Protecting your estate is an important part of estate planning. One way to protect your estate is by obtaining discharge orders. A discharge order is a court order that protects a debtor’s property from creditors.
Here are some key things to know about discharge orders and how they can protect your estate:
What is a Discharge Order?
A discharge order is a court order that releases a debtor from personal liability for certain debts. Once a discharge order is issued, creditors are prohibited from pursuing collection actions against the debtor.
What Debts are Dischargeable?
Not all debts are dischargeable. Generally, dischargeable debts include credit card debt, medical bills, and personal loans. However, certain debts, such as taxes and student loans, may not be dischargeable.
How Can a Discharge Order Protect Your Estate?
A discharge order can protect your estate in several ways:
Protecting Your Property
Once a discharge order is issued, creditors are prohibited from pursuing collection actions against the debtor. This means that your property, such as your home or car, cannot be seized by creditors to satisfy debts.
Protecting Your Heirs
A discharge order can also protect your heirs from creditors. If you leave property to your heirs in your estate plan, a discharge order can ensure that the property remains in their possession and is not subject to collection actions by creditors.
Protecting Your Assets
A discharge order can also protect your assets, such as your retirement accounts or investment portfolios. By obtaining a discharge order, you can ensure that these assets are not subject to collection actions by creditors.
In Chapter 12 bankruptcy, debtors have more options when it comes to protecting their estates from negative consequences by discharge orders. A debtor may choose to enter into a repayment plan with their creditors in which they agree to make regular payments over a period of time until all debts have been paid off in full. Once this is done, all remaining debts are discharged and no further action can be taken against them or their assets.
It is important to note that while discharge orders can protect estates from negative consequences, they do not necessarily absolve debtors of responsibility for paying back what they owe. Creditors may still pursue collection actions against debtors even after a discharge order has been issued if they believe there is still money owed on the debt. Therefore, it is important for debtors to stay current on their payments so as not to put themselves at risk of being sued by creditors after receiving a discharge order.
Finally, it is important for individuals who are considering filing for bankruptcy or entering into repayment plans with creditors to consult with an attorney before doing so in order to ensure that they understand all of their rights and responsibilities under the law regarding bankruptcy and discharge orders. A local Birmingham bankruptcy attorney can help individuals make informed decisions about how best to protect their estates from negative consequences by discharge orders while still meeting their financial obligations under the law.