Understanding Terminology Of Debt Handling

Bankruptcy Lawyer Bryan W. Stone answers the question “Can I get credit after filing personal bankruptcy?”


Bankruptcy can be a confusing process given the often-technical terms used by creditors and bankruptcy courts. Even understanding what has happened to your debt, whether you need to repay or not, can be difficult to determine in some cases. To find out more about various terms used to describe the status of debt, keep reading.


Book close up Charlotte Bankruptcy Lawyer Mecklenburg debt attorneyCanceled


Canceled debt refers to those debts that have been, as the name implies, canceled by the creditor. This happens when a creditor has decided they are unable to collect money for a debt and that they might as well write it off. Unfortunately, this doesn’t happen very often, but when it does, you as the debtor stand to benefit. That’s because debtors are not liable to repay canceled debts. That being said, you may be liable for paying taxes on the canceled debt, as the cancellation of the debt is seen as a kind of taxable gift.


Charged off


Charged off debt is a term that is frequently used by creditors and can be very confusing for debtors. It may sound like the same thing as canceled debt, but it’s very different from a legal standpoint. Charged off debt is debt that a creditor removes from its books, often after trying and failing to collect it. The creditor believes it is unlikely to receive the money it is owed and removes the debt from its records. However, the debt is not discharged as it is with canceled debt. Charged off debt is instead usually sold to another debt buyer, such as third-party collections agencies. Debtors remain liable for charged off debt and, if you are unable to repay, this will need to be included in any future bankruptcy filing.




Discharged debt refers to those debts that have been included in a bankruptcy filing. Discharged debt is the goal of every successful bankruptcy filing. The debts that are formally discharged in a bankruptcy are not required to be paid back later, meaning you are completely out from underneath the obligations. The companies that were owed the discharged debts cannot continue collection efforts and cannot sell the discharged debts to outside collections agencies. The discharge will eventually disappear from your credit report, but will continue for between 7 to 10 years, depending on the type of bankruptcy you chose to file.


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

Kyle Frost Bankruptcy Lawyer Student loan attorneyKyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology.  He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.

Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.

In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.



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