Arizona 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.
Arizona Bankruptcy Law - Collateral
Be aware that debts secured by valid liens on collateral are not fully
discharged in an Arizona 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.
The Federal process of filing necessarily incorporates state law requirements. These state law requirements are
set forth in statutes, rules and case law opinions which frequently alter the operation of law. As a result of
these precedents, Arizona bankruptcy cases are unique to the state, as well as unique to each individual who
files. All alternatives provided by law may not be available because of differing individual financial histories
or prior case filings.
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