What is a Discharge in Bankruptcy and How Can We Get One?

The goal of most bankruptcy filings is to get a discharge from the federal Bankruptcy Court. A discharge is a federal Court Order that any and all debts listed on your bankruptcy petition and schedules as dischargeable are, in fact, discharged. The Order prohibits any and all creditors from forever attempting to collect the former debt.

When Do I Get My Discharge?

In a typical Chapter 7 personal bankruptcy case, the discharge is 90 days after the filing. The way it works is approximately 30 days after filing a bankruptcy there is a Trustee hearing, called the Meeting of Creditors under Section 341. Sixty days after the hearing you get a bankruptcy discharge.

The actual discharge is a document that is sent to the debtor, the debtor’s attorney and the creditors. If you lose this document, you can get a copy from your attorney or from the Bankruptcy Court.

What Would Delay a Discharge in Bankruptcy?

If a creditor files an adversary proceeding, the discharge can be delayed. If the Trustee has questions that can’t be immediately answered or requests documents that cannot be provided at the time of the hearing, the discharge day may be delayed.

What Would Prevent a Discharge in Bankruptcy?

In fact, there is no automatic right to a discharge in a Chapter 7 bankruptcy. Our blog is replete with articles about debtors who have been found who committed fraud on the Bankruptcy Court. Those debtors are not given a discharge. While Creditors have the burden of proof in Bankruptcy Court, which is considered a “debtor friendly” place to litigate questionable claims by the creditors, the Court may make a finding that a debt is not dischargeable.

A discharge Order can be revoked by the Court for a fraud on the Court. To prove such a fraud, the Trustee or the Court would bring an action and the debtor would have the right to object and present evidence.

The debtor is required to take the personal financial management class following the 341 Creditors Meeting is grounds for the Court to deny a discharge.

What Can Creditors Do Following a Discharge?

Nothing. After your debts are discharged, the creditors can’t sue you in any court. They can’t send you letters requesting payment. They can’t call you regarding payment. In the event a creditor pursues a debtor following a discharge, and a simple reminder letter won’t work, you can file a motion with the Court and get sanctions issued against the creditor.

What Can Employers Do Following a Discharge?

The government and private employers may not discriminate against you because of a bankruptcy discharge.

The government may not terminate an employee because of a bankruptcy filing or a bankruptcy discharge.

What Debts Are Not Dischargeable?

Secured debts are not dischargeable in a Chapter 7 bankruptcy. Mortgages on real estate are not dischargeable, unless you are willing to walk away from the home; in that instance, an experienced bankruptcy attorney might recommend you stop paying the mortgage(s). Liens on vehicles or other such personal property are not dischargeable, again, unless you want to return the vehicle; any amounts in arrears are discharged.  Recent federal tax debt is not discharged; taxes filed on time and more than three years old may be dischargeable. Willful and malicious injury to a person or property is not dischargeable.  Student loans are very difficult to have discharged.  Domestic orders, such as child support, alimony and property divisions, are not dischargeable.

When Can I File Bankruptcy Again for Another Discharge?

Under the Bankruptcy laws enacted in 2005, you need to wait 8 years before filing for another discharge. Your lawyer can look up the date of any prior discharge if you do not recall it.