Exceptions to the Court’s Discharge: When a Creditor Can Still Collect After Bankruptcy

One of the common terms in Chapter 7 and Chapter 13 Bankruptcy is "discharge" of your debts.  A discharge in Bankruptcy is a Court Order that imposes a permanent injunction against applicable creditors, which prohibits any and all collection action against you personally.  It is important to recognize that dischargeable debts are not "erased" or "eliminated" when the Bankruptcy Court discharges the debt and concludes your case.  The debt remains on your credit report, but creditors are prohibited from collecting on the debt - as it pertains to you - after the Court's discharge. 

While most debts are dischargeable automatically, there are several ways a creditor may collect on a debt after a debtor has received an Order of discharge.  First, certain debts are not affected by the Bankruptcy discharge, including child support obligations, debts obtained by fraud, personal injury claims, criminal fines or restitution, most student loans, and certain taxes. 

Even with a discharge in Bankruptcy, a creditor may pursue collection against you from your property.  This option is only available if the creditor has a lien against property that was not extinguished or protected during the Bankruptcy.  Foreclosure on real estate and repossession of a vehicle are two examples of collection actions that are directed at property and not against the debtor personally.

Finally, the creditor can collect from any other person who is obligated on your debt.  The Court's discharge injunction only applies to individuals who file for Bankruptcy and successfully receive a Court Order.  For instance, if you and your mother are co-signors on a credit card or bank loan, your personal obligation to pay the debt is discharged, but your mother is still obligated to pay the loan and can be sued by the creditor.  This problem occurs in both Chapter 7 and Chapter 13 Bankruptcy after the debt is discharged.

If you are struggling with debt, call the Law Office of Nicholas R. Westbrook at (713) 893-6204 and learn how consumer Bankruptcy can help you.  A free legal consultation is available at several Houston locations.  Mr. Westbrook is an experienced and dedicated Houston Bankruptcy lawyer who can answer your questions and assist you during this difficult time.  It's time to stop letting debt ruin your life.  Call today!