One of the biggest concerns an individual filing for bankruptcy may have is when the debt will finally be gone. This may be particularly true if it has been difficult to meet basic obligations due to high payments on unsecured debt. For many, bankruptcy filing is selected only after attempting other resolutions, and the discharge signals a point of relief from extreme stress. The discharge date in Chapter 7 bankruptcy is based on the filing time, and the actual discharge typically occurs approximately four months after the filing.

A Chapter 7 filing allows for eligible unsecured debts to be completely eliminated, providing a consumer with a clean slate. It is important to remember that some debts may not be eliminated through bankruptcy, but relief from high payments for those debts that are eligible may provide some related benefits as other obligations can then be met. A Chapter 7 bankruptcy stays on one’s credit record for 10 years, but a consumer may use that time to work on rebuilding credit through timely payments of obligations.

Chapter 13 may be necessary if a financial means test demonstrates that one is ineligible for Chapter 7. In this case, the court will determine a repayment plan for eligible debts. After the repayment period of up to five years, the remaining balances of included debts may be discharged. This type of filing only remains on the credit report for seven years, allowing one’s credit history to be cleared much sooner than in Chapter 7. It may be helpful to discuss the options with a lawyer who is experienced in dealing with both types of filings.

As an individual discusses bankruptcy with a lawyer, it may be important to provide complete information about creditors and outstanding balances. A lawyer may also assist in dealing with any creditor contact, especially negative instances, that may occur after the conclusion of the bankruptcy.

Source: Fox Business, “When is a Bankruptcy Officially Discharged?“, Erica Sandberg, August 04, 2014