What does a discharge in bankruptcy do regarding contracts?

A discharge in bankruptcy effectively eliminates the legal obligation of the debtor to repay most debts, which includes many contracts that the debtor has entered into. This means that once a discharge is granted, creditors are typically barred from enforcing the terms of those contracts against the debtor, as the debts are considered settled to the extent allowed by the bankruptcy law.

This discharge serves as a fresh start for the debtor, relieving them of the burden of past financial obligations and allowing them to begin anew without the threat of legal action from creditors regarding most debts. However, it's important to note that certain types of debts, such as student loans or child support obligations, may not be dischargeable, but in general, the typical outcome of a bankruptcy discharge is to prevent creditors from collecting on the debts that were included in the bankruptcy proceeding.

Understanding this allows individuals in financial distress to see bankruptcy as a legal tool for debt relief, where the main consequence is the cancellation of the legal claims that creditors would otherwise have to enforce contracts and collect debts.