YOUR BANKRUPTCY DISCHARGE

The word bankruptcy is derived from two Latin words, bancus, meaning "bench," and ruptus, meaning "broken."  The term was used to describe the breakup of a tradesman's business (often resulting in physically breaking the tradesman's table or bench, signifying the end of the business).  Early bankruptcy laws were concerned with protecting creditors from insolvent businesses.  Usually this meant total liquidation of the business.  In some cases a creditor could have the tradesman imprisoned for non-payment of a debt.

Modern bankruptcy law in the United States is more forgiving and promises the individual debtor a fresh start.  The United States Bankruptcy Code is enacted by Congress via authority granted by Article I, Section 8 of the United States Constitution.  United States bankruptcy laws have evolved to protect the honest, but unfortunate debtor, and provide the debtor with a discharge of overwhelming debts.  Debtor's prisons were abolished in the United States long ago.

The cornerstone of the bankruptcy fresh start is the bankruptcy discharge, a permanent court injunction that prohibits creditor collection against the debtor.  The bankruptcy discharge is available to individual debtors and is generally ordered at the end of the Chapter 7 or Chapter 13 bankruptcy case.  A discharge is not available to a non-individual, like a business or a corporation.  The discharge order forbids creditors from contacting the debtor to collect on a debt, or taking legal action against the debtor personally.  In fact, these protections start immediately upon the filing of a Chapter 7 or Chapter 13 bankruptcy through what is known as the Automatic Stay, and become permanent upon discharge. The bankruptcy discharge is very broad and is enforced through a contempt action with the bankruptcy court in the event a creditor chooses to ignore the discharge order.

Certain debts are not affected by the bankruptcy discharge including child support obligations, debts obtained by fraud, criminal fines or restitution, most student loans, and certain taxes.  While these debts are non-dischargeable for policy reasons, other common debts like medical bills and credit card debts are discharged by the Chapter 7 or Chapter 13 bankruptcy.  The Bankruptcy Code offers certain protections to the debtor to repay non-dischargeable debts during a bankruptcy case.

If you are struggling with debts and need a fresh start, discuss your options with an experienced bankruptcy attorney.  The modern bankruptcy law offers many legal options for paying or discharging personal debt.  Learn how a bankruptcy discharge can start you on a path to a fresh financial start.