What is Discharge (Bankruptcy) and How Does It Affect You?
Definition & Meaning
In bankruptcy law, a discharge refers to the legal process that eliminates a debtor's obligation to repay certain debts. When a debtor receives a discharge, they are released from personal liability for those debts, meaning they are no longer legally required to pay them. This legal action protects the debtor from creditors attempting to collect these debts, including through calls, letters, or personal contact. However, it is important to note that while the debt itself is discharged, any liens securing the debt may still remain enforceable.
Legal Use & context
The term "discharge" is primarily used in the context of bankruptcy proceedings. It is a critical component of Chapter 7 and Chapter 13 bankruptcy cases, where individuals seek relief from overwhelming debt. Users can often manage the bankruptcy process themselves using legal templates available through services like US Legal Forms, but they may also benefit from legal advice to navigate complex situations.
Real-world examples
Here are a couple of examples of abatement:
- Example 1: A person files for Chapter 7 bankruptcy and receives a discharge of their credit card debt. They are no longer required to pay this debt, and creditors cannot pursue them for payment.
- Example 2: A debtor in Chapter 13 bankruptcy completes their repayment plan and receives a discharge of remaining unsecured debts, such as medical bills. (hypothetical example)
Relevant laws & statutes
The primary legal framework governing discharges in bankruptcy is found in the United States Bankruptcy Code, specifically:
- 11 U.S.C. § 727 - Discharge under Chapter 7
- 11 U.S.C. § 1328 - Discharge under Chapter 13