What is a bankruptcy discharge in a Chapter 7 Case?
The bankruptcy court grants a discharge to the person named as debtor. However, it should not be treated as dismissal which has entirely different meaning.
The collection of discharged debts are prohibited.
The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor:
– by mail,
– by phone,
– or otherwise,
– to file or continue a lawsuit,
– to attach wages or other property,
– or to take any other action collect a discharged debt from the debtor.
There are also special rules that protect certain community property owned by the debtor’s spouse, even if that spouse did not file a bankruptcy case.
What is the punishment?
A creditor who violates this order can be required to pay damages and attorney’s fees to the debtor including of course a contempt of court from the bankruptcy court. This, however, should not be mixed up with a creditor’s valid lien which was not avoided or eliminated in the bankruptcy case. Despite all this, a debtor may voluntarily pay his debts that has been discharged.
Debts that are discharged.
The chapter 7 discharge order eliminates a debtor’s legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt existed on the date the bankruptcy case was filed.
Debts that are not discharged.
Let us discuss debts which cannot discharged. Here is a laundry list of these debts:
1. Debts for most taxes.
2. Debts incurred to pay non-dischargeable taxes;
4. Debts that are domestic support obligations;
5. Debts for most student loans;
6. Debts for most fines, penalties, forfeitures, or criminal restitution obligations;
7. Debts for personal injuries or death caused by the debtor’s operation of a motor vehicle, vessel, or aircraft while intoxicated.;
8. Some debts which were not properly listed by the debtor;
9. Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged;
10. Debts for which debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts; and
11. Debts owed to certain pension, profit sharing, stock bonus, other retirement plans, or to the Thrift Savings Plan for federal employees for certain types of loans from these plans.
The law is complex, and it is always good to talk to a Nevada licensed attorney.