A Bankruptcy Discharge is your Goal, from the first second that you enter the bankruptcy process
The bankruptcy discharge is only gained after a person has filed for bankruptcy and completed the appropriate stages of bankruptcy. The stages vary somewhat depending on any assets the debtor or debtors hold. The period of bankruptcy varies, but allows a fresh start for the debtor, once the terms of bankruptcy have been completed.
The bankruptcy discharge releases the debtor from the payment of certain debts which have been specified during the bankruptcy, and are discharged by the bankruptcy court.
First we explain the key concepts behind “Bankruptcy Discharge”, then answer a number of questions including:
Q: What Are the Penalties If Bankruptcy Is Not Discharged?
Q: Are all of the debtor’s debts discharged, or only some?
Q: What Is the Definition of a Discharged Bankruptcy?
Q: Are bankruptcy discharge and dismissal the same thing?
Q: Can child support interest and penalties be discharged in bankruptcy?
Main Discussion of Bankruptcy Discharge
The discharge from bankruptcy is a permanent order, which means that the creditors are not allowed to try to collect on these debts, or take any form of legal action after the bankruptcy discharge. This then frees up the debtor to make a fresh financial start, free from these previous debts, and without phone calls, letters, or any personal contact from the previous creditors.
However, it should be noted that any liens placed on property that are not discharged, are still in effect and are enforceable after the bankruptcy. There are other types of debt that cannot be discharged, such as tax debts, debt for certain types of housing such as condominiums, and debts such as spousal support payments if these are not listed during bankruptcy procedures as debts owing.
If the debtor has been given a repayment plan under the bankruptcy plan, then usually once these repayments have been made, then the court usually grants the discharge, but of course, the laws concerning bankruptcy are complicated, and you should get more details from your financial adviser.
There is no guarantee of an automatic bankruptcy discharge for any debtor, as the creditors are entitled to file a complaint in the bankruptcy court, provided it is filed before the deadline is reached for this.
Also the bankruptcy court itself may not grant a discharge, for a variety of reasons. The debtor has to fulfill various requirements during bankruptcy, such as filing tax returns, making payments to creditors according to the agreement, and attend a personal financial management course. If any of these are not completed to the satisfaction of the courts, then the debtor cannot be discharged until these have been completed to the satisfaction of the bankruptcy court.
The bankruptcy discharge can be revoked by the court within one year of it being granted, if it is found that the debtor has filed fraudulent claims, or has obtained the discharge by fraud.
Once the debtor has been discharged from bankruptcy, those debts that were discharged no longer have to be paid. However, in some circumstances, the debtor may choose to pay back any debts even though the debts have been discharged. In the case of debts to a family doctor for instance, or to a family member, the debtor may choose to make payments even after they have been discharged from these payments. That is the debtors decision, and they are not obliged to make payments to any creditors from which they have been discharged.
It should be remembered that although bankruptcy provides a fresh start for someone who has accumulated debts which they cannot pay, and the period before becoming discharged does vary, the aim of bankruptcy is to enable the debtor to become a valuable member of society by forgiving debts that they have incurred, thus removing the tremendous financial burdens many carry.
~~ Common Questions about Bankruptcy Discharge ~~
Q: What Are the Penalties If Bankruptcy Is Not Discharged?
Once you have filed a petition for bankruptcy protection, your creditors are not allowed to contact you any more by mail, email, phone or any other approach. And once your bankruptcy process has been completed, all debts covered by the filing are discharged, meaning that creditors must continue to comply with the conditions of the bankruptcy by not contacting you for any further collection activity.
So, if your debts are not discharged, if a discharge of debtors notice is not granted to a consumer concerning a certain debt, the creditor has the right to continue with collection activities; since the conditions of the bankruptcy no longer apply, your creditors can act to pursue certain remedies that are related to your debt.
If there’s no discharge of debtors notice executed, it’s exactly as if a debtor had never filed a petition for bankruptcy at all. Creditors can pursue legal action through the courts and acquire a judgment; and once they have obtained a judgement, they have numerous options available to them, including garnishing wages or attaching a bank account. And in some states, a creditor can attach a lien to real estate property.
Q: Are all of the debtor’s debts discharged, or only some?
