What does discharge of foreclosure mean?

Foreclosures are lender recover their money after a homeowner stops paying their mortgage. Your obligation to make payments under the deed of trust may be cancelled (discharged) in bankruptcy, so the lender could not garnish your wages or bank accounts to collect the money.

What happens to debt after foreclosure?

When a borrower loses their home to foreclosure and still owes their lender money after the sale, the remaining debt is usually referred to as a deficiency. Lenders can sue to recover this amount.

How does a foreclosure work and how does it relate to debt?

A foreclosure can be the result of losing a job, medical problems that keep you from working, too many debts or a divorce. Foreclosures often begin when the borrower stops making payments. When this happens, the loan becomes delinquent and the homeowner goes into default. The default status continues for about 90 days.

What does it mean when a debt is discharged in bankruptcy?

The discharge (or discharge order) is your main goal in filing for bankruptcy protection. It is an order from the court – entered pursuant to the provisions of the Bankruptcy Code – that tells your creditors they are forever prohibited from asking you to pay your pre-bankruptcy debts ever again.

Can a debtor receive a copy of a discharge?

The discharge does not list out each one of your creditors individually – it applies to them all across the board and is limited only by the non-dischargeability provisions in the Bankruptcy Code. This means that even creditors who cannot be discharged (such as student loans or some tax debts) will receive a copy of the discharge.

What happens when a student loan is discharged?

This means that even creditors who cannot be discharged (such as student loans or some tax debts) will receive a copy of the discharge. For those creditors, the discharge tells them that the automatic stay has been terminated and they can resume collection activities from you.