Discharge In Bankruptcy Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Discharge In Bankruptcy, written in plain English, along with examples of how it is used.

What is Discharge In Bankruptcy?

n. At the conclusion of the bankruptcy process, the order given by the bankruptcy judge which forgives the remaining debts that cannot be paid. Certain exceptions are not dischargeable, such as debts for fraudulent or illegal actions, alimony and child support and taxes, and remain owed. A bankruptcy discharge is bad news for unsecured creditors.

History and Meaning of Discharge In Bankruptcy

The discharge in bankruptcy is the ultimate goal for most debtors who file for bankruptcy. It's an order by a bankruptcy judge that releases a debtor from personal liability for certain specified types of debts. This means that the debtor will no longer be legally required to pay those debts. The discharge is granted at the end of the bankruptcy process, after the debtor has completed all of the required tasks in their bankruptcy case.

The purpose of bankruptcy discharge is to give the debtor a fresh start by eliminating debts that they cannot reasonably afford to pay. Creditors are also required to stop all attempts to collect any of the discharged debts, including phone calls, letters, and legal action.

Examples of Discharge In Bankruptcy

  1. A debtor files for Chapter 7 bankruptcy and is able to discharge all of their unsecured debts, such as credit cards and medical bills.

  2. A debtor files for Chapter 13 bankruptcy and successfully completes their repayment plan, allowing them to receive a discharge of any remaining qualifying debts.

  3. A debtor is unable to discharge their tax debt because it is considered non-dischargeable debt unless certain requirements are met, such as the debt being at least three years old.

Legal Terms Similar to Discharge In Bankruptcy

  1. Bankruptcy: the legal process through which individuals or businesses who are unable to pay their debts can get a fresh financial start.

  2. Non-dischargeable debts: debts that cannot be discharged in bankruptcy, such as taxes, student loans, and certain court judgments.

  3. Creditors: the individuals or businesses to whom you owe money.

  4. Repayment plan: a plan in a Chapter 13 bankruptcy that allows a debtor to repay some or all of their debt over a three to five-year period.