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Information about bankruptcy discharge

Discharge is an important factor in a New Jersey bankruptcy because this action releases a debtor from the personal liability to various types of debts. Upon discharge, a debtor is no longer bound to repay the debts in question. This action also puts an end to collections activities by creditors.

The timing of a discharge may depend on the type of bankruptcy action filed. In a Chapter 7 bankruptcy action, the discharge is typically granted within a 60-day period after a meeting between the involved parties, allowing time for their complaints to be heard. In all, a Chapter 7 discharge may take as little as four months after the petition has been filed to be completed. In a Chapter 13 petition, the discharge does not occur until after an established repayment period has been completed. In some cases, the repayment plan may last up to five years.

While a bankruptcy discharge can alleviate financial pressure by releasing a debtor from certain debts, there are some exceptions. Debts owed for taxes or certain court judgments, for example, may not be discharged. Student loans and spousal or child support are also not eligible for discharge either. Additionally, some debts may be exempted from discharge based on creditor objections and approval of the court. A court may also deny discharge in cases involving failure of the debtor to provide appropriate documentation or in cases involving a debtor's efforts to defraud creditors.

Because the process can become complicated and some balances might be exempted or unaffected by a discharge, it may be important for an individual seeking debt relief through bankruptcy to discuss the entire process with an experienced lawyer. A lawyer may provide guidance in preliminary steps, such as credit counseling and efforts to negotiate with specific creditors, which might precede a bankruptcy filing.

Source: United States Courts, "Bankruptcy Basics", September 19, 2014

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