What Does It Mean When a Debtor Waives His Rights to a Bankruptcy Discharge?

By Elizabeth Stock

Filing for bankruptcy has many benefits, including relieving you of all eligible debt through the bankruptcy discharge. However, it may be beneficial for you to waive your right to a discharge if you would like to keep certain property after the completion of your case. Be aware, however, that waiving the discharge makes the debts still legally enforceable following the conclusion of the bankruptcy case.

Bankruptcy Discharge

At the end of a bankruptcy case, you ordinarily will receive a discharge. The discharge eliminates all debts that were included in the bankruptcy case, making them no longer legally enforceable by your creditors. A discharge essentially erases the debt and you will have no further obligation to repay it. However, some types of debt, such as child support obligations or student loans, cannot be discharged in a bankruptcy case.

Reaffirmation Agreement

If the bankruptcy trustee can prove fraud or bad faith is present in your case, waiving your right to a discharge may prevent the court from dismissing your case. Keeping your bankruptcy case open is important if you would like to enter into a reaffirmation agreement for one of your debts, such as a car loan. A reaffirmation agreement is an agreement between you and a creditor that creates a new obligation to repay a debt in exchange for your continued possession of the property. When signing a reaffirmation agreement, you waive your right to discharge the debt that is the subject of the agreement.

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Waiver Requirements

Several requirements must be met before the court will accept a waiver. First, the waiver must be in writing and you must sign the written waiver. Typically, the waiver is filed after you file the original bankruptcy petition. Once the waiver is submitted, the court will review the waiver and determine whether to approve it. The bankruptcy court may hold a hearing to ensure that you understand the legal consequences of the waiver. If a reaffirmation agreement is present, the court will consider whether to uphold the agreement if a valid waiver has been signed.

Consequences

Regardless of whether you choose to waive your bankruptcy discharge, filing for bankruptcy has several consequences. For example, your credit rating will be affected by filing for bankruptcy and it may be harder to obtain new credit. In addition, if you file for Chapter 7 bankruptcy, the bankruptcy trustee must liquidate all non-exempt property. Additionally, everything you file with the court is accessible by the public, so if you are concerned about others viewing your financial situation, you may want to reconsider filing for bankruptcy.

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What Happens if a Bank Discharges a Home Loan During a Bankruptcy?
 

References

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How Long Before Debt is Discharged After Bankruptcy?

A bankruptcy discharge is available to you at the completion of your bankruptcy case. Your debt is erased when you receive the bankruptcy discharge, and the debt is no longer enforceable. However, when you receive a bankruptcy discharge will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, the two most common forms of personal bankruptcy.

Can Creditors Attempt to Get Money After a Discharge?

When you file a petition for bankruptcy, you are asking a federal court for protection from creditors and time to work out your financial difficulties. In a Chapter 7 case, the court authorizes a trustee to seize your assets and sell them in order to repay creditors. In a Chapter 13, the trustee sets up a repayment plan, taking into consideration your assets as well as your income. Unless the case is dismissed, both kinds of bankruptcy conclude with a cancellation of debts you owe to some — but not all — of your creditors.

Are Apartment Leases Dischargeable in Chapter 7 Bankruptcy?

If you are renting an apartment and filing for Chapter 7 bankruptcy, you will have to make an important decision regarding the lease that you signed. The bankruptcy law considers unpaid rent as a form of unsecured debt; this debt may be discharged at the end of the bankruptcy process. However, your landlord may evict you for non-payment of current and future rent. If you wish to stay in your home, you have options.

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