The bankruptcy discharge releases the debtor from the payment of certain debts which have been specified during the bankruptcy, and are discharged by the bankruptcy court. The discharge from bankruptcy is a permanent order, which means that the creditors are not allowed to try to collect on these debts, or take any form of legal action after the bankruptcy discharge. This then frees up the debtor to make a fresh financial start, free from these previous debts, and without phone calls, letters, or any personal contact from the previous creditors.
However, it should be noted that any liens placed on property that are not discharged, are still in effect and are enforceable after the bankruptcy. There are other types of debt that cannot be discharged, such as tax debts, debt for certain types of housing such as condominiums, and debts such as spousal support payments if these are not listed during bankruptcy procedures as debts owing.
If the debtor has been given a repayment plan under the bankruptcy plan, then usually once these repayments have been made, then the court usually grants the discharge, but of course, the laws concerning bankruptcy are complicated, and you should get more details from your financial adviser.
There is no guarantee of an automatic bankruptcy discharge for any debtor, as the creditors are entitled to file a complaint in the bankruptcy court, provided it is filed before the deadline is reached for this. Also the bankruptcy court itself may not grant a discharge, for a variety of reasons. The debtor has to fulfil various requirements during bankruptcy, like filing tax returns, making payments to creditors according to the agreement, and attend a personal financial management course. If any of these are not completed to the satisfaction of the courts, then the debtor cannot be discharged until these have been completed to the satisfaction of the bankruptcy court.
The bankruptcy discharge can be revoked by the court within one year of it being granted, if it is found that the debtor has filed fraudulent claims, or has obtained the discharge by fraud.
Once the debtor has been discharged from bankruptcy, those debts that were discharged no longer have to be paid. However, in some circumstances, the debtor may choose to pay back any debts even though the debts have been discharged. In the case of debts to a family doctor for instance, or to a family member, the debtor may choose to make payments even after they have been discharged from these payments. That is the debtors decision, and they are not obliged to make payments to any creditors from which they have been discharged.
It should be remembered that although bankruptcy provides a fresh start for someone who has accumulated debts which they cannot pay, and the period before becoming discharged does vary, the aim of bankruptcy is to enable the debtor to become a valuable member of society by forgiving debts that they have incurred, thus removing the tremendous financial burdens many carry.
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