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Time periods for bankruptcy discharges vary by type

Debtors in the Washington, D.C., area who are considering bankruptcy might be interested in bankruptcy discharge dates. A discharge date in a bankruptcy is the actual date when the allowable debts are officially forgiven once the bankruptcy petition is filed and granted. The discharge date is dependent upon the bankruptcy type. For example, a common bankruptcy is Chapter 7, which liquidates all liabilities. Those who qualify have the ability to eliminate the majority of their financial obligations. Discharge on a Chapter 7 happens, after court proceedings, in about four months.

Chapter 13 is not total debt liquidation; it is a debt adjustment. On allowable debts, a debtor could pay certain creditors a portion of the amount owed using the court system. After three to five years, they could then discharge the remaining debt, but they must be allowable and unsecured debts. The court would assess the unpaid debts when the debtor has completed their Chapter 13 payment program, and if approved, the bankruptcy discharge would happen soon thereafter.

Another factor is how long will the bankruptcy will be on a debtor's credit report. It will be on the report for 10 years from the bankruptcy filing date, not the discharge date, with a Chapter 7. It will be on the report for seven years from filing for a Chapter 13. And, as the years go by, the bankruptcy will have a less negative impact on a debtor's credit rating. After the seven or 10 years, the bankruptcy will be gone.

For a person with unmanageable debt, filing bankruptcy could be a viable option. A bankruptcy attorney could help explain the process, benefits and timelines to the debtor and handle filing all of the necessary legal paperwork from the initial petition through the final discharge date.

Source: FOX Business, "When is a Bankruptcy Officially Discharged?", Erica Sandberg, August 04, 2014

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