Discharge

Discharge is bankruptcy term of art the describes the final action in a bankruptcy case. Once the case has been properly administered, the individual who filed for bankruptcy is granted a discharge of the unsecured debt that is owed, after any payments that might be available are made.

This means that when bankruptcy is concluded, a debtor can eliminate the remaining unsecured debt owed to credit companies, pay day lenders, utility companies and other creditors whose claim is against you for money and not an actual asset or item, of which the debt is secured against.

This is one of the main and influential reasons people file for bankruptcy is receive a discharge of the unsecured debt that is owed. Often times, tens of thousands of dollars in credit card debt

Automatic Stay

Under Section 362 of the Bankruptcy Code, upon filing bankruptcy, the petitioner is granted an stay. This stay, which in puts every legal or collection act on hold, until it relief from this stay is allowed by the bankruptcy court.

What does this mean? How does this apply to an every day consumer?

This is one of the strongest protections afforded in bankruptcy. By filing for bankruptcy, under the court, all your creditors are prevented from taking any action against you. That means your property is safe, your are safe and creditors are no longer allowed to contact you or hassle you directly. This is great for people who are constantly hassled by creditors and feel overwhelmed.

Even more, if you have imminent foreclosure, a car recently repossessed, lawsuits pending, by filing for bankruptcy, the automatic stay stops all these actions. The foreclosure is delayed, the car (depending on how much time has passed and local state laws) can be returned, and all lawsuits will stop.

This stay while automatic, is not absolute, and provides for some protection.

But this is one of many different aspects of bankruptcy that provides protection for debtors, for filers, and for those who are honest but unfortunate.