Illinois Bankruptcy Lawyers - "What is a discharge in bankruptcy?"

Under 11 U.S.C. 727, a discharge is a release of liability in favor of the debtor which applies only to specific debts appearing within schedules completed by the debtor or their bankruptcy lawyer, which must filed with the court. Debts that must be listed within these schedules include most common consumer obligations: loans, notes, credit cards, accounts payable, and contractual obligations. A discharge terminates obligations. No further payment are required.

An order of the court granting discharge acts as a federal injunction directed to each listed creditor and their bankruptcy lawyers, prohibiting further action to collect the debt, claiming the debt, or representing to any person or organization that the debt remains valid. Lawsuits are banned. All actions for collection are prohibited, including all phone calls requesting payments of any kind.

Illinois Bankruptcy Lawyers - Collateral

Be aware that debts secured by valid liens on collateral are not fully discharged. Creditors and their bankruptcy lawyers retain rights to recover collateral, up to the value of the lien, but may not collect any amount owed beyond the lien value. In the most basic sense, a discharge charges off only unsecured obligations, including the unsecured portion of debts secured by collateral.

Debtors and their bankruptcy lawyers may selectively choose to repay any debt after discharge. Post discharge payments are voluntary. A post-discharge payment of a portion of a discharged debt, if made, does not act as a reaffirmation of the debt and no further payments are required.

Requirements for discharge and confirmation are complex. Bankruptcy lawyers must carefully construct a financial history for each client before recommending any course of action. Because financial histories are unique, available options under the Code vary. Also, bankruptcy lawyers frequently arrive at different conclusions regarding available options, based on each bankruptcy lawyer's level of experience and expertise. All debtors who have questions regarding discharge and confirmation through the Illinois federal court system should compare the advice of several bankruptcy lawyers to establish the range of options available.

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