If you are unfamiliar with the bankruptcy process but you have already gotten started on this new and confusing journey in your life, you might have questions. One question that many have is concerning bankruptcy discharge, what it means, and the impact it can have on various aspects of your life. Many people wonder: if a debt was discharged in bankruptcy, are you required to repay it?
What is Bankruptcy Discharge?
To understand whether or not you have to repay a discharged debt, you must first understand how discharge works. A discharge is ordered to someone at the end of Chapter 7 and 13 bankruptcy. The discharge works to relieve you of having to pay off a debt any longer. If you take a step to discharge your debt, credit entities are no longer able to take collection action, which means you get to start fresh with a clean slate in regards to your business. You will no longer receive those annoying calls, letters, and more.
There are many debts that can be discharged in bankruptcy, including the following:
- Credit card debt;
- Medical bills;
- Lawsuit judgments; and
- Obligations that are under lease.
Of course, there are many debts that cannot be discharged. These include ones like child support, alimony, fines and restitution from breaking the law, tax debts, and debts that arise from a lawsuit brought on by drunken driving. There are also debts that will not be discharged unless you can show that an exception applies, such as student loans or income tax debt.
Repaying a Debt
There are some scenarios where it makes sense to move forward with repaying a debt that was previously discharged:
Loan Cosigner – If somebody cosigned for you so that you could receive a loan, it might be a good idea to repay this debt. Even though you are no longer responsible for the debt, your cosigner will be. If you don’t want to leave them in that position after filing for bankruptcy, it is extremely important to help repay these debts.
Borrowed Money – As far as bankruptcy laws are concerned, if you borrowed money from a relative and went bankrupt, you no longer have to repay these debts. However, since this is your family, you might feel obliged to help the person who once helped you.
Corporate Credit Card – Perhaps your employer provided you with a credit card that you are able to use for employment matters, such as to travel or purchase supplies. Depending on the scenario, your portion of liability might be discharged. However, again, you might feel compelled to make sure it is paid off.
What Happens Next
It is normal to have many questions concerning the bankruptcy process, especially when this is all new to you and your business. At M.J. Watson & Associates, your bankruptcy process can be easily explained and all of your questions can finally be answered as you attempt to get back on track on a financial level. Our legal professionals in bankruptcy would like to assist you through every step of the bankruptcy process. Contact us for more information at 817-877-2861.