When a person files for Chapter 7 bankruptcy, their intention is to have as many of their debts discharged as possible. But what is a bankruptcy discharge, and how does it work in Georgia?

When a Bankruptcy Discharge Is Enacted in Georgia

When a debt is discharged in a Chapter 7 proceeding, a creditor is forever barred from initiating or continuing collection efforts. Therefore, if a creditor had sued the debtor for a past due debt prior to when the debtor filed bankruptcy, if the debt is discharged, the creditor can never collect on that debt. If a creditor does initiate or continue collection efforts on a debt that has been discharged in bankruptcy, they are in violation of the U.S. Bankruptcy Code and could face penalties and other sanctions.

Examples of actions a creditor can no longer take after a debt has been discharged include the following:

• Sending letters
• Calling
• Taking legal action to collect on a debt

Which Debts Are Dischargeable in Chapter 7 Bankruptcy?

It is important to note that not all debts are dischargeable in a Chapter 7 bankruptcy. First, in order to be considered for discharge, the debt had to be incurred prior to filing. Debts also have to be unsecured, meaning there is nothing for the creditor to take if the debt is discharged. Moreover, only debts that arose before a bankruptcy was filed are dischargeable. For example, if a debtor files for past due amounts on their electric bill, only the amount that was incurred prior to the bankruptcy filing can be discharged. New debt cannot be discharged.

Examples of the most common dischargeable debts include:

• Medical bills
• Credit card bills
• Past due amounts on utility bills

Conversely, debts secured by collateral, like home mortgages, are generally not dischargeable in bankruptcy unless the collateral securing the debt is surrendered to the creditor during the bankruptcy process. So, for example, if a debtor surrenders their home to their lender while a Chapter 7 bankruptcy is pending, they may simply walk away from the debt, since the debt is dischargeable after the house was surrendered.

If you’re not certain whether your debts qualify to be discharged under Chapter 7 bankruptcy, contact a Georgia bankruptcy attorney and ask, What is a bankruptcy discharge? We’ll gladly discuss your case and answer your questions.

The Purpose of Allowing Debts to Be Discharged in Chapter 7 Bankruptcy

Everyone makes mistakes. Sometimes, those mistakes are financial in nature. Maybe you found yourself unable to pay your debts because you weren’t taught financial literacy when you should have been. That’s not your fault. Additionally, unforeseen circumstances, such as an illness or injury, can have a dramatic impact on your ability to pay creditors.

The government wants people who are capable of making better financial decisions in the future or recovering from dire financial circumstances to have the opportunity to do so. That’s one of the key reasons debts may be discharged when someone qualifies for Chapter 7 bankruptcy. The goal is to ensure that people are able to have a fresh start instead of being burdened with debt for their entire lifetimes.

Qualifications for Chapter 7 Bankruptcy in Georgia

If you wish to have your debts discharged by filing for Chapter 7 bankruptcy, it’s important to understand that not everyone qualifies for it. So what is a bankruptcy discharge and who is eligible? Strongly consider reviewing your case with a bankruptcy lawyer if you’re not sure whether you qualify. Our experts can help you better determine if filing for Chapter 7 bankruptcy is an option you may pursue.

In general, to qualify for Chapter 7 bankruptcy, you must:

• Not have filed for Chapter 7 bankruptcy in the last eight years
• Have an income less than the median income for a household of your size in the state of Georgia
• Show that deductions for such expenses as health insurance render your income lower than the median, even if it’s technically higher

This highlights one of the many reasons it’s wise to enlist the help of an attorney when considering filing for Chapter 7 bankruptcy. You need someone on your side who can show that you meet the established qualifications.

Discharged Debts vs. Loss of Property

Filing for Chapter 7 bankruptcy isn’t the only option you have if you’re unable to pay your debts. For instance, you may file for Chapter 13 bankruptcy instead.

Some people don’t wish to file for Chapter 13 bankruptcy because debts aren’t discharged in Chapter 13 bankruptcy cases. Instead, you must pay off your debts over time when you file for Chapter 13 bankruptcy.

However, if you have valuable luxury items or property, you may have to give it up as part of your Chapter 7 bankruptcy agreement. This is why some prefer to file for Chapter 13 bankruptcy. Doing so allows them to protect their property.

Weighing the pros and cons of your options can be challenging if you don’t have much experience with these matters. This is another reason to consult with a legal professional. Their insights can help you determine whether losing your property to have your debts discharged is preferable to paying off your debts over time.

Objections to Debt Discharge

When you file for Chapter 7 bankruptcy and it appears a debt is to be discharged, the relevant creditor will be notified. When they are, they have a certain amount of time (which is typically specified in the notice they receive) to file an objection to a debtor’s discharge. This results in a type of lawsuit known as an “adversary proceeding.” Additionally, a bankruptcy trustee or the U.S. trustee can file a complaint of this nature.

