You’ve now went through the entire experience of preparing all of the paperwork necessary for filing your bankruptcy case; you sat through the surprisingly uneventful meeting of creditors, and finally received your discharge order from the bankruptcy court.
So, what really just happened?
It’s fantastic news for you! There is no tool as powerful as a discharge order granted by a bankruptcy court for dealing with a debt problem.
A Chapter 7 bankruptcy, which is the chapter of the Bankruptcy Code under which you most likely filed, truly gives you a financial “fresh start.”
The bankruptcy discharge order is an order, signed by a Federal Bankruptcy Court judge, which completely eliminates your legal liability for the pre-bankruptcy debts which you did not reaffirm.
A reaffirmed debt is simply a pre-bankruptcy debt obligation for which you re-established your legal obligation to pay. For example, you may have reaffirmed a debt in order to make sure you kept the collateral which secured the debt, like a car loan.
Otherwise, you’ve come out of bankruptcy debt free. This means your pre-bankruptcy creditors no longer have any legally enforceable right to pursue you for payment.
Of course, if you did reaffirm debt during your bankruptcy, whether to keep a house or vehicle, that obligation will continue to be reported to credit bureaus. This gives you an opportunity to immediately impact your credit score positively after your bankruptcy case concludes.
The Discharge Injunction
The bankruptcy discharge order creates an automatic injunction, known as the discharge injunction. The discharge injunction prohibits all of your discharged, pre-bankruptcy creditors from taking any collection efforts against you whatsoever.
In other words, your discharged pre-bankruptcy creditors cannot send you any statements, cannot call you, sue you, threaten you, garnish your income, or report derogatory information to credit bureaus, in an attempt to collect their pre-bankruptcy debt.
There are extremely serious consequences when a creditor fails to obey the prohibitions provided through the bankruptcy discharge injunction.
Recovery of your attorney’s fees and costs, money damages, and even punitive damages, may be sought against a creditor who violates the discharge injunction by harassing you for money after your bankruptcy has concluded.
You should contact your bankruptcy attorney immediately if you believe one of your pre-bankruptcy creditors is violating your rights afforded by the discharge injunction. Doing so is certainly worth your effort.
You may be able to recover the fees you paid to the bankruptcy attorney to file your case, and you likely will not have to pay your bankruptcy attorney to pursue the case. Of course, every situation is different, and your attorney would need to evaluate the potential violations on a case-by-case basis.
Most importantly, if your creditors continue to try and collect from you, or continue to report negative information to the credit bureaus, what benefit did you really get from your bankruptcy case?
You don’t want the time and energy you spent throughout your bankruptcy case to be wasted. Make sure to take action immediately if your rights are being violated.
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