How to receive discharge of debt

A person can find themselves in debt for many reasons. Throughout the recession thousands have been laid off. Accident or illnesses can bring unexpected expensive medical bills that can drive people into debt. Here in Arizona the rapid rise and crash of the housing market has left thousands drowning in debt giving rise to an all time high Phoenix AZ bankruptcy rate. The prospect of having to declare bankruptcy is not desirable to say the least. The negative stigma attached and the seven years it takes to be removed from your permanent record are strong deterrents. But all is not lost. In a previous article, I talked about how it is easier than most think to get their credit turned around after receiving a discharge of their debt. By working closely with an Arizona bankruptcy attorney the negative effects begin diminishing immediately after the bankruptcy process is completed and are almost completely gone within three years. The entire objective of declaring bankruptcy is to receive a discharge of debt. This means that you are no longer obligated to pay the debt that is qualified to be discharged, and the creditors can no longer pursue any course of action against you. How does this work exactly and what does it mean for you? This depends on what chapter you are filing under. Discuss your case with a qualified Arizona bankruptcy lawyer to help you decide which chapter would best fit your needs. It is important to remember that not all debt can be discharged. Only unsecured debt like credit card debt can be discharged. Secured debt such as student loans and also child support debt cannot be discharged. The first step is to receive the mandatory credit counseling which your attorney should give you instructions on how to receive. Then the proper papers are filed. These include the petition and statement of financial affairs. Once these are submitted the “automatic stay” is invoked which prevents creditors from taking any further action to collect debts. This in and of itself is a huge relief. One month after filing, you must meet with the trustee. Recent revisions now require you to take a financial management course before a discharge can be issued. If neither the creditors nor trustee objects to your claims within 60 days then you will receive the notice of your discharge of debt about 5 weeks later. The entire process can take 4-5 months. Chapter 13 BankruptcyThe first two steps are the same as for chapter 7 bankruptcy. Then your payment plan needs to be completed. This payment plan must be planned for at least 36 months and up to 60 months depending on various factors. Again there may be challenges from either the creditor or trustee and then there is a “plan confirmation” hearing in which your plan is approved or not approved. Once the plan is approved, you simply have to make all the payments. After you have completed all payments, you will receive your discharge of debt a few months later. The entire process can take 36-60 months.