Oftentimes, two of the more troubling questions bankruptcy filers seek answers to are "What is a bankruptcy discharge?" and "What debts can be discharged in a bankruptcy proceeding? The specific rules for bankruptcy discharge depend on the type of bankruptcy filed. Chapter 7 offers a quick discharge, while Chapter 13 involves a repayment plan before discharge.

You should consider consulting a qualified bankruptcy attorney or financial professional to understand the implications of a bankruptcy discharge. Bankruptcy is a complex process, and the rules vary based on your situation.

A Description of a Bankruptcy Discharge

In a bankruptcy case, a discharge is a legal order that releases you from the obligation to repay certain debts. Filing for bankruptcy is a way to seek relief from overwhelming debt and financial difficulties. The discharge is a crucial outcome of the bankruptcy process because it offers you a fresh start and the opportunity to rebuild your financial life.

Throughout the bankruptcy proceedings, the court will evaluate your eligible debts, and if approved, they will issue a discharge order. This discharge order acts as a permanent injunction, preventing your creditors from taking further collection actions against you for the discharged debts.

Once you receive a discharge, you are relieved of the legal obligation to repay those discharged debts. Your creditors are prohibited from pursuing legal action, making collection calls, or sending collection letters related to those debts. The discharge provides much-needed relief from the burden of excessive debt and enables you to make a fresh financial start.

Dischargeable Debts

Dischargeable debts in bankruptcy refer to the debts that can be eliminated or discharged through the bankruptcy process. When a debt is discharged, you are no longer legally obligated to repay it, and the creditor is prohibited from taking further collection actions against you.

Here are some common examples of dischargeable debts:

  • Credit card debt — This includes outstanding balances on credit cards or store cards.
  • Medical bills — Debts incurred for medical services, treatments, or hospital stays.
  • Personal loans — Unsecured loans obtained from individuals or financial institutions.
  • Utility bills — Unpaid electricity, gas, or water bills.
  • Past-due rent payments — Outstanding rental payments owed to landlords or property management companies.
  • Business debts — Debts incurred by sole proprietors or business owners for business-related expenses.
  • Collection agency debts — Debts that have been sold or transferred to a collection agency for collection.
  • Civil court judgments (with exceptions) — Most civil court judgments can be discharged, except for certain types of judgments related to fraud, willful misconduct, or intentional harm.
  • Older tax obligations — Certain older tax balances, typically income taxes, will be considered nonpriority debts and discharged.
  • Breach of contract or negligence-related debt — Judgments resulting from breaching a contract or negligent acts causing personal or property harm can usually be discharged through Chapter 13 bankruptcy.

The list is not exhaustive. Therefore, consult your bankruptcy attorney to evaluate your case and guide you on the debts that can be discharged.

Anticipated Timeline For Receiving The Bankruptcy Discharge

The timing of a bankruptcy discharge depends on the type of bankruptcy you filed and the specific circumstances of your case. Here are some general guidelines:

  • Chapter 7 bankruptcy — In a Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, the discharge is typically granted relatively quickly. It usually occurs a few months after you file your bankruptcy petition. However, the exact timeline varies depending on factors, including the complexity of your case and any potential challenges or objections raised by creditors or the bankruptcy trustee.
  • Chapter 13 bankruptcy — In a Chapter 13 bankruptcy, also known as reorganization bankruptcy, you will be required to create a repayment plan to pay off a portion or all of your debts over three to five years. The discharge in a Chapter 13 case is typically granted at the end of the repayment plan once you have completed all the required payments.

You must fulfill certain obligations throughout the bankruptcy process to be eligible for a discharge. These obligations include:

  • Attending credit counseling.
  • Submitting required documentation.
  • Completing financial management courses, and
  • Complying with any court orders or trustee requests.

Additionally, any objections or legal disputes arising during your bankruptcy case could delay the discharge. Creditors or the bankruptcy trustee could object to the discharge if they believe you have engaged in fraudulent activities, failed to disclose assets or income, or violated bankruptcy laws.

After the bankruptcy court grants a discharge, they typically notify you by mailing an "order of discharge." This document confirms that your debts have been discharged, and you are no longer legally obligated to repay them.

