What is a bankruptcy discharge?

I’m sure you are coming across a great deal of unfamiliar terms and phrases while researching the process of filing bankruptcy. This jumble of information may make references to getting a “bankruptcy discharge,” for example. So what is a “bankruptcy discharge”? If your debts are “discharged” through your bankruptcy case, then you are no longer obligated to pay them and your creditors are prohibited from ever making any effort to collect the debt.  So receiving a “bankruptcy discharge” is a good thing – it’s what you want to happen – what you want your final result to be.

It’s important to note that if the debt has property that is collateral for the loan, the creditor may still be able to repossess the property if you do not pay.  In other words, filing bankruptcy won’t give you a free car.  You will either pay for the car or you will surrender it back to the creditor with all responsibility for any difference in amount owed, etc being gone.  Any debt of yours that is cosigned or guaranteed by someone else can still be collected from that person (your cosigner or guarantor), but not from you.  Your legal obligation to pay has been “discharged”.

Will all debts be discharged?  Most of the debts you owe at the time you file your case will be discharged, but certain types of debt cannot be discharged no matter what.  These non-dischargeable debts include: income taxes that are less than 3 yrs old, child support, alimony, government fines and restitution, and student loans.  Other debts that you may not be able to discharge include debts you may have incurred by fraud or willful or malicious actions.