What is bankruptcy discharge?
Bankruptcy discharge relieves you, the debtor, from the responsibility of repaying certain types of debts. If you receive a bankruptcy discharge you are no longer legally required to continue to make debt payments on discharged debt. A bankruptcy discharge also legally prohibits creditors from continuing their debt collection actions such as telephone calls, letters, and other legal collection actions. Bankruptcy does not discharge secured debt.
Debts you cannot discharge
Section 523(a) of the Bankruptcy Code specifically outlines debts that cannot be discharged by filing Chapter 7, 11, 12 and 13. Generally debts that are not discharged by filing bankruptcy will include willful and malicious injury debts, alimony and child support payments, governmental fines and penalties, personal injury debts from drunk driving charges, tax-advantaged retirement plan debts, educational loans from the government and debts for cooperative housing fees. Chapter 13 bankruptcy allows for more debts to be discharged than filing other types of bankruptcies. Specifics should be discussed with a bankruptcy lawyer.
Creditor Objection or Trustee Objection
Filing bankruptcy does not give you an absolute right to discharge your debts. In fact, a creditor or a trustee may make an objection. Creditor objections are made directly to the bankruptcy court after they have received notification of your bankruptcy filing. If the creditor makes an objection their complaint will initiate a lawsuit which is called an “adversary proceeding.”
A court or trustee objection may also be filed for any of the following reasons:
- You did not provide the appropriate tax documents.
- You failed to complete the personal financial management course.
- You intentionally concealed property in efforts to defraud your creditors.
- You destroyed your financial records.
- You have inexplicably hidden or lost assets.
- You have violated a court order.
What does it mean if my case is discharged?
Debts are discharged at the completion of your case, which for Chapter 7 is immediately following the date the creditors can object and the time allowed for a motion to be filed for your case to be dismissed due to abuse. This is generally four months from the date you filed your bankruptcy petition.
Chapter 13 bankruptcy discharges debts as soon as you complete your bankruptcy repayment plan. At the completion of your case a copy of the discharge order is sent to the trustee, the attorneys and the creditors. The notice of discharge sent to the creditors notifies them that they must cease all collection efforts or face potential fines and penalties.