Not all debts are discharged. The Bankruptcy Code lists the types of debts not eligible for discharge under 11 U.S.C. §523. The debts discharged vary under each chapter of the Bankruptcy Code.
Student Loans are typically not dischargeable, although this is not so if it can be proved that there are issues of undue hardship from a failure to have the debt discharged.
Domestic support obligations are typically not dischargeable – although issues of accrued interest and state-collected penalties may be, in some circumstances (so, the debtor should prepare for increased legal fees; see later).
Some taxes are not dischargeable – according to 11 U.S.C. §507, taxes due within three years of the bankruptcy filing and that were assessed by the IRS less than 240 days before the bankruptcy started will not be discharged. Taxes that were filed within two years of filing for bankruptcy are also not dischargeable. Also, financial penalties imposed on tax debtors due to fraud or willful evasion of taxes are not eligible for discharge.
And, money, assets, or credit obtained through fraudulent means are not dischargeable.
It’s also important to realize that when you file for personal bankruptcy, the filing will only cover pre-bankruptcy petition debts. This is true of both Chapter 7 and Chapter 13 bankruptcies. Both types cover pre-petition bankruptcy debt, but only some types of post-petition debt can be added to a bankruptcy plan.
Q: What Is the Definition of a Discharged Bankruptcy?
Discharged bankruptcy is a legal term for a permanent court order releasing the debtor from personal liability for the debts covered by the bankruptcy petition. The order prohibits creditors from starting or continuing collection action on any discharged debts, and continues the prohibition against legal action or communication with the debtor in the form of telephone calls, emails, letters, or personal contacts.
This order, in general, releases the bankrupt from all current debts associated with the petition for bankruptcy (wipes clean the financial slate) and frees the debtor from the legal disabilities of a bankrupt.
To move away from legal-speak: a bankruptcy discharge can be seen as a new beginning in a debtor’s financial life because when a debtor obtain the formal discharge, the financial slate is wiped clean, and they are are free from the debt associated with the bankruptcy plan.
Q: Are bankruptcy discharge and dismissal the same thing?
Bankruptcy dismissal and discharge are two different things. A bankruptcy can be dismissed for various reasons such as abuse or failure to live up to a bankruptcy plan.This leaves the debtor without a bankruptcy discharge – which is the ultimate target of any debtor filing for bankruptcy.
A discharge (see the question above) is the elimination of debts, which occurs at different times depending on what chapter under which the bankruptcy was filed.
Q: Can child support interest and penalties be discharged in bankruptcy?
Child support itself is not dischargeable.
However, the accrued interest and state collected penalties MAY be dischargeable. This will typically call for a debtor’s bankruptcy lawyer to file an adversary action (lawsuit) in Federal bankruptcy court to get them discharged, so additional legal costs are likely, above any fees charged by the bankruptcy attorney for filing the bankruptcy itself.
This would be a good issue to address when interviewing local bankruptcy attorneys prior to commencing the petition for bankruptcy.
{ 45 comments… read them below or add one }
The best advice I can give someone that is filing bankruptcy is do not do anything with any kind of credit until you receive your discharge papers. Those discharge papers are key that is what tells you that all the debts have been forgiven, and read them because that will tell you if all of them were forgiven or if a creditor said no. Just remember it’s better to be safe than sorry.
For those readers concerned about getting your credit back after you file, it isn’t hard at all, because the creditors get a report of who has filed bankruptcy and been discharged and they know that you can’t file again for another seven years so they want you to have those credit cards and stuff. So you will start seeing offers in the mail for credit cards as soon as your bankruptcy is discharged by the court
There are moral questions about filing Bankruptcy. I was reading the comments left by your readers and it seems that the biggest question about bankruptcy is whether it is right to file bankruptcy in the first place. Take it from someone who has been there, there is no right or wrong answer to that question it is all based on opinion and it is between you and God how you handle it.
I can’t believe that I stumbled across a blog that I have been trying to find information on for so long now, and there it sat just looking at me. Thank you for explaining that you can not count everything over and you are debt free until you get the discharge order from the courts, and the same letter that they give you, they send to the debtors as well. Don’t get discouraged and don’t give up.
