What Specifically Does a Chapter 7 Bankruptcy Discharge Do?

What Specifically Does a Chapter 7 Bankruptcy Discharge Do? """A chapter 7 bankruptcy discharge absolves you of personal liability for discharged debts and prohibits creditors from contacting you, intimidating you, or taking any other action against you in an attempt to collect those debts. The US bankruptcy court estimates that nearly 99 percent of all first-time chapter 7 petitioners receive a discharge, primarily due to their low incomes and high debt ratios. According to Section 4004© of the Bankruptcy Code, most bankruptcies are discharged between sixty and ninety days after the petition is filed and the meeting of creditors is conducted. Thus, the likelihood of being denied a discharge under Chapter 7 bankruptcy is minimal. Among the grounds for which a chapter 7 discharge may NOT be granted are the following:* You did not explain clearly any loss of use of assets. * You failed to show financial records, credit card statements, or other important evidence requested by the bankruptcy trustee. * You failed to appear at the bankruptcy court hearing or the meeting with all creditors. * You fraudulently transferred property to your relatives/family, concealed or destroyed property that would have otherwise become the bankruptcy court's estate under U.S.C. 727; Bankruptcy Rule 40. You made fraudulent statements or assurances while under oath.Be aware that certain states permit creditors to retain rights to property discharged under Chapter 7 bankruptcy. A debtor who wishes to contest such a right must be willing to'reaffirm' the debt, which means they must be willing to make payments on the debt based on a modified repayment schedule with a reduced interest rate and more principal down payment. Let's consider a simple example. You wish to keep your $8,000 automobile after obtaining your chapter 7 bankruptcy discharge. However, most states limit the value of a vehicle to $5,000, so you have an excess value of $3,000 that can be reaffirmed by the creditors. If the creditors wish to retain the rights to $3,000 in order to minimize their losses, the US bankruptcy trustee will ask you to sign a'reaffirmation agreement' under which you will be required to make monthly payments to your creditors on this excess $3,000 value that you wish to retain.In conclusion, a reaffirmation is an agreement between you and the creditor to continue making payments on certain debts after receiving a chapter 7 discharge. In exchange, the creditor guarantees that so long as you continue to make payments, he/she will NOT repossess the asset you wish to retain after filing for bankruptcy. Before a discharge is granted, the reaffirmation agreement must be signed and finalized if you choose to reaffirm a debt. A written agreement to reaffirm the debt must be signed and lodged with the bankruptcy court; if you are not represented by an attorney, the agreement must also be approved by a judge.

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