There are several reasons a court might deny a Chapter 7 discharge. They include the following:

• Failure to provide necessary tax documents
• Failure to complete a financial management course, which may be a requirement when you file for Chapter 7 bankruptcy
• Transferring or concealing property to defraud creditors or delay key processes
• Concealing or destroying financial records
• Perjury
• Fraudulent acts
• Failure to properly account for loss of assets
• Violation of a court order

This is yet another reason you need assistance from a qualified and experienced bankruptcy attorney. When you file for Chapter 7 bankruptcy, there’s no absolute guarantee that your debts will be discharged, even if they appear to meet the necessary qualifications. If a creditor files a complaint, you need representation from a lawyer who can demonstrate that your debt should be discharged because you haven’t done anything that would give the court a reason to deny a discharge.

When Is a Debt Discharged Finalized in a Chapter 7 Bankruptcy Case?

A number of factors can influence when a debt is discharged after you file for Chapter 7 bankruptcy. Usually, the discharge is finalized promptly after the deadline for filing a complaint objecting to said discharge has passed. Naturally, if a complaint is filed, it will take longer for a debt to be fully discharged.

Once the debt has been discharged, both you and your creditors will receive an official notice confirming the discharge. The notice your creditors receive will also warn them that they may be subject to penalties if they take any further action in an attempt to collect on a debt. If you receive a notice letting you know a debt has been fully discharged, but your creditors are still trying to collect on said debt, don’t engage with them. Contact your attorney instead. They can file a motion with the court. This may prompt the court to reopen the case to confirm that a discharge has not been violated. Typically, if a violation has occurred, the creditor who pursued a payment for a discharged debt will be subject to a fine.

Revocation of Debt Discharges in Chapter 7 Bankruptcy Cases

There are instances when a debt discharge may be revoked even after it’s been finalized. A debt discharge may be revoked if:

• It can be shown that a discharge was obtained through fraudulent means
• A debtor acquired property or was entitled to acquire property that would qualify as property of the bankruptcy estate, but they failed to report this during bankruptcy proceedings
• Committed a violation described in section 727(a)(6) of the Bankruptcy Code
• A debtor fails to provide documents requested in a case audit
• Misstatements were discovered in an audit of the case, and a debtor failed to adequately explain them

In most instances, a request to revoke a debt discharge must be made within a year of the discharge being finalized. If a creditor or other party files such a request, your attorney can help you avoid a revocation if one isn’t justified.

Paying Discharged Debts After Filing for Chapter 7 Bankruptcy

Sometimes, a debtor later decides they want to pay a debt that’s already been discharged after they filed for Chapter 7 bankruptcy. They may want to do so to preserve a relationship with someone who plays an important role in their life. For example, a debt you owe to your physician may have been discharged, but you wish to maintain a positive relationship with them, so you later on decide you’d like to pay your debt now that you’re able to do so. You have this option, even if a discharge has been finalized.

Protection from Employment Discrimination After Filing for Chapter 7 Bankruptcy

For various reasons, some fear that when they file for Chapter 7 bankruptcy and their debts are discharged, their employers may terminate them or otherwise subject them to discriminatory treatment. This is against the law. A private employer is not permitted to discriminate against employees who’ve filed for bankruptcy. Again, if you believe your employer has violated the applicable laws, contact an attorney to address the issue. If a bankruptcy lawyer determines this scenario is better-suited to an employment law attorney, they may be able to refer one.

Obtaining a Discharge Order

Your discharge order, the official notice you receive letting you know that a debt has been discharged, is an important document. However, it’s possible to lose it.

Don’t worry if this happens. You can easily obtain a new copy of your discharge order by contacting the clerk of the bankruptcy court where the order was originally entered. That said, you should be prepared to pay fees for making and certifying new copies of the order. If a case is closed, the fee may be higher, as the discharge order may be archived, making it more time-consuming to retrieve.

Hire Georgia Bankruptcy Attorneys to Take Full Advantage of Chapter 7 Debt Discharge Rules

Are you considering filing for Chapter 7 bankruptcy in the state of Georgia? Do you want to know, What is a bankruptcy discharge? If so, you’ll be more likely to ensure your debts are discharged properly if you have strong legal representation. A lawyer can also assist with the various tasks the process of filing for bankruptcy involves, unburdening you as a result.

The experienced bankruptcy attorneys at Morgan & Morgan work closely with their clients to ensure they benefit as much as possible from the Bankruptcy Code’s rules of “dischargeability”. We’ll gladly work with you and answer any questions you may have on this topic. Give us a call or contact us through our website to schedule a free initial consultation.

 

This article was originally published on June 14, 2018 and updated on August 24, 2021.