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The bankruptcy discharge process

Many Ohio residents that are considering bankruptcy are not really certain of what is involved in a discharge of debt. they may have mistaken ideas about what types of debts will be discharged, whether the debt still exists and what can and cannot be done after a discharge order goes into effect.

Understanding the concept is important, because it can inform the debtor of what can and cannot occur following a discharge. When a debt is discharged in bankruptcy, the debt itself still remains. Creditors who hold the debt are prohibited from doing anything to try to collect on it, and the debtor is no longer personally liable for it. However, debtors are free to voluntarily repay any debt that was discharged, and they sometimes choose to do so if, for example, it is owed to a friend or some other creditor with whom the debtor wishes to continue to maintain a relationship with.

There are certain types of debts that are generally not subject to discharge. Secured debts, including mortgages and car loans secured by real or personal property will not be discharged. Some types of unsecured debts, including restitution owed due to a crime, back child support, back taxes and certain student loan debt may all survive a discharge, allowing collection activity to continue after the bankruptcy process is completed.

Additionally prohibited are negative employment actions due to the bankrupt debtor's discharge in a Chapter 7 or Chapter 13 bankruptcy. A person who continues to go through further collection actions pursued by a discharged debt's creditor may want to seek help from a bankruptcy attorney. In the event that a creditor fails to abide by the prohibition, the case can be reopened and the creditor could face a civil contempt sanction.

Source: U.S. Courts, "Discharge in Bankruptcy", accessed on Jan. 23, 2015

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