I am so glad to hear that child support is not dismissible in bankruptcy, I work long and hard to finally get child support from my ex that I am glad to hear that he will have to continue to pay it no matter what. The other advice you gave in your article was very helpful as well. I hope I never have to file but just in case I will keep this article.
Thank you for giving us the definition of a discharged bankruptcy, unfortunately I have never done this before, or I guess that is fortunate, so I was unfamiliar with the terminology. Your advice on this subject was great. Thank you for discussing it do many others are embarrassed to talk about so it is hard to find out helpful information.
I today’s society you would think that this wouldn’t be such a taboo subject because there are so many people that are having to file every month it seems that you would be able to find good council on the subject. Your article is the first one I have run across that has had a question and answer section so thank you for that some of these were questions I had, so I appreciate it
I had to file bankruptcy a few years back and I didn’t realize any of this information. It is interesting what all has to happen in order for things to be cleared and for you to be debt free finally. If your bankruptcy isn’t discharged then the creditors can come after you for the full amount plus interest right? If at that point can you file again sense the first one wasn’t discharged?
My husband and I just filed bankruptcy not more than two weeks ago and I just ran across this article, I wish I would have seen it before we filed but I don’t think it would have made a difference. How do you know when your bankruptcy has been discharged? Does the lawyer tell you or do you go back to court? We are new to this so forgive the stupid questions please. Your article was great and you had some great information in it I just didn’t notice the answer to this question in there. If you wouldn’t mind replying to my comment with the answer I would greatly appreciate it.
How important do you think the discharge of a bankruptcy is? I have been reading that you shouldn’t go out and try to incur any debt until the discharge is released through the bankruptcy court because that would be all the cause they need to not discharge your bankruptcy at all. And that there are people out there that have filed bankruptcy just because they maxed out their credit cards and didn’t want to pay them off and those are the cases that have made it more difficult for the people that have legitimate needs to get rid of their debt to get rid of the credit cards, because the credit card company can say no. Is that true as well? I understand that it is easy to get credit cards after you are discharged by the bankruptcy court though so that is good as long as you don’t go make the same mistakes. Thank you for posting the information you have it has been very helpful in explaining exactly what happens. I would really be grateful if you would please answer my questions with a reply.
Bankruptcy is such a sticky subject that no one likes to talk about because it is so embarrassing. I was reading the comments left by your readers and it seems that the biggest concern about bankruptcy is whether it is right to file bankruptcy in the first place. And secondly how do they get credit back after they file. Take it from someone who has been there, there is no answer to the right or wrong question it is all based on opinion and it is between you and God how you handle it. As far as getting your credit back is concerned after you file, it isn’t hard at all, your credit limit on credit cards will be smaller than it was when you first start out but you can get credit cards easily, because the creditors get a report of who has filed bankruptcy and been discharged and they know that you can’t file again for another seven years so they want you to have those credit cards and stuff because they figure you will rack up the debt again and you have to pay it, so you will start seeing offers in the mail for credit cards as soon as your bankruptcy is discharged by the court. But please don’t make the mistake of getting a bunch of them and racking up the debt again. In order to build your credit up you need to use them on things that you know you can pay of completely the next month. Never leave a balance on your credit cards for more than a month, not only does this make your credit go up it will also keep them from being able to charge you interest.
This was a very good article and you stressed the point of how important it is to have the bankruptcy discharged. I just want to reiterate that fact, I have had friends go out and file bankruptcy and thought it was a done deal and as soon as they received the credit card offers in the mail the sent off for them and they got them, but because they did that before the bankruptcy was discharged the bankruptcy court denied them the discharge. They were devastated because the filing of the bankruptcy put into action the stopping of the collection calls and hate mail etc. but when this happened the collectors were released to start in again wanting their money and now they had no choice they had to pay it back. So if you get anything from this article let it be the importance of waiting.
Just remember something very important if you file bankruptcy and you give the lawyers a list of your debts and the debtors you want to include in the bankruptcy and then you turn around and go incur more debt with other credit cards or car companies’ etc. before your bankruptcy is discharged from the courts, it will not be discharged and you will owe all that back money plus any interest to those companies that haven’t been bothering you. And yes they will start bothering you again by phone, mail or any way they can to get their money. Filing bankruptcy is not a get out of jail free card and it isn’t over, over night. What ever the case may be wait on those discharge papers to come before you incur anymore debt.
