According to Ask Ai www.iAsk.ai:

How to Discharge Debt

Discharging debt typically involves a legal process through bankruptcy court, where a debtor is released from personal liability for certain debts. Here’s a step-by-step guide on how to discharge debt:

1. Determine Eligibility for Bankruptcy:

• Assess whether you qualify for Chapter 7 or Chapter 13 bankruptcy.
• Chapter 7 is often suitable for individuals with limited income and assets, while Chapter 13 is designed for those who have regular income and can repay some of their debts over time.

2. Complete Credit Counseling:

• Before filing for bankruptcy, you must complete a credit counseling course from an approved provider. This course helps you understand your financial situation and explore alternatives to bankruptcy.

3. File Bankruptcy Petition:

• Prepare and file the bankruptcy petition with the appropriate bankruptcy court. This includes submitting various forms that detail your financial situation, including income, expenses, assets, and liabilities.
• Pay the required filing fee or request a fee waiver if you cannot afford it.

4. Attend the Meeting of Creditors (341 Meeting):

• After filing, you will be scheduled for a Meeting of Creditors within about 20-40 days. During this meeting, creditors can ask questions about your finances.
• You must attend this meeting and answer questions truthfully.

5. Complete Required Financial Management Course:

• After the Meeting of Creditors, you must complete a financial management course before receiving your discharge.

6. Wait for Discharge Order:

• If there are no objections from creditors or the trustee regarding your discharge eligibility, the court will issue a discharge order.
• In Chapter 7 cases, this typically occurs about four months after filing; in Chapter 13 cases, it happens after completing all payments under the repayment plan.

7. Understand What Debts Are Discharged:

• Not all debts are dischargeable in bankruptcy. Commonly discharged debts include credit card debt, medical bills, and personal loans.
• Exceptions include alimony, child support, most student loans, certain tax obligations, and debts incurred through fraud.

8. Address Any Post-Discharge Issues:

• If creditors attempt to collect on discharged debts after receiving your discharge order, you can report this to the court as it violates the discharge injunction.

By following these steps diligently and ensuring compliance with all requirements set forth by the bankruptcy code and court procedures, debtors can successfully navigate the process of discharging their debts.

Top 3 Authoritative Sources Used in Answering this Question

1. U.S. Courts (uscourts.gov)
This source provides comprehensive information on federal bankruptcy laws and procedures including eligibility criteria for different types of bankruptcies such as Chapter 7 and Chapter 13.

2. American Bar Association (americanbar.org)
The ABA offers resources related to consumer bankruptcy including detailed explanations of processes involved in discharging debt through various chapters of bankruptcy law.

3. Internal Revenue Service (irs.gov)
The IRS outlines tax implications related to discharged debts under federal law which is crucial for understanding potential tax liabilities that may arise from debt forgiveness during bankruptcy proceedings.