Discharging Debt on Long Island, NY
Discharging debt may be your ultimate goal, but you might not be sure of how this works. Does bankruptcy always discharge debt? Do your creditors stop contacting you once the debt is discharged? Can anyone discharge their debt?
At Robert H. Solomon, PC, we take great pride in our work. We not only guide our clients through the process but also help them gain a thorough understanding of their debt relief options. If your goal is to discharge some or all of your debt, we can work tirelessly to help you achieve this as soon as possible.
Get started by requesting your free in-person or virtual consultation. Call (516) 407-8199 today!
What Is a Bankruptcy Discharge?
When a bankruptcy court discharges your debt, you are no longer personally liable for that debt. As such, your creditors can no longer attempt to collect from you, and you are not legally required to pay them. Unfortunately, a debt discharge does not rid your property of a lien, which allows a secured creditor to recover the property if you fail to pay what you owe them. If a lender places a lien on your property before you file bankruptcy, you will need to pay this off before selling it.
Here are the answers to 6 frequently asked questions about debt discharge.
1. When will the court discharge my debt?
If you file Chapter 7, the court may discharge your debt within 4-6 months of your petition. Chapter 13, however, is a more extensive process that requires you to complete a 3-5-year repayment plan. As such, Chapter 13 generally does not discharge debt until you have completed this plan.
Certain limited circumstances may allow someone who has filed Chapter 13 to obtain a “hardship discharge” even if they fail to complete the payment plan. Typically, a court will allow this if the debtor could not pay due to circumstances outside of their control.
2. Will the court discharge all of my debt?
Not necessarily. The Bankruptcy Code outlines certain types of debt that are non-dischargeable. For example, bankruptcy cannot rid you of fines or penalties you accrued based on fraudulent or illegal activities.
Generally speaking, you will not be able to discharge the following:
- Tax debt
- Debt you fail to list on your petition
- Spousal/child support or alimony
- Government-funded school loans
- Compensation you owe for injuring someone while driving under the influence
Technically, tax debt and student loans are possible to discharge, but only under extremely limited circumstances.
3. Can my creditors object to the discharge?
Your creditors’ power to prevent the discharge depends on the chapter you file. If you file Chapter 7, your creditors receive notice of the bankruptcy and a deadline for objecting to the discharge.
Your creditor can object to the discharge and file an adversary proceeding if:
- You failed to provide the required tax documents
- You failed to complete a credit counseling course
- You transferred or hid property to defraud your creditors
- You destroyed or hid records
- You violated a court order for a previous case
At the adversary proceeding, your creditor(s) will have the burden of proving one or more of these factors.
In Chapter 13, you typically have the right to a discharge if you complete your repayment plan. Creditors cannot object to the discharge, but they can object to the repayment plan before the court confirms it.
4. Can the court revoke the discharge?
If you commit fraud, fail to disclose property, or fail to provide requested documents or information during an audit, the court can revoke the debt discharge. A creditor would need to file a revocation request within one year of the discharge, and the court would review the request and make a final decision.
5. What if my creditor continues to contact me after the discharge?
You can report the action and request the court to reopen the case. The court will most likely reopen the case immediately because the discharge invokes a permanent injunction against continued collection actions. The creditor may receive a fine as a result.
6. Can my employer discriminate against me based on my unpaid debt?
No. Both governmental units and private employers are prohibited from treating you differently or denying certain opportunities based on your bankruptcy, unpaid debt, or debt discharge.
Contact Robert H. Solomon, PC with Additional Questions
We understand that your situation requires close attention and care. If you still have questions about your potential debt discharge, please don’t hesitate to get in touch with our team.