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Discharge of debt after a Chapter 7 bankruptcy filing

Chapter 7 bankruptcy proceedings are also known as a liquidation procedure. Under Chapter 7 of the U.S. Bankruptcy Code, the debtor may be released from all personal liabilities of repayment of eligible debts. The creditors may be barred from initiating or continuing collections proceedings against a debtor who has been discharged.

In Chapter 7 bankruptcy proceedings, there are a lot of exceptions to the general rule. Many debtors find it beneficial to consult attorneys in order to understand the various options available to them. In numerous cases, a discharge may be issued by the bankruptcy court judge, unless a party with some interest in the matter files a motion in court opposing the discharge proceedings.

There are various grounds to oppose a discharge under Chapter 7. In cases where debtors are unable to explain the reasons for their economic losses adequately, did not keep regular and vigilant books of their accounts or in some way showed that criminal activities, such as fraud or perjury, were the cause of their loss of assets and resultant bankruptcy, debtors may not be eligible for a Chapter 7 discharge.

In many cases, creditors may still have some rights to the debtor's property in lieu of repayment, even after the debtor receives a discharge under Chapter 7. However, the debtor may have the option to reaffirm his or her debt on said asset or property. Under a reaffirmation agreement, the debtor promises to fulfill the debt on the property to the creditor by reaffirming his or her loan and debt, even after discharge.

Source: United States Courts, "Chapter 7," accessed April 1, 2015

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