People really shouldn’t worry about building credit after bankruptcy because you are going to get credit card offers like they were coming out of the wood work. The thing to remember is you don’t want to go out and get right back in the same position you were in before, because after you file you can not file again for seven more years so if you were not aware of that you could end up in bigger trouble that you were in the first place. Remember what the article says about bankruptcy discharge and wait to do anything until you get that piece of paper. And the fastest way to build up credit is to make sure whatever you purchase on credit, pay it off the very next month. If you can not do that then don’t buy it because it isn’t worth it.
If I understand this correctly, there is essentially some sort of variable grace period between the time you file for bankruptcy and the time you become discharged. I am not quite clear on when the discharge occurs. Does it usually happen after the court proceedings conclude or does some time pass from that point forward. The most pertinent and perplexing question I think is, are bankruptcy discharge and dismissal the same thing? I don’t see where this is made clear, neither on the video or the article. Do I need to surf around this website to find more clear cut ansers?
It is bad enough that one has gone through the stress, uncertainty and fear of the future that results from drowning in debt, now I am learning (if I did in fact understand correctly) that there are more factors to worry about before your bankruptcy is considered valid. It’s not enough for creditors to humiliate you and eat away at your self worth (as well as your monetary worth), come to find out you have to qualify for your own demise before your bankruptcy is honored. It’s like not being considered dead enough to lay in your own funeral casket.
The discharge of a bankruptcy is very important, do not go out and try to incur any debt until the discharge is released through the bankruptcy court because that would be all the cause they need to not discharge your bankruptcy at all. Believe it or not there are people out there that have filed bankruptcy just because they maxed out their credit cards and didn’t want to pay them off and those are the cases that have made it more difficult for the people that have legitimate needs to get rid of their debt to get rid of the credit cards, because the credit card company can say no. It is easy to get credit cards after you are discharged by the bankruptcy court but do not get them before hand. Thank you for posting the information you have it has been very helpful in explaining exactly what happens.
I was reading the comments left by your readers and it seems that the biggest concern about bankruptcy is whether it is right to file bankruptcy in the first place. And secondly how do they get credit back after they file. Take it from someone who has been there, there is no answer to the right or wrong question it is all based on opinion because some would say it is not the right thing to do and that even if you do file you should make plans to pay back the debt in the future anyway because God tells us to pay our debts. Then there are those that would say it is ok because it is also in the Bible that every seven years the debts were wiped clean for people (that is where the rule about you can only file every seven years came from). So I would say it is between you and God. As far as getting your credit back is concerned after you file, it isn’t hard at all, your credit limit on credit cards might be small when you first start out but you can get them easily, the same goes for a car loan because the creditors get a report of who has filed bankruptcy and been discharged and they know that you can’t file again for another seven years so they want you to have those credit cards and stuff because they figure you will rack up the debt again and you have to pay it, so you will start seeing offers in the mail for credit cards as soon as your bankruptcy is discharged by the court.
This was very helpful information, I thought as soon as you filed with the courts it was over and done with, you didn’t owe anybody that you listed in the bankruptcy anymore. I would have been in a lot of trouble in that case because what would have happened if the court didn’t discharge it? You posted this just in time I haven’t filed yet but I am getting ready to so this was a very timely gift.
So according to my comprehension, a discharged bankruptcy must occur in order for the slate to effectively be wiped clean so it frees the person from all associated debts. I would not have known that this is such a vital document or ruling in the bankruptcy process. By all indications, any harassing phone calls from collection agencies or annoying emails from creditors should cease and desist, but how exactly do all creditors and collection agencies know that such a discharge has been enacted? This is important to know for a person who may have had a vehicle that was on a repossession list, but now, after the discharge, is entitled to be free from such action. Is there some national registry that gets flagged when a bankruptcy discharge is completed?
