What is a bankruptcy discharge and how does it work?

One reason a person chooses to file bankruptcy is to be able to start fresh. A discharge is a court order which states that you do not have to pay most of your debts. However, certain debts cannot be discharged. For example, the following debts cannot be discharged:

  • Child support
  • Alimony
  • Most taxes
  • Most student loans
  • Court fines and criminal restitution
  • Personal injury caused by driving under the influence of drugs or alcohol.

The discharge pertains only to debts that arose before the date you filed. Also, if the judge discovers you obtained money or property as a result of fraud, that debt may not be discharged. It is essential to list all debts and properties in your bankruptcy schedules. If you do not list a debt, it is possible the debt will not be discharged. Your discharge may also be denied if you do something deceitful in relation with your bankruptcy case, such as lie, falsify records, destroy or conceal property, or if you disobey a court order. You can only receive a Chapter 7 discharge once every eight years. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not need to sign a reaffirmation agreement or any other kind of document in order to do this. Some creditors hold a secured claim (for example, the bank that keeps the mortgage on your house or the lender that holds a lien on your car). You do not have to pay a secured claim if the debt is discharged, however the creditor can still take the property.