A DEBTOR who gets a discharge in a bankruptcy petition is no longer personally liable for most of the debts listed in the petition. This means that creditors of the debtor are permanently barred from taking collection efforts against him such as lawsuits, phone calls and/or other forms of communication or contact. After all, the ultimate objective of bankruptcy is to give the debtor a “fresh start”, unburdened by his past debts. Of course, there is nothing to stop the debtor from paying any of his creditors, should he wish to, after he gets his discharge.
However, while the debtor is not personally liable for unsecured debts, secured creditors or lien holders can still enforce the lien (unless the lien itself has been discharged in bankruptcy) to recover the property secured by the lien like a real property or cars.
In Chapter 7, a debtor gets a discharge faster compared to the other types of bankruptcy. The discharge is usually issued within four (4) months, more or less, after the filing of the bankruptcy petition, unless a creditor files an opposition. The clerk of court issues a “Discharge of Debtor” which includes the debtor’s name, address, case no. and the date of the discharge. There is an explanation page attached containing the nature and details of the discharge. On the other hand, the discharge under a Chapter 13 petition is usually issued after the debtor has successfully completed the plan payments within three (3) or five (5) years depending on the length of the plan.
Some debts are excepted from discharge or non-dischargeable without need for action from the creditor. These debts include: (a) certain taxes or customs duties and certain liabilities incurred to pay taxes that are nondischargeable; (b) certain debts not listed or scheduled by the debtor in the bankruptcy filing; (c) domestic support obligation owed either for spousal or child support, including such amounts owed to a governmental unit; (d) certain fines, penalties, and forfeitures payable to governmental units including state court criminal restitution and payments due under federal criminal restitution orders; (e) student loans; and (f) liability for wrongful death or personal injury caused by the debtor’s operation while under the influence of alcohol or drugs of a motor vehicle, vessel, or aircraft.
On the other hand, certain debts are discharged unless a creditor takes timely action by filing a complaint in the bankruptcy court, to determine nondischargeability. These includes
(a) claims for money, property, services, or credit if obtained by false pretenses, false representation, actual fraud, or use of a materially false written financial statement on which the creditor relied in extending credit to the debtor; (b) claims for fraud or defalcation of a fiduciary, embezzlement, or larceny; and (c) claims for willful and malicious injury by the debtor to another person or entity or the person or entity’s property.
If you are contemplating filing bankruptcy or other alternatives, it is advisable to seek the counsel of a bankruptcy lawyer to guide you on the intricacies of filing for such a petition.
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Atty. Gwendolyn Malaya-Santos is a member of the State Bar of California and the Integrated Bar of the Philippines. To schedule for a free initial consultation, please call Tel. Nos. (213) 386-5651 (Los Angeles office) or (626) 329-8215. Attorney Santos’ offices are located at 3540 Wilshire Blvd., Suite 1012, Los Angeles, CA 90010 and Riverside Turner Riverwalk, 11801 Pierce Street, 2nd Floor, Riverside, CA 92505.
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Information contained in this article does not, nor is it intended to, constitute legal advice for any specific situation and does not create a lawyer-client relationship. It likewise does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy code.
