How Discharge Affects Your Belongings
Discharge from bankruptcy doesn’t mean you’ll get back any belongings, even if they haven’t been sold yet. It might take some time for the official receiver to deal with them.
If you come by any new assets after you’ve been discharged, these will usually remain yours and can’t be claimed by the trustee. An important exception to this rule is any payments you receive by claiming for payment protection insurance which was mis-sold before you become bankrupt.
Reopening A Closed Chapter 7 Bankruptcy Case
Even the judge issuing a final decree in the case won’t necessarily spell the end. Sometimes it’s necessary to reopen the case. Most often this happens when the trustee, one of the creditors, or the debtor becomes aware of an asset that should have been included when the case was active. Your duty to cooperate with the trustee will continue if the case is reopened, but the court will not have the power to revoke your discharge more than a year after the case was closed.
Review Your Credit Reports
Monitoring your credit report is a good practice because it can help you catch and fix credit reporting errors. After going through bankruptcy, you should review your credit reports from all three credit bureausExperian, Equifax and Transunion. Due to Covid-19, you can view your credit reports for free weekly through April 20, 2022 by visiting AnnualCreditReport.com.
While reviewing your reports, check to see if all accounts that were discharged after completing bankruptcy are listed on your account with a zero balance and indicate that theyve been discharged because of it. Also, make sure that each account listed belongs to you and shows the correct payment status and open and closed dates.
If you spot an error while reviewing your credit reports, dispute it with each credit bureau that includes it by sending a dispute letter by mail, filing an online dispute or contacting the reporting agency by phone.
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Planning For A Better Financial Future
Set up a savings plan. In other words, pay yourself first. Even if it is only a few dollars per pay period, try to put aside a little for emergencies as soon as you are able. For many people who have been out of work or are otherwise financially devastated, it can be hard to imagine being able to save again. Still, a small amount can add up over the long run.
Ideally, you should eventually save six months of living expenses. However, having even a modest amount set aside in savings can help when the unexpected comes up. Start small and aim for a month’s salary in savings, then work up from there. Arranging for this money to be transferred directly from your paycheck to your savings account, so you never see it, will make it easier to save.
Quick Note: Never rely on credit as an emergency fund: If you have a savings plan, you can avoid one of the most destructive financial habits: using credit as an emergency fund. It is better to take a little money out of savings to replace the flat tire or the washing machine that died suddenly than taking on new debt.
Contribute to a retirement plan. If you already have a 401k or other retirement plan, try to contribute as much to it as possible. At the very least, kick in as much as your employer matches. Of course, if you can max out your contributions, so much the better. However, as with general savings, even small contributions add up over time.
Keeping The Car That You Already Own
Make timely payments if keeping a car or other vehicle. If you have an auto loan that you did not reaffirm, but you wish to keep the vehicle, just continue to make timely payments. The lender retains a lien on your car and can repossess if you get behind on payments. If you did not reaffirm the loan, it is unlikely that your credit report will reflect your post-bankruptcy payments.
Can I return my car after bankruptcy? If you did not reaffirm your car loan and no longer wish to keep your vehicle, you can arrange to turn it over to the lender . As long as you did not reaffirm the debt in your bankruptcy, the creditor cannot obtain a deficiency judgment. However, if you reaffirmed the loan in bankruptcy, the lender would be able to secure a deficiency judgment.
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How Long Does A Chapter 13 Bankruptcy Take
A Chapter 13 bankruptcy involves a repayment plan, so it takes quite a bit longer to complete. Typical Chapter 13 bankruptcy cases last 3 to 5 years. As part of the repayment plan, secured debts, like car loans are paid off. Depending on the type of debt you have, this type of bankruptcy may provide more debt relief than a Chapter 7 filing. Itâs always best to speak to a bankruptcy attorney about a Chapter 13 filing, as there are many moving parts in the Chapter 13 bankruptcy process.
What Does A Chapter 7 Discharge Mean
A discharge is the fancy legal term for your debts being forgiven in your bankruptcy. When we talk about debts forgiven in bankruptcy, we would say that your debts are discharged. The Chapter 7 discharge order is the final order you receive in your Chapter 7 bankruptcy. It is signed by the bankruptcy judge assigned to your cases and states clearly that you have received a Chapter 7 discharge. In other words, it is the formal document that releases you of your debts.Some people refer to the order less formally such as discharge papers.
