Virginia Bankruptcy Law - "What is a discharge in bankruptcy?"

Under 11 U.S.C. 727, a discharge is a release of liability in favor of the debtor which applies only to specific debts appearing within schedules filed with the court.. Debts that must be listed within schedules include many common consumer obligations: loans, notes, credit cards, accounts payable, and contractual obligations. A discharge terminates obligations. No further payment are required.

An order of the court granting discharge acts as a federal injunction directed to each listed creditor, prohibiting further action to collect the debt, claiming the debt, or representing to any person or organization that the debt remains valid. Lawsuits are banned. All actions for collection are prohibited, including all phone calls requesting payments of any kind.

Virginia Bankruptcy Law - Collateral

Be aware that debts secured by valid liens on collateral are not fully discharged in a Virginia bankruptcy. Creditors retain rights to recover collateral, up to the value of the lien, but may not collect any amount owed beyond the lien value. In the most basic sense, a bankruptcy discharge charges off only unsecured obligations, including the unsecured portion of debts secured by collateral.

Debtors may selectively choose to repay any debt after discharge. Post discharge payments are voluntary. A post-discharge payment of a portion of a discharged debt, if made, does not act as a reaffirmation of the debt and no further payments are required.

Be aware that all options are not available to all debtors. The availability of alternatives depends on several factors. State & federal laws change frequently through the legislative process and through court interpretations. Each debtor presents a unique financial history and assortment of debts. Local rules and customs vary. Nevertheless, all debtors gain the maximum benefit available similarly: careful planning and selection of options before filing.

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