Definition:
Discharge of a Debt
Discharge is the release of a debtor from the payment of debts in a bankruptcy process; sometimes called "release" from a debt. A debt is discharged or canceled by a court during a bankruptcy proceedings in order to relieve the debtor of the requirement to pay off the debt. Discharge only applies to debts incurred before the bankruptcy proceedings begin. Some debts cannot be discharged. For example:
- Most taxes
- Child support
- Alimony
- Most student loans
- Court fines and criminal restitutions
- If the court finds you received money or property by fraud, that debt may not be discharged.
Liens are not usually discharged, but remain in place after the bankruptcy, until the loan on the property has been paid off.
Corporations usually are not able to discharge debts; in a corporate bankruptcy all debts of the corporation must be paid, at least in part.
Also Known As: Discharge is sometimes referred to as "release" from a debt.