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Chapter 7 Bankruptcy Frequently Asked Questions
Written by: HFM
If you have questions about how Chapter 7 bankruptcy works in San Diego, you are not alone. The attorneys at Higgs Fletcher & Mack have put together this list of frequently asked questions to help guide you through the entire process.
What is Chapter 7 Bankruptcy
The three primary bankruptcy Chapters are Chapter 7, Chapter 11 and Chapter 13. Chapter 13 is an individual consumer reorganization that requires payment to creditors through a payment plan over a three to five year period. Chapter 11 is a larger scale reorganization for business that also requires payment to creditors through a payment plan. Unlike Chapter 13 and 11, Chapter 7 is a liquidation proceeding whereby Debtors that qualify liquidate there non-exempt assets in exchange for a discharge of most types of debt.
Who Qualifies for Chapter 7 Bankruptcy Discharge
A Chapter 7 discharge is a court order that excuses a debtor from having to pay most types of debt. A Chapter 7 discharge is only for qualifying individuals who no longer have the ability to pay their bills and are in need of a fresh start.
Can Businesses Discharge their Debt with Chapter 7
How does Chapter 7 Bankruptcy in San Diego Work
Bankruptcy under Chapter 7 for individuals and businesses alike starts with the filing of a bankruptcy petition with the court. The debtor must also file the required paperwork including:
- schedules of assets and liabilities
- monthly income
- monthly expenses
- a statement of financial affairs
What Is A Discharge In Bankruptcy
A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.
Although a debtor is not personally liable for discharged debts, a valid lien that has not been avoided in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.
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Get A Handle On Your Debts By Speaking With A Bankruptcy Attorney
Bankruptcy will help you get rid of credit card debt, medical bills, and creditor harassment. Even the most well-executed bankruptcy filing will leave you with certain debts in many cases, including student loans and child support obligations.
A lawyer can help explain the scope of how much discharged debt you will have. They will explain categories of debts and which ones may not be discharged in a Chapter 7 filing. Your attorney will also provide you with suggestions for how to best manage these debts. Contact a local bankruptcy attorney today.
Should I File For Chapter 13 After Filing For Chapter 7
If you file Chapter 13 at least four years after filing Chapter 7, you can have a very low monthly Chapter 13 payment plan and receive a full discharge of all remaining balances after you complete the three- to five-year plan. For example, you could pay as little as $100 a month for three years inside of Chapter 13, paying very little to your creditors and yet still discharging the remaining balances owed.
This may be a good option for people who have student loan debt, certain types of income tax debt and child support payments to make, says Sean Fox, president of Freedom Debt Relief. These things cannot get discharged in a Chapter 7 bankruptcy.
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When Does The Discharge Occur
The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse . Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court. In individual chapter 11 cases, and in cases under chapter 12 and 13 , the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a chapter 12 or chapter 13 plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing. The court may deny an individual debtor’s discharge in a chapter 7 or 13 case if the debtor fails to complete “an instructional course concerning financial management.” The Bankruptcy Code provides limited exceptions to the “financial management” requirement if the U.S. trustee or bankruptcy administrator determines there are inadequate educational programs available, or if the debtor is disabled or incapacitated or on active military duty in a combat zone.
Home Mortgage And Other Property Liens
If you have a lien on the property, such as a home mortgage, you cannot have the mortgage discharged in bankruptcy.
State laws vary, but you can generally keep your home in bankruptcy if you keep making the payments and if you do not have more equity in the home than you are allowed to keep by state law.
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What Is Student Loan Bankruptcy
You may have heard that student loans cannot be discharged in bankruptcy. That statement oversimplifies the truth. You actually can get student loans discharged in some cases, but the bar is higher, and the process is more burdensome than it is for other types of debt.
Filing for bankruptcy to discharge student loans may get easier, though, if a recently introduced bipartisan bill is passed. The Fresh Start Through Bankruptcy Act of 2021, by Senators Dick Durbin and John Cornyn , would restore the ability for struggling borrowers with federal student loans to seek a bankruptcy discharge for their loans 10 years after the first loan payment comes due.
It would also make it possible to retain the existing undue hardship discharge option for private student loans and for federal student loans that have been due for fewer than 10 years.
Is It Hard To Buy A House After Bankruptcy
Getting a loan will be very difficult for a few years immediately following a bankruptcy, says Reggie Graham, branch manager for Silverton Mortgage.
He notes that home buyers applying after bankruptcy can often expect bigger down payment requirements and higher interest rates.
