If you are considering filing a Chapter 7 or Chapter 13, one of your main goals is to receive a discharge of your debt. When you receive your discharge order from the bankruptcy court, it means that you are no longer legally obligated to pay all of the debts included in the discharge. In most cases, the majority if not all of the debt included in your bankruptcy filing can be discharged. Thus, your discharged debt is cancelled! For many people, this saves them from repaying thousands of dollars to creditors and it is often referred to as a financial “fresh start.”
When you file a personal bankruptcy, it is essential that you make a full financial disclosure in order to obtain the most comprehensive discharge available. The law requires a debtor to disclose all of his or her debts, creditors, sources of income and expenses. A list of every party that you owe money to is created and it is commonly referred to as your “creditor matrix,” which is used to provide notification to your creditors of your bankruptcy filing. Every party that is notified of your bankruptcy filing must cease its collection efforts against you (except in a few rare cases). Notice to a creditor also means that the creditor is bound by the discharge order as it applies to their debt.
Once the discharge order has been entered and filed with the court, your creditors and collectors are prevented from using any collection tactics against you to collect the discharged debt. This means that they cannot send demand notices, make harassing telephone calls, pursue lawsuits, or proceed with any other form of collection activity.
What happens if a creditor disregards the discharge order and continues its collection efforts? In most cases it is a mistake and as soon as you inform the creditor that its debt has been discharge they will cease all actions against you. However, if you continue to be pursued by a creditor or collector regarding a discharged debt, you may seek damages against that party in court.
At The Law Office of Diane Anderson, our lawyer has been through a divorce, a bankruptcy, and faced estate planning and probate termination after her mother passed away at a young age. This kind of experience is unmatched by attorneys who have simply guided their clients through each process. Contact us today to schedule a comprehensive consultation.