A discharge of debt occurs in a bankruptcy case, when the case is finalized and debts are legally terminated. There are specific federal laws governing the process and the behavior of debtors and creditors in handling discharged debt.
Civil Actions
The obligation to pay a debt can be enforced by a civil action in a court of law. A creditor can seize certain assets, if necessary, to satisfy the debt.
Stay
Filing for bankruptcy legally stays (suspends) all collection action. The bankruptcy proceeds as creditors file their claims in court, and a hearing takes place before a bankruptcy judge.
Discharge
At the end of the process, all debts are discharged, except for those that, by law, cannot be discharged, such as federal income taxes and student loans. In a Chapter 13 case, the discharge occurs after the debtor has completed scheduled repayments.
Collection
Discharge means the debt is canceled and non-collectible. The borrower is no longer liable for repayment. The creditor must end collection action, including any court suits.
Liens
Liens used to secure loans before the bankruptcy remain in force. A car loan, for example, can still be satisfied through seizure of the property that is used to secure the loan -- the car.
0 comments:
Post a Comment