The ultimate goal of your chapter 7 or 13 bankruptcy is receiving a discharge from the court. In a chapter 7 bankruptcy this occurs after your paperwork is filed, the meeting of creditors is held, the time period has passed for any creditors to object to a discharge, and you have completed your required financial education course.
In a chapter 13 bankruptcy, you have the right to seek a discharge once you have completed the required payments from your confirmed payment plan. Once you have completed your payments in a chapter 13 plan, it is too late for any party in your bankruptcy to try and modify the plan. At this point we will need to take steps upon payment completion to get your discharge. We will file confirmation that you completed the required financial education course and if you were also required to pay domestic support we will confirm that all of your alimony or child support payments have been paid.
The next step is receiving your discharge. A discharge hearing is not usually required unless you chose to reaffirm debts without begin represented by an attorney. Reaffirming a debt means that you make an agreement to still be responsible for repaying that debt after your bankruptcy discharge. Creditors will sometimes encourage or pressure debtors to reaffirm debt. However, only in rare cases does it make sense to reaffirm a debt.
It may be that you are trying to keep property that you owe money on after you receive a discharge. If this is the case, we encourage you to discuss the options with us if the property was not exempt in your bankruptcy process or it was secured property. You can choose to continue to make payments on a debt after your discharge without having to reaffirm the debt.
Because creditors can easily intimidate a debtor into reaffirming a debt, the courts will hold a discharge hearing so that the judge can inform creditors of their rights when they are not represented by an attorney. The court must approve any reaffirmations when the person filing bankruptcy is not represented by an attorney in the reaffirmation negotiations.
As experienced bankruptcy attorneys, we work closely with you to ensure you take full legal advantage of all your rights. We want to protect you from creditor pressure to reaffirm debt. Even if, in rare circumstances, we negotiate a reaffirmation of one of your debts, we are required to file with the court a declaration that you were fully informed of your rights. We must also show that you have sufficient money budgeted for the reaffirmation payments and if you don’t we must state that we believe you are able to make the payments and that the debt payments will not cause undue hardship for you and your dependents.
The court is looking to protect debtors from undue hardship as a result of any reaffirmation of debt. You also have the right to rescind the reaffirmation within 60 days or later if your discharge occurs after the 60 days. Because of all of these circumstances, we rarely advise that reaffirmation is the right course of action. The reaffirmation of a debt in some ways goes against the very purpose of bankruptcy, which is to allow you to get a fresh financial start by legally eliminating your responsibility to repay the debt.
After the Bankruptcy Discharge
After your discharge, it is important to follow-up on your credit reports to make certain that your creditors are accurately reporting the discharge of the debt to credit reporting agencies. Bankruptcy will show up on your credit report but it is also important that balances for those debts that were discharged reflect a zero balance. Checking 30 to 60 days after the discharge will help to close the loop on your bankruptcy process.
Once you have received your discharge, it is also possible for creditors to contact you to still try and collect on the debt. It will be important as you close out your bankruptcy process to bring to our attention, as your attorneys, any legal actions taken by your creditors after the discharge. You might feel that the creditors should know of your discharge and thus it is not necessary to respond to any actions taken by creditors. However, by bringing these to our attention, we are able to ensure that creditors do not take action that could cause financial or legal harm to you after your bankruptcy.
Just as we emphasize throughout the bankruptcy process in working with us, it is important to keep the lines of communication open about whatever might be happening with your creditors. This is just as important post-discharge as it is during the process. If you have questions about your bankruptcy process, or whether bankruptcy is right for you, contact our office today for a free consultation.