Your focus should be on rebuilding your credit to prepare for applying for a mortgage loan when youre ready, says Graham.
Keep in mind that a bankruptcy filing stays on your credit reports for 10 years.
This doesnt hinder your ability to buy a home. But its realistic to acknowledge that a lender is going to consider that fact when reviewing your loan request, cautions Heck. My suggestion is to expect two to three years to rebuild your financial health following a bankruptcy.
Graham also suggests the wait time to buy a home may be shorter if you file a Chapter 13 bankruptcy instead.
Chapter 13 involves paying back an agreedupon portion of your debt, which lenders look more kindly upon, he explains.
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Will A Chapter 7 Discharge Remove A Foreclosure From My Credit Report
Yes! A Chapter 7 will remove any negative items regarding your foreclosure. It will remove the indication of the foreclosure itself, but also the missed payments leading up to the foreclosure. The Chapter 7 will also prevent you from being sued for a deficiency judgment and will prevent you from being taxed on any deficiency that is forgiven.
No Asset Cases Close Quickly
In many Chapter 7 cases, the debtor keeps all property because the debtor’s assets are exempt. This type of bankruptcy is known as a no-asset Chapter 7. In most no-asset cases, nothing remains to be done after discharge. After the trustee files a report stating that there are no assets to administer, if there is no outstanding litigation, the court enters an order closing the case.
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How To Get Proof You’ve Been Discharged
Your discharge from bankruptcy will happen automatically, so you won’t necessarily get proof sent to you.
Email the Insolvency Service to get a free confirmation letter. You should only ask for this after the discharge date.
If you ask for a confirmation letter, you must include your:
- full name
- National Insurance number
- court reference number
If youre applying for a mortgage, youll need a Certificate of Discharge. If you originally applied for bankruptcy through a court then youll need to ask them for a certificate. This costs £70 and £10 for extra copies.
If you originally applied for bankruptcy online, email the Insolvency Service for a certificate. Theres no fee for a Certificate of Discharge if you applied online.
One: Make Arrangements To Pay Any Nondischargeable Debts
If you have non-dischargeable debts, such as student loans or certain taxes, you will need to contact the creditor to make arrangements to pay them. If you do not arrange to pay these debts, the creditors can begin collection action and report delinquencies on your credit report.
Nondischargeable student loans. As to student loans, you should receive a forbearance for the time you were in Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the loans would have been paid the same as other unsecured creditors but would also continue to accumulate interest. In either case, you need to make arrangements to get these loans back on track after bankruptcy.
Fortunately, there are various programs to lessen the burden of federal student loan payments worth exploring to see whether you might qualify, including income-based repayment and . Some private lenders have hardship programs of some kind. In any case, try to avoid deferments, as the accumulating interest may cause the debt to build to an unsustainable level.
Nondischargeable taxes. Regarding non-dischargeable income taxes, contact the IRS, state revenue department , or the local taxing authority to make payment arrangements. However, if you have a substantial tax debt, you may need the assistance of an attorney to work out a settlement. If you can pay off these tax debts in a lump sum at some point, you will likely save substantial interest and fees.
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Your Bankruptcy Discharge Date
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In a Nutshell
Obtaining a bankruptcy discharge is the primary goal of every individual who files bankruptcy. The discharge date is the most important date in a personal bankruptcy, second only to the date the case was initially filed. Letâs take a look at 4 things you should know about your bankruptcy discharge, when your discharge will be granted by the bankruptcy court, and how to figure out the date of your discharge even if you canât find your paperwork anymore.
Written bythe Upsolve Team. Reviewed byAttorney Andrea Wimmer
Obtaining a bankruptcy discharge is the primary goal of every individual who files bankruptcy. The discharge date is the most important date in a personal bankruptcy, second only to the date the case was initially filed. Letâs take a look at 4 things you should know about your bankruptcy discharge, when your discharge will be granted by the bankruptcy court, and how to figure out the date of your discharge even if you canât find your paperwork anymore.
When To File An Adversary Proceeding: Chapter 7
If you choose to file for Chapter 7, you can file the adversary proceeding right after filing your bankruptcy case. If you’ve already gone through Chapter 7 bankruptcy and your case has been closed, you may still be able to file an adversary proceeding to get your student loans discharged. How much time you have to do so depends on where you live and the courts.
If your Chapter 7 case is already closed, you must first move to reopen your bankruptcy case. This is procedural and does not restart the bankruptcy or eliminate the discharge you may already have received for your debt.
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