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
Unless there are objections to the bankruptcy, the
debtor will automatically receive a discharge. The clerk of the
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
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
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
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
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
Helpful Videos on Bankruptcy
to watch videos on how the Bankruptcy process works.