Discharge (of Debt)

Bankruptcy provides a federal process for receiving protection against one's creditors and at its completion may allow the debtor to be released from certain types of "dischargeable" debt. A debt discharge prohibits the creditors from continuing their collection efforts which can include telephone calls, personal contact and collection letters. Discharge of debts includes not only debts which are liquidated but any debts (except non-dischargeable debts) which occurred prior to the filing the bankruptcy petition. Creditors must also be notified of the bankruptcy proceedings.

Debts may be discharged by filing one of five different types of bankruptcy proceedings. The debts discharged and the time frame for discharging debts will vary based on the type of bankruptcy filed. Chapter 7 Bankruptcy is the most common type of bankruptcy filed and quickly and easily discharges most unsecured debt by liquidating the debtor's assets and paying the creditors. Chapter 13 Bankruptcy, also a very common bankruptcy, does not discharge debts until after the debtor agrees to a monthly repayment schedule which repays their debts under a 3 to 5 year plan.

The debt not discharged depends on the bankruptcy case filed. Chapter 7 Bankruptcy non-dischargeable debt includes:

• Taxes based on income or gross receipts for which a return (if required) was due within 3 years prior to the filing of the petition.
• Taxes assessed within 240 days prior to the filing of the petition.
• Taxes for which returns (if required) were not filed or were filed within 2 years of the filing of the petition (§727(b), §523(a)(1)(B)(2)).
• The debtor made a fraudulent tax return or willfully attempted in any manner to evade or defeat such tax [§727(b) §523(a)(1)(B)(3)].
• Debt incurred within 90 days before filing.
• Debt obtained by fraud, false pretenses, or false financial statements
• Cash advances within 70 days before filing
• Loans from pension, profit-sharing, and stock bonus plans
• Debts from fraud, embezzlement or larceny
• Debts not listed.
• Domestic support obligations. Includes child support and spousal maintenance [§727(b)] [§523(a)(5)].
• Educational Loans
• For willful and malicious injury (§727(b)] [§523(a)(6)).
• Debt from a previous bankruptcy where discharge was denied (§727(b)) (§523(a)(10)).
• For death or personal injury from DUI (§727(b)] [§523(a)(9))
• Homeowner's association fees and assessments. Such fees and assessments arising after the filing of a bankruptcy are not discharged (§727(b)) (§523(a)(16)
• Death from a divorce or separation.
• Prisoner'[s fees imposed by courts for filing cases, motions, complaints, or appeals (§727(b)][§523(a)(17)).
• Loans from pension, profit-sharing, and stock bonus plans (§727(b) §523(a)(18)).
• Federal and state securities laws violations, settlements, and securities fraud, deceit and manipulation (§727(b)] [§523(a)(19)).

Other bankruptcy filings may have other debts which can not be discharged by filing bankruptcy. Regardless of the type of bankruptcy under consideration, it is important to talk to a bankruptcy lawyer prior to filing bankruptcy to determine what debts are not dischargeable.