Step 3: Discharge (Forgiveness)

The Discharge (Forgiveness) Order

The discharge (forgiveness) of your debts is what you are after. Discharge is equivalent to judicial pardon of debt or forgiveness. You need this to begin your rebuilding.

After the hearing, there’s not much to do but wait. Secured debts, such as a vehicle or home, require reaffirmation in order to keep the secured collateral. Creditors and/or the U.S. Trustee may object to the dischargeability of certain debts or to the debtor obtaining a discharge. In 99% of cases, there are no objections to discharge. You will be advised if an objection to discharge is likely. Be upfront with your attorney so you’ll know before the case is filed what is likely to happen.

If no objections are filed, about 60 days after the hearing, the Judge will sign the Discharge Order. If no assets are being administered, the Bankruptcy Court will close the case. If assets are being liquidated, the case stays open but you still get your discharge.

This Order is the final order which legally declares most unsecured debts forgiven. Some debts can’t be discharged such as:

• Recent income taxes
• Child support, alimony, property settlement agreements
• Fines owed the government
• Student loans

But most debts without property pledged are forgiven in Chapter 7 bankruptcy. Chapter 13 does forgive a broader range of debts. Debts generally forgiven in Chapter 7 include:

• Credit cards
• Unsecured loans
• Secured loans where property is surrendered

The wiping out of this debt gives you a clean slate to build on.

Step 4: Financial Restoration After Bankruptcy.

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