Q.What is a Chapter 7 discharge and how do I get one?
A.A "Discharge" is a court order releasing a debtor from all of his/her dischargeable debts and ordering the creditors not to attempt to collect them from the debtor. A Chapter 7 discharge is the forgiveness of personal liability for debts incurred before filing a bankruptcy petition. A debt that is discharged is one that the debtor is released from and does not have to pay.
A debtor can receive a Chapter 7 discharge after s/he turns over all non-exempt property to a court-appointed trustee. The trustee is required to sell the property and distribute the proceeds to creditors according to the priorities established by the Bankruptcy Code. Frequently, creditors receive no distribution from a bankruptcy case.
Some debts, however, are not dischargeable under Chapter 7 and some persons are not eligible for a Chapter 7 discharge. Common examples of non-dischargeable debts include: mortgages and liens on property, obligations for alimony or child support, certain taxes and student loans, and debts incurred by false statements or representations.
In some cases, a debtor is denied a discharge and thus continues to be obligated on all the debts that were mentioned in the bankruptcy petition. Reasons for the denial of a discharge include court determinations that the debtor concealed assets, fraudulently transferred assets to avoid payment to creditors, making a false statement under oath, and failing to attend the required personal financial management education class from an approved government provider.