Using Chapter 7 to alleviate your debt issues can help you obtain an improved financial situation. Through this branch of bankruptcy, you can receive a discharge of all your qualifying debts. When the court orders the discharge, you are no longer legally responsible for paying the debts. If you are wondering how this works in a Chapter 7 case, keep reading. Here are several things to understand about the discharge offered through Chapter 7.
What a Discharge Is
People use this branch of bankruptcy to receive a discharge of debts. Receiving a discharge means that the court issues an order that you no longer owe the debt. A debt that the court discharges is a bill you no longer must pay. The debt is forgiven and wiped out. You cannot receive a discharge on every debt you have unless you only owe money on qualifying debts. Before you file, your lawyer should evaluate your entire debt load to see where you stand. You will know if your debts qualify before you file. You may end up still owing some creditors when you finish your case, as it is uncommon for a case to discharge all debts.
How It Affects You
Receiving the discharge affects you in several ways. First, it takes the pressure off you to pay your creditors. It also relieves the stress from creditor harassment. The court issues an automatic stay to provide you with this relief. The stay stops your creditors from trying to collect money from you. Finally, the discharge affects you by posting remarks on your credit report. You will receive a posting on each discharged account that says the balance is zero, and that the debt was part of a Chapter 7 bankruptcy case.
How Your Creditors Get Paid
When the court discharges your debts, your creditors may not receive any payment for the amounts you owed. Your creditors will receive payment only if you own assets that the court takes from you during your Chapter 7 case. If this happens, the court sells the assets and gives partial payments to your creditors for the discharged debt balances.
Receiving a discharge from a Chapter 7 case is the top reason people choose this branch of law. If you qualify for Chapter 7 and feel that it is the right choice for you, talk to a local bankruptcy law attorney to find out how to get started with the process.