One of the most powerful tools in filing for Chapter 7 or Chapter 13 bankruptcy is the ability to discharge your debt. After you have completed the conditions of your bankruptcy, the court may clear you of your remaining debt obligations and prohibit your creditors from continuing collection efforts. Because this represents a loss to them, your creditors may search for reasons why you should still be liable for the remainder of your debt. Discharge is not guaranteed as part of bankruptcy. You must follow the correct procedures and make a good-faith effort to repay your debt.
There are several steps needed to qualify for debt discharge, and missing any one of them may cause a court to deny your request. The requirements include:
- Complying with all court orders related to your bankruptcy;
- Paying all of your court and filing fees;
- Obtaining credit counseling;
- Completing a financial management course;
- Filing your most recent tax return; and
- Staying current on any child or spousal support payments.
You cannot qualify if your debt was previously discharged within a certain number of years. Eight years must have passed if you received a Chapter 7 discharge, and six years must have passed if you received a Chapter 13 discharge.
A court will deny your debt discharge if it determines you were dishonest during your bankruptcy. Fraud can take many forms, including:
- Hiding or destroying property or documents with the intent to hinder collection efforts;
- Failing to properly explain the loss of assets that may have helped repay creditors;
- Lying about information relating to your bankruptcy; or
- Withholding relevant information that may disqualify you from discharge.
If a creditor files a complaint against you to deny discharge of your debts, you have 30 days to respond with an answer and/or a request to dismiss the complaint. A creditor also has a year after your debt is discharged to request to revoke the ruling based on new evidence. At your trial, the creditor must prove that its complaint is valid. More than your ability to discharge your debt may be at stake. Certain acts of fraud can result in criminal charges, which may include prison time and fines if convicted.
Freedom From Debt
Discharging your debt is a vital part of filing for bankruptcy because it allows you to start over. As long as you follow the rules and act honestly, a bankruptcy court should allow it. A Frisco, Texas, bankruptcy attorney at The Page Law Firm can guide you through the bankruptcy process. Schedule a free consultation by calling 214-618-2101.