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How does discharge in bankruptcy work?

The ultimate goal of a personal bankruptcy is to see that debts subject to the bankruptcy petition are discharged, meaning that creditors can no longer pursue the debtor for payment. The process of getting debts discharged varies depending on the type of bankruptcy involved. Chapter 7 discharges usually takes place shortly after the expiration of deadlines for creditors to challenge it; this usually takes place about four months after the filing of the petition for bankruptcy. Chapter 13 discharges, on the other hand, typically take longer because of the duration of the payment plan, which can take three to five years to complete. The court ordinarily grants the discharge shortly after the debtor makes all of the payments provided for under the payment plan.

Debt discharge under bankruptcy does not necessarily eliminate all debts. There are 19 types of debt that are not dischargeable under a Chapter 7 bankruptcy, and slightly fewer under a Chapter 13. For example, tax claims, debts that the debtor excluded from filing with the court, spousal support and child support payments, debts to the government other than taxes, debts incurred in connection with willfully and maliciously harming another person or damaging his property, and debts for personal injuries in connection with the debtor's driving a vehicle while intoxicated cannot be discharged.

In addition, creditors have the right to object to the discharge of certain debts. The reasons for such challenges in a Chapter 7 include the debtor's failure to provide tax documentation or to account for the loss of any assets, attempts on the part of the debtor to conceal or otherwise transfer property for the purpose of defrauding creditors, the commission by the debtor of perjury or fraud, or violation of a court order or discharge from an earlier case of bankruptcy or failing to complete a mandatory personal financial management course. Under Chapter 13, creditors can object to confirmation of the payment plan, but are more limited in their ability to challenge discharge of an approved plan once the debtor has completed it.

Lastly, in certain situations the bankruptcy court can revoke a discharge, typically in circumstances involving fraudulent or other illegal behavior of the debtor.

For more information on how discharge works, in addition to resources available online from the United States Courts you can also consult with an experienced Pennsylvania bankruptcy attorney.

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