I thought bankruptcy was for deadbeats who spent too much on their credit cards. My bankruptcy story started with a phone call. I was a stay-at-home parent, cleaning up after the kids’ lunch when the phone rang. My spouse had been in a car accident, and was on his way to the hospital. I gathered up the children and rushed to the emergency room. Unfortunately, we did not have health insurance. We had always made one excuse or another, or decided that we just didn’t have the money. The bills started, and kept coming for months. It’s the hardest decision we’ve ever had to make, but bankruptcy was the right decision for us. Fortunately, I everything processed smoothly. I never had to worry about anything being discharged. Maybe because my lawyer handled it.
Reading the comments left by your readers it seems that the biggest concern about bankruptcy is whether it is right to file bankruptcy in the first place and how do they get credit back after they file. As far as if it is right some would say it is not and that even if you do file you should make plans to pay back the debt in the future anyway because God tells us to pay our debts, but it is also in the Bible that every seven years the debts were wiped clean for people (that is where the rule about you can only file every seven years came from) so that is really a judgment call on your part it is between you and God. As far as getting credit cards etc. after you file, it isn’t hard at all, you credit limit might be small when you first start out but you can get them easily, the same as a car or home because the creditors get a report of who has filed bankruptcy and they know that you can’t file again for another seven years so they want you to have those credit cards and stuff as soon as possible because they figure you will rack up the debt again and you have to pay it, so as soon as you get that discharge from the court you will start seeing offers in the mail for credit cards. This is a taboo topic in today’s society because it is still such a shameful thing to have happen to you but it isn’t the end of the world.
Many of us are told that the recovery is pretty much here, or pretty much here, or else it’s stalled. I agree with the opinion with regards to getting credit after individual bankruptcy, you can easily say just work with cash and keep in mind that that’s a terrific plan but sometime you just have to have a credit card for instance in case your vehicle stops working outside the state, unless you have protection obviously.
A bankruptcy is a big deal, some people think it is as simple as going to a bankruptcy lawyer and telling them you want to file and that is it, you are free and clear your debts are gone, but it isn’t that simple. The lawyer has to discuss which chapter you want to file and there are about twenty different chapters (I could be exaggerating on how many chapters there are but there are quite a few) then you have to list all of our debtors and the amounts you owe, then the lawyer has to take it to court and file it for dismissal meaning that you are dismissed from owing that debt. Then you wait a few weeks and the court decided if you are dismissed or not, once you have that dismissal then you are done. It is a very lengthy process to say the least so do your research and be prepared when you go to the lawyer and hopefully it will go faster than it normally would.
I am going to have to file for bankruptcy and if I am going to ruin my credit that way then I want all my debts except my house gone. Which chapter is that? I thought I saw a previous blog that explained the different chapters so I will do some more research and see what I can find out. Thank you for the information on what discharged bankruptcy really means now I know what to look for before I can assume that my debts have been erased. About how long does this whole process take?
I feel really sad that we only have bankruptcy as a means to getting out of debt.
How did our wages tank so low that it’s impossible to get caught up by just working?
You should be able to support yourself, and your expenses with your 9 to 5. I have no
ideal how we’ll ever get back on track, this is truly awful.
I am confused because I fail to understand the difference between the discharge and filing for any one of the bankruptcy chapters. Are they the same thing? In other words, is a bankruptcy discharge just another way of saying chapter 7 or 11 bankruptcy? Whatever the case, I can see the value of filing for bankruptcy because it allows you to press a reset button and start over again. The restrictions you have imposed upon you from a bankruptcy are ones that should be there anyway because as someone whose filed for chapter 11, for instance, you don’t need to be trying to get credit until such time that you demonstrate that you can control your spending and having to buy things with cash is a good training process to help you get used to good spending habits.
I don’t know how comparable the US and Canada bankruptcy programs are, however in Canada they’ve recently made the actual process far more challenging – just about any slip-up in the regular monthly bookkeeping and the period of time to discharge gets to Thirty-six months. Really brutal.
I saw you’re not a lawyer or attorney (whoever published this web site) but I do appreciate your making it easy to understand some of the issues. I guess I understand the whole legal thing is never going to be straightforward however they do appear to try to make it too complicated.
Isn’t going to seem easy to receive helpful advice on bankruptcy, within Canada there are locations where you don’t have to shell out but find great assistance and counseling even, I’m not really sure the way it is within the states in the usa or England. At least the site has provided me some useful questions to ask.
