What is a discharge in bankruptcy? - New York Bankruptcy Law & Lawyers

Under 11 U.S.C. 727, a discharge is a release of liability in favor of the debtor which applies only to specific debts appearing within schedules filed with the court. All legitimate debts that must be listed within the schedules filed with the court, including common consumer obligations such as loans, notes, credit cards, leases, accounts payable, and consumer contracts. A discharge terminates debts without further obligation for payment. Bankruptcy lawyers must stop all collection efforts. An order of the court granting a discharge has the effect of a federal injunction directed to each creditor and bankruptcy lawyer, prohibiting further action on the debt, claiming the debt, or representing to any person or organization that the debt is valid. All collection lawsuits are banned. Not even a collection call is allowed.

New York Bankruptcy Law & Lawyers Collateral Issues

Be aware that debts secured by valid liens are not discharged. Creditors and their bankruptcy lawyers usually retain rights to repossess collateral up to the actual value of the lien, but may not collect deficiency balances. In the most basic light, a bankruptcy discharge eliminates only the unsecured portion of an obligation, including the unsecured portion of any debt secured by collateral. Debtors and their bankruptcy lawyers may selectively choose to repay any debt after discharge, but all post discharge payments are voluntary. A post-discharge payment of a portion of a discharged debt, if made, does not create a reaffirmation and no further payments are required.

The majority of personal bankruptcy lawyers certified in consumer Chapter 7 and Chapter 13 cases offer free initial consultations. Potential clients may review all options available and ask any question deemed important. All attorneys are bound by the attorney client privilege and must zealously guard confidentiality. Because of recent amendments to new bankruptcy laws, by passage of the latest reform bill known as the Abuse Prevention Act of 2005, debtors will find qualification for debt relief somewhat more difficult. Yet these laws also present new options, alternatives, and means of discharging debt that were previously unavailable. Now, more than ever, the assistance of qualified representation before federal courts is essential to gain maximum benefits provided by law.

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