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Bankruptcy is never really over, depending on how one defines “over”

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is a bankruptcy discharge ?”

 

Anyone who has passed through the bankruptcy process and received a bankruptcy discharge notice in the mail may experience an understandable sense of joy and relief. It is over. Or is it?

House Auction Charlotte Bankruptcy Lawyer Mecklenburg Chapter 7 AttorneyAt the risk of sounding like a lawyer, whether “it” is “over” depends upon what one means by “it’ and what one means by “over.” In the world of bankruptcy, very little is ever really over, and even the bankruptcy discharge—while an important formality—does not end any actions that are still pending in a bankruptcy.

A bankruptcy, at its essence, is less like a lawsuit and more like probate—gathering the assets of a dead person and using them to pay off the person’s debts. The difference is the person is not dead; the person is you, and sometimes the best recourse you have against creditors is to sue. In bankruptcy, your trustee may sue creditors for a variety of reasons, and your trustee may answer and defend against creditors or others who sue you, for whatever reason. These cases can drag on long after a person has received one’s bankruptcy discharge.

A bankruptcy discharge does not, as many believe, wipe the proverbial slate clean, so if clearing yourself of any and all debts is what you define as having “it” over and done, then you may misunderstand the effect of a bankruptcy discharge.

Perhaps most famously, most student debts are not discharged in bankruptcy. Even those who receive a bankruptcy discharge are still obligated, in most cases, to repay student debt. In addition, depending on the type of bankruptcy through which persons pass, debtors may hold on to cars, houses, or other items of property that they bought by taking out loans. These loans still have to be repaid, and subject to the terms of a bankruptcy settlement, a discharge may not clear these off the liability side of a debtor’s balance sheet.

Sometimes it is in a person’s favor to reopen a bankruptcy case to, for instance, remove a lien that should have been discharged in a bankruptcy. Other creditors who are enjoined by a bankruptcy discharge from seeking to collect on a debt may continue to seek repayment anyways, and a debtor may have to go to court to sue the collector or creditor for trying to collect a discharged debt.

Finally, it is important for persons who have passed through bankruptcy to monitor their credit reports to ensure that debts that should have been discharged through bankruptcy are removed from the reports. Failure to monitor these reports and to attempt to immediately correct any errors can lead to unnecessary damage to one’s credit.

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://blog.credit.com/2014/12/3-reasons-your-bankruptcy-could-keep-dragging-on-103946/

 

 

Image Credit:

http://commons.wikimedia.org/wiki/File:Flickr_-_Infrogmation_-_Customhouse_Auction_Sign.jpg

 

 

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http://www.youtube.com/user/ArnoldSmithPLLC?feature=watch

 

 

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