the bankruptcy case has been concluded? A debtor who has received a discharge may voluntarily repay any discharged debt.

Can a creditor refuse to report a discharged debt?

A creditor who repeatedly refuses to report your discharged debt properly might be in violation of the bankruptcy discharge injunction prohibiting creditors from trying to collect on discharged debts. If you take steps to remedy the misreporting, and the creditor (or collector or debt buyer) refuses to fix the error, talk to a bankruptcy attorney.

How is a lien stripped in a bankruptcy?

Lien stripping is the act of eliminating liens of unsecured debt discharged in Chapter 13 bankruptcy. The process for stripping a lien after completing a Chapter 13 bankruptcy varies by the bankruptcy court jurisdiction. In the bankruptcy court serving the Northern District of California, for example, it’s relatively simple to strip a lien.

Can a hardship discharge be used in Chapter 7 bankruptcy?

Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor’s control. The scope of a chapter 13 “hardship discharge” is similar to that in a chapter 7 case with regard to the types of debts that are excepted from the discharge.

What happens if creditors ignore your discharge order?

The creditor will thus be subject to citation for contempt in the bankruptcy court upon application of the debtor. When creditors receive a copy of the order of discharge, they are put on notice that they violate the injunction provisions at their own risk.

Can a creditor charge off an account after bankruptcy?

There are a number of circumstances when a creditor can charge off an account but they MAY NOT do so after you’ve filed for Bankruptcy or after you’ve received your Bankruptcy Discharge. Why do I include this here? Because it happens, and it’s illegal.

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