FL residents may find financial freedom through bankruptcy discharge

Many people file for bankruptcy with the hopes of having their debt discharged. However, there are certain things that one should know about this process.

Although the number of people who have filed for bankruptcy has steadily decreased over the past five years, there are still many people who seek out bankruptcy as the solution to their financial turmoil. In fact, 1,071,932 people filed for bankruptcy in 2013, which is down from 1,221,091 just one year prior, according to the U.S. Federal Court system. Over 76,000 bankruptcies were filed in Florida last year alone. While there are several types of bankruptcies available, each chapter has its own qualifications, terms and dates of discharge.

Bankruptcy discharge 101

When bankruptcy debt is discharged, the debtor is released from the financial obligations of the specified debts. Once the debt is discharged, the creditors are no longer able to communicate with the debtor in an attempt to receive payment of that debt.

In a Chapter 7 bankruptcy, a discharge is granted after the time period for filing an objection to the discharge has expired, according to the U.S. Federal Courts. This is usually four months after the bankruptcy documentation has been filed. People or entities that have filed for Chapter 11, Chapter 12 and Chapter 13 cases can expect to have their debt discharged after they have completed making the payments that are specified in the bankruptcy plan. In most cases, debtors have three to five years to complete the payments. Debtors must also complete a credit counseling course when filing for a Chapter 7 or Chapter 13 bankruptcy.

Are all debts able to be discharged?

Only certain debts are able to be discharged, according to the U.S. Federal Courts. The most common types of debt that are not eligible for discharge include:

  • Child support and alimony obligations.
  • Government penalties or fines.
  • Certain tax claims.
  • Any fees stemming from a DUI conviction.
  • Debt acquired from intentionally causing injury to another person or property.

Since all of the exemptions vary depending on the specific chapter of bankruptcy that is filed, it is best to seek counsel from an attorney, who can help distinguish which types of debt can be discharged.

The benefits of a bankruptcy discharge

Debtors can experience several benefits from having their debt discharged through bankruptcy. Not only are they no longer legally obligated to repay the debt, but they are also free from the annoying calls from creditors.

While bankruptcy can have an impact on a person's credit score, discharging debts through the process can ultimately help to rebuild credit. According to Experian, one of the three major credit reporting agencies, paying bills on time is the single most important determiner of a good credit score. Eliminating unsecured debts through bankruptcy can free up more financial resources to pay bills and debts that cannot be discharged through the process. Though it can take time, as Experian notes, scores improve as a person demonstrates greater financial responsibility.

Seeking professional legal assistance

People who have considered filing for bankruptcy may want to contact an established bankruptcy attorney. An attorney can be critical when it comes to deciding whether a bankruptcy in right for your unique financial circumstances.

Keywords: bankruptcy, Chapter 7, Chapter 13