Debt Discharge

Debt discharge occurs when a lender formally releases a borrower from the obligation to repay a debt, meaning the debt is canceled or forgiven. This usually happens through legal processes like bankruptcy or specific programs designed to reduce or eliminate debt. Once discharged, the borrower is no longer responsible for paying that particular debt. It provides financial relief but may have tax implications, as forgiven debt can sometimes be considered taxable income. Overall, debt discharge can help individuals or organizations recover financially by alleviating the burden of certain unpaid obligations.