Arizona residents might be interested in knowing more about when a bankruptcy actually takes effect. A recent article discusses the discharge date for both Chapter 7 and Chapter 13 bankruptcy. The discharge date is when a debtor is no longer required to make payments to creditors and certain debts are discharged entirely. The article suggests that the date depends on which type of bankruptcy the petitioner filed.

Most bankruptcies are Chapter 7 filings. The process allows people who qualify to walk away from unsecured debts. This simple bankruptcy liquidates liabilities. It involves filling out and filing the appropriate paperwork with the court and going through the court hearings. Actual discharge of the debts occurs four months later.

A Chapter 13 bankruptcy is more complicated. The plan involves the adjustment of debts. The petitioner is required to pay some or all of the owed through the filing over time. At the end of three to five years, which depends on the length of the payment plan, the any remaining unsecured and allowable debt is discharged.

The discharge dates may not mark the end of a bankruptcy. The filing process can still have a negative effect on a person’s credit score for up to 10 years, depending on the type of bankruptcy protections he or she sought.

Even when people are buried in debt, filing for a bankruptcy can seem like a daunting task. Moreover, people often do not understand the differences and benefits of each type of bankruptcy. However, debt relief from bankruptcy can give people a fresh start. A lawyer could answer questions and help a client to choose the best type of bankruptcy for their personal situation.

Source: FOX Business, “When is a Bankruptcy Officially Discharged?“, Erica Sandberg, August 04, 2014