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What is a Chapter 7 Discharge in Los Angeles Bankruptcy?
One of the reasons people file bankruptcy is to get a “discharge”.. A Chapter 7 Discharge is a document the courts give to a person or a couple that tells the creditors the debts cannot be collected.
After the meeting of creditors, if it’s a Chapter 7, in a typical case the trustee files the no asset report if there are no assets to distribute to the creditors. After approximately 3 to 4 months after the hearing, the person gets a discharge and the case is closed.
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What is dischargeable?
You can get rid of credit card debt. You can get rid of medical bills. Unsecured debt is generally dischargeable unless it was obtained by fraud or something like that. You can discharge, like I mentioned, IRS debt in certain instances as well. When a home a person lives in is underwater as to the first mortgage, a second mortgage can be “stripped” in Chapter 13 bankruptcy and discharged as well.
So for instance you might owe money to a credit card company. A Chapter 7 Discharge can wipe that off the books.
It’s not a magical solution but it does eliminate certain types of debt.
However it’s not some sort of get out of debtor jail free card. There are some things that a Chapter 7 Discharge does not cover.
Some debts cannot be discharged. For example, you cannot discharge debts for:
- child support
- most taxes
- most student loans
- court fines
- criminal restitution
- personal injury caused by DUI
And you can’t escape criminal behavior either: if you’ve committed fraud or made money illegally, that’s not sheltered. So Walter White wannabees, you can’t keep your ill-gotten gains.
Essentially, bankruptcy is a tool for people who cannot recover from financial difficulties. But it is not a shelter from all storms, nor should it be. You cannot wipe your children from the books and you cannot escape the consequences of your behavior that falls outside of the law.
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Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.