35. What does a bankruptcy discharge mean?

A “discharge” is a court order stating that you no longer owe the debts discharged. This order typically is the last action in your bankruptcy proceeding where your debts are officially eliminated. However, if your creditor is secured by collateral such as your house or vehicle, the creditor can still repossess or foreclose on the collateral even though you personally are not liable for the debt. For example, your vehicle finance company may be able to repossess your car but it will not be able to sue you for any deficiency if your car is worth less than the balance owed on your car loan.

A discharge only applies to debts that existed at the time you filed bankruptcy, and you can only receive a chapter 7 bankruptcy discharge once every eight years. Different rules may apply involving chapter 13 bankruptcies.

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The Discharge Video