Dude, there’s still a large amount of judgment connected to actually having been bankrupt, although the good news is you won’t need to wait for a long time nowadays so you can get hold of a credit card (even if pre-paid), auto finance and maybe even mortgages.
I get mixed up over the entire education loan thing where it looks like some students just simply go bankrupt soon after they graduate so they’re going to be free of debt and also clear of the fallout when there’re still young. Although others declare it’s impossible to get undergraduate loans written off in bankruptcy. My mom & dad went to University in Europe (long ago) and point out their schooling was totally free. Wish that’d come into play right here!
See, I realize many bankruptcies are the effect of bad luck, even disaster, some them I’m sure are just that folks have no idea how to budget as well as how to manage money and no-one teaches this at the school skill level where in my opinion it should be just as essential to be taught as maths or English. I would have said more essential compared to exercise also but with so much obesity I reckon I won’t be able to suggest that any longer.
One of my buddies tried everything to stay away from bankruptcy and agreed on one of those plans to repay everyone back a certain amount over some time, not the entire amount but regular repayments. But A couple of years in he got layed off yet again, missed some payments and the whole offer was off and he then owed everything once again and had to pay everything off so the 2 years became just a waste really even though it did make him make some payments.
A buddy of mine who’s just gone through this is dealing with that same challenge (credit as a result of bankruptcy) his wife has family members overseas with health problems and being in a position to buy an air ticket and then rent an auto at limited notice really creates some obstacles.
Personal bankruptcy is typically called the last resort and I must agree – it may be good to be relieved from the financial obligations but (from observation, not experience, mercifully) this can be a hellish process to go through and it’s very easy to come out the procedure with numerous serious troubles to deal with.
It always would seem to me that the personal bankruptcy direction is a real challenge. On the one side, it just doesn’t seem right that when the discharge is dealt with, a lot of debts go not paid and you just move on free from debt. Still at the same time, I can see how too much debt usually means it’s impossible to ever dig out so with out personal bankruptcy what’s left? Anyway, that’s how it seems to me.
I know this article is mostly about bankruptcy discharge but it’s really hard to split up the discharge material from the issue of getting credit just after bankruptcy, too. The moment the discharge is authorized the challenges start with obtaining credit or you won’t be able to do things such as rent cars, not to mention even hotels need more than merely the cash for a single night.
So basically what ever chapter of bankruptcy you file has to be discharged through bankruptcy court before you are certain that you know longer owe them money, correct? And which chapter is it that wipes the slate clean of all of your debts? I am going to have to file and if I am going to ruin my credit that way then I want all my debts except my house gone. I thought I saw a previous blog that explained the different chapters so I will do some more research and see what I can find out. Thank you for the information on what discharged bankruptcy really means now I know what to look for before I can assume that my debts have been erased.
It’s worrisome to look at the sheer number of new personal bankruptcies in recent times. Many of us are told that the recovery is pretty much here, or pretty much here, or else it’s stalled … individuals presently in the personal bankruptcy process must be hoping for it to enable them to recover beyond getting there discharge.
I agree with the opinion with regards to getting credit after individual bankruptcy, you can easily say just work with cash and keep in mind that that’s a terrific plan but sometime you just have to have a credit card for instance in case your vehicle stops working outside the state, unless you have protection obviously.
Can anybody let me know, just how rigid is the rules when it comes to, will even a small slip-up necessarily mean someone doesn’t receive a discharge? This can be a tricky way to walk, brother.
I contacted my credit card company before I filed for bankruptcy and was told they decided on a case by case basis when canceling credit cards, with my history of great credit they would probably allow me to keep my credit card with them.
I was surprised when I received a letter canceling my credit card. I had been with this company 30 years and never had a late payment or anything bad against me.
My bankruptcy was discharged 3/9/2011. I noticed in you inforrmation it stated the discharge could be revoked within one year of the discharge. I am trying to pay down the principal of my home loan. After all my bills are paid I have a couple of hundred dollars extra. If I start applying that money to my loan could that be a reason that the discharge of the bankruptcy could be revoked.
What if the couple has divorced since the filing of the initial bankruptcy. At this time, one person lives on the east coast and the other person lives on the west coast/