What is a discharge in bankruptcy


The question is what is a discharge in bankruptcy? A discharge in bankruptcy is simply a fancy way of referring to the order that the court enters that wipes out the debt that a person owes at the time that they file bankruptcy. Now a discharge order is pretty powerful. A discharge order prevents creditors from taking any further action to collect against that particular debt. That includes phone calls, it includes legal action, it includes letters. Any of these harassing types of actions are prohibited once the discharge order is entered. The discharge order is entered at the end of a successful bankruptcy.


When do I get my discharge in a Chapter 7 - Video


The question is, when does a discharge occur in a chapter 7 bankruptcy? The answer to this question is pretty simple.  When you file a chapter 7 bankruptcy, what’s called the 341 meeting the creditors is set at approximately 30 to 40 days after the filing date.  Now, after that hearing there’s a 60 day timeframe in which creditors can file an objection to your discharge order.  That’s where creditors can make some sort of complaint with the court saying that you’re not entitled to have their particular debt wiped out.

If they’re doing the math with me the 30 to 40 day timeframe plus the 60 days after your 341 date would 90 to 100 days as a typical timeframe in which discharge orders entered in a chapter 7 case.  Assuming that you’ve completed all of your obligations as a debtor in the chapter 7 bankruptcy case you can anticipate that the discharge order will be entered around that time.

Are all my debts discharged in bankruptcy? - Video


The question is: Are all of my debts discharged in bankruptcy or are only some of them discharged? The answer is, it depends on what kind of debts you have. There are certain cases in which certain types of debt are considered non-dischargeable in your bankruptcy case. That's a fancy way of saying that those debts can't be eliminated or wiped out. Types of non-dischargeable debt often include recent taxes that are owed to the IRS or other governmental agencies. Student loans are often non-dischargeable.

Now in certain circumstances, those types of debts can be dischargeable so it's important you speak with an experience bankruptcy attorney that can advise you whether or not your type of debt is dischargeable but generally speaking, credit cards, payday loans, common types of consumer debt will be dischargeable in your bankruptcy case.


Bankruptcy Helps Good People

Last year a man I’ll call David walked into my office to talk about bankruptcy.

The first thing he said was “I want to pay people what I owe them.”

David was the kind of guy that seemed to have everything in his life worked out. He was successful in his business, earning over 80,000 dollars annually, and had met many of his personal life goals. Yet here he was, talking with an attorney about something that he thought shouldn’t be possible: declaring bankruptcy. The first thing he said was “I want to pay people what I owe them.”

He felt it was difficult to even consider it. Like most of us, David had been raised to believe in taking care of himself and paying back debts. He believed in doing what was right, and he wondered if bankruptcy should even be considered. After all, wasn’t that “cheating?” Should responsible people even consider bankruptcy?

David’s Story

David had been doing fine with his life, paying his bills on time and being a model citizen. One day, though, he recognized he would need just a little extra money to take care of an unexpected expense. So he did what many people do every day: he went to a payday loan center and took out a two-week loan. Like many payday loan consumers, he felt that the two-week timeframe would allow him to avoid long-term debt and not burden his family. Instead, this loan would prove to destroy his finances.

When the loan came due, he paid what he could, but found he simply didn’t have enough to pay it all back that quickly. He had to take out another loan to pay off the original debt. Then another. And another.

Interest on the Payday Loan had climbed to $4000 per month.

In a matter of months, what had started as a manageable payment had spiraled out of control. No amount of belt tightening was enough. Interest on the payday loans had climbed to 4000 dollars a month. The payday loan was sinking his family finances. David wondered how somebody in his position, making a decent earning, taking care of his obligations, could have got into this situation. More importantly, how could he get out?


Think you know all about payday loans? TAKE OUR QUIZ. Most people only score 60%. Can you do better?

First, we took a look at that loan system. Some quick calculations on the payments, time frame, and principal showed that they were charging him over 400% interest on his loans. This predatory practice made it impossible for David to ever escape.

With that in mind, and with his sincere desire to pay back his debts, we talked about a “Chapter 13 bankruptcy.” The Chapter 13 bankruptcy let us strip the interest from the payments and let David set up a straightforward payment plan to pay back not just the payday loan company, but all of his creditors.

With a road map laid out, and approval from the courts, David is now on the path to even greater financial security. He didn’t have to lose any of his property. He didn’t have to burden his relatives. He was able to create a solution that let him keep his promises and take care of his family.

Bankruptcy Can Be a Tool for Responsible People

I know there are many more people like David out there. Maybe you’re one of them. Maybe you are trapped in a payday loan. Remember: You are not a bad person if you can’t pay them back. The reality is that their predatory lending practices are designed to trap and enslave people. But there is help.

Bankruptcy isn’t a cure-all for financial woes. But it can often help people find the breathing room they need to get back on their feet.

Want to try our Payday Loan Quiz?

Working in bankruptcy, we find that payday loans come up a lot. Think you know all about these financial tools? Take our quiz and see how you do. All the data for this quiz came from KNPR's interview with Barbara Buckley, executive director of the Legal Aid Center of Southern Nevada. [link]

[qzzr quiz="6837" width="100%" height="auto" redirect="true" offset="0"]


In Nevada, Legal Cases Can Take Years, and Then Years Again.

Here's an article about the Nevada Court system that we hope you will read, and share, because it's important.

Nevada Supreme Court Bogged Down.

NPR reports today that the Nevada Supreme Court is the busiest in the nation, and that's a very bad thing. Why? Because Nevada is one of just 10 states with no intermediate appeals court, our judges are simply overwhelmed by cases. It means that any time a case is appealed, whether divorce, probate,  personal injury, civil rights, or whatever, it has to go to the state supreme court rather than first passing through a mid-appellate court.

What does this mean for the citizens of Nevada? It means that results can take years to go through court, then even more years to go through appeals. The Nevada Supreme Court is just flooded by cases. Nevada has more than 330 cases filed per Supreme Court justice per year. To get a sense of how bad that is, Arizona, with a population three times that of Nevada, has around only 200, and Utah, with a very similar population to that of Nevada, has only about 100. Both of those states have appellate courts that help resolve many of the appellate cases.

Nevada Chief Justice James Hardesty asks "Do you want us working on precedential-setting cases, the most important cases... or do you want us to resolve drivers' license revocations or inmate disputes?" (source)


Why don't we have an appeals court?

Many states created appeals courts in the 60s and 70s, as state populations grew and court systems were re-worked. However, Nevada experienced most of its growth in the past 30 years, so we missed that wave of reform. Additionally, establishing an appeals court here requires a constitutional amendment to be approved by voters. Nevada voters have been suspicious of changes to the court system, and wary of the expense.


What do we need to do?

Nevada needs an appellate court. Our court system deserves to be free to face tough issues, and our population deserves quick justice for their legal issues. Right now we've got neither.

This election cycle, both political parties and the entire legal community are behind this change to the Nevada legal system. But there's no money to make people aware of how important this is.  That's why it's important you share this information.

The cost of an appeals court is only about 1.5 million dollars. That's less than one hundredth of one percent of our state budget, and it would mean years of relief for countless Nevada citizens, and it would take financial pressure off of programs such as the Legal Aid Center of Southern Nevada.

It's time Nevada moved forward on this important issue.

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