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Frequently Asked Questions About Bankruptcy

What is a discharge Bankruptcy?
A bankruptcy discharge releases you from liability from most debts. The discharge is a permanent order prohibiting creditors from taking any form of collection action on discharged debts.

How does the debtor get a discharge?
Unless there are objections to the bankruptcy, the debtor will automatically receive a discharge. The clerk of the bankruptcy court mails a copy of the "order of discharge" to all the creditors, the debtor and the debtor’s attorney. The notice informs creditors the debts have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt.

Are all of the debtor's debts discharged?
Not all debt can be discharged. Non-dischargeable debts include: some tax claims; debts not listed by the debtor on the "bankruptcy petition"; child support; alimony; debts for willful and malicious injuries to person or property; debts to governmental units for fines and penalties; debts for most government funded or guaranteed educational loans or benefit overpayments; debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated; debts owed to certain tax advantaged retirement plans; and debts for certain condominium or cooperative housing fees.

Can creditors object to the discharge?
YES! DEBTOR'S DO NOT HAVE AN ABSOLUTE RIGHT TO A DISCHARGE. An objection to the debtor’s discharge may be filed by a creditor or by the Trustee. The court may deny a discharge for any of the reasons described The Bankruptcy Code, including: 1) failure to provide requested tax documents; 2) failure to complete a course on personal financial management; 3) transfer or concealment of property with intent to hinder, delay, or defraud creditors; 4) destruction or concealment of books or records; 5) perjury and other fraudulent acts and; 6) failure to account for the loss of assets.

Can a debtor receive a second discharge in a later chapter 7 case?
The court will deny a discharge in a Chapter 7 case if the debtor received a discharge under Chapter 7 in a case filed within eight years before the second petition is filed. The court will also deny a Chapter 7 discharge if the debtor previously received a discharge in a Chapter 13 case filed within six years before the date of the filing of the second case unless: (1) the debtor paid all “allowed unsecured” claims in the earlier case in full; or (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtor’s plan was proposed in good faith and the payments represented the debtor’s best effort. A debtor is ineligible for discharge under Chapter 13 if he or she received a prior discharge in a Chapter 7, case filed four years before the current case or in a Chapter 13 case filed two years before the current case.

Can the discharge be revoked?
The court may revoke a discharge under certain circumstances such as: 1) Obtained the discharge fraudulently; 2) Failing to disclose property that would constitute assets of the bankruptcy estate;
3) Failing to explain misstatements discovered in an audit; 4) Failing to provide documents or information requested in an audit of the case. A request to revoke a discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.

May the debtor pay a discharged debit after the bankruptcy case has been concluded?
A debtor who has received a discharge may voluntarily repay any discharged debt. A debtor may repay a discharged debt even though it can no longer be legally enforced.

What can the debtor do if a creditor attempts to collect a discharged debt after the case is concluded?
If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine.

Can an employer terminate a debtor's employment solely because the person was a debtor or failed to pay a discharged debt?

The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because they have filed bankruptcy.

Court mandatory filing fees
The filing fees must be paid to the clerk of the court upon filing. These are usually in addition to your attorney fees. Debtors should be aware that failure to pay these fees may result in dismissal of the case. If the debtor’s income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the Chapter 7 fees in installments, the court may waive the requirement that the fees be paid.

Frequently Asked Bankruptcy Questions

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