Discharge

• Discharge is the last step in the Chapter 7 bankruptcy process. Chapter 7 is one of two forms of personal bankruptcy in which a court trustee liquidates a person's assets, distributes proceedings to creditors and then cancels any remaining debts through a discharge order. The other type of personal bankruptcy, Chapter 13, reorganizes debts but does not include a discharge order.
  
  

Discharged Debts

• Most personal debts can be discharged through Chapter 7 bankruptcy and appear as discharged debts on the discharge order. Credit card debt, personal loans, payday loans, medical bills, past rent, utility bills, any bill in collections and even secured loans (mortgages or car loans or any other loan where the lender can take property, such as a car or house to pay for the loan if you default or file for bankruptcy) can be discharged. If these loans appear on your discharge order, they are canceled and you are no longer liable.
  
  

Liens

• Liens -- claims on property that back a loan -- cannot be discharged, even if your personal liability for the loan is discharged. This means that your debt can be discharged -- you have no obligation to pay back money -- but the lender can still claim the car, house or other property and sell it to cover their loss. If you file for Chapter 7 bankruptcy and have secured debts, ask your lawyer to talk to the lender to explore options. You often have the option to either surrender the property, pay the lender the value of the property in a lump sum or continue the loan agreement as before.
  
  

Unqualified Debts

• When you file for bankruptcy, you must list all debts and creditors. However, not all debts can be discharged through bankruptcy, and some debts will not be listed on your discharge order. Debts to government entities, such as federal student loans or tax debt, cannot be discharged, nor can damages that you have been order to pay someone for personal injury. You also cannot discharge alimony or child support.