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Measuring a discharge in bankruptcy

Virginia residents who are considering filing for bankruptcy may wonder what a discharge date is or exactly what it means to have debts discharged. The discharge is what happens at the end of the proceeding, after the petition has been filed and approved by the judge. For many people, the discharge date is also the emotional end of a long and frustrating journey, as it represents the date they are no longer struggling with debt.

There are two main types of bankruptcies available to individual debtors. Chapter 7 bankruptcy is more common among those who qualify. It allows consumers to liquidate their debts and completely eliminate the need to pay many of their unsecured financial obligations. It typically takes about four months for a person to get a discharge date in a Chapter 7 proceeding. At that point, the person no longer needs to pay debts that have been discharged.

A Chapter 13 proceeding allows the petitioner to pay debts over time. Some unsecured debts will be discharged. The consumer makes payments on any remaining debts for three or five years under a plan approved by the bankruptcy court. Once that time is up, the judge will assess any remaining unsecured, qualifying debts to determine whether to discharge them. If the judge approves a discharge, it usually happens fairly quickly.

The discharge date is not when a person's credit rating starts to recover. A Chapter 7 remains on a person's credit for 10 years, and a Chapter 13 stays for seven years. A bankruptcy attorney may be able to help determine whether a client qualifies for a Chapter 7 filing and explain the income restrictions and credit counseling requirements.

Source: FOX Business, "When is a Bankruptcy Officially Discharged?", Erica Sandberg, August 04, 2014

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