However, the order of discharge does not automatically close your bankruptcy case. The case will remain open until specific requirements are fulfilled. These requirements include:

  • Distributing available funds to creditors by the bankruptcy trustee.
  • Resolving any ongoing bankruptcy litigation, and
  • Completing any other outstanding obligations or administrative tasks related to the bankruptcy proceedings.

Note: Follow through with any remaining requirements and comply with the court's instructions until your bankruptcy case is officially closed.

Does the Discharge Order Outline the Discharged Debts?

The discharge order issued in bankruptcy cases generally does not provide a detailed list of the debts discharged. Instead, it offers general information about categories of debt that are considered "nondischargeable." These debts will remain your responsibility even after you receive the bankruptcy discharge.

The discharge order typically includes explanations regarding the following types of debts that you could still be obligated to pay:

  • Domestic support obligations — This refers to spousal or child support payments that you are legally required to continue making.
  • Most student loans and tax debt — Generally, student loans and tax debts are not dischargeable in bankruptcy, although there can be exceptions in certain situations.
  • Debts not properly listed — If you fail to list certain debts in your bankruptcy filing accurately, they will not be discharged, and you may still be responsible for paying them.
  • Accounts deemed non-dischargeable by the court — The court has the authority to determine that specific debts cannot be discharged based on factors, including the nature of the debt or other relevant considerations.
  • Fines, penalties, and criminal restitution — Debts resulting from fines, penalties, or restitution ordered as a consequence of illegal activities are typically not dischargeable.
  • Debts arising from intoxicated-related injuries — Obligations resulting from causing personal injury to someone while operating a vehicle under the influence of alcohol or drugs will not be discharged.
  • Loans owed to a retirement plan — Loans owed to a retirement plan will not be discharged through bankruptcy.
  • Debts subject to a reaffirmation agreement — The agreement is court-approved, allowing you to continue paying a creditor despite the bankruptcy discharge voluntarily. You agree to be legally obligated to repay the debt by reaffirming it. The creditor also agrees to maintain the loan or credit arrangement as if the bankruptcy had not occurred.

There are certain debts for which the creditor must file a lawsuit within the bankruptcy case and request that the court determine that the debt should not be discharged. This is known as an adversary proceeding or a non-dischargeability lawsuit.

Debts arising from fraudulent activities committed by the debtor or debts resulting from personal injury caused by the debtor while intoxicated are examples of debts the court could declare as non-dischargeable. In these cases, the creditor should present evidence and arguments to the court to demonstrate that the debt should survive the bankruptcy discharge.

The court will consider various factors and legal standards to determine whether these debts should be discharged or remain the debtor's responsibility.

What Happens to Property Liens?

Liens on property generally remain in place even after a bankruptcy discharge. A lien is a legal claim or encumbrance on property that serves as collateral for a debt. Bankruptcy discharges the debtor's personal liability for the discharged debts, but it does not automatically remove liens from the property.

If there is a lien on your property, for example, a mortgage lien or a judgment lien, the creditor could still have the right to enforce that lien and seek repayment by taking action against the property, even after your debts have been discharged through bankruptcy. The lienholder retains the right to foreclose or take other legal actions to satisfy their claim.

However, in some cases, bankruptcy can potentially provide relief from certain types of liens. For example, in a Chapter 13 bankruptcy, there could be options to address and modify certain liens through a repayment plan. Additionally, specific provisions in bankruptcy law, like lien avoidance, allow for the removal of certain types of liens if they impair exemptions or meet certain criteria.

Revocation or Denial of a Debt Discharge

Under certain circumstances, the court has the authority to deny or revoke a debt discharge in bankruptcy. While receiving a discharge is the desired outcome of a bankruptcy case, it is not guaranteed. There are situations where the court could deny or revoke the discharge. Here are some instances where this occurs:

  • Noncompliance with court requirements — If you fail to fulfill your obligations during the bankruptcy process, for example, by attending mandatory counseling sessions, submitting required documents, or providing accurate and complete financial information, the court could deny or revoke the discharge.
  • Concealment or fraudulent activities — If you engage in fraudulent behavior or intentionally conceal assets, income, or information from the court, your creditors, or the bankruptcy trustee, the court will deny or revoke the discharge.
  • Violation of bankruptcy laws — If you violate bankruptcy laws or engage in prohibited activities, including incurring debts through fraudulent means shortly before filing for bankruptcy, the court will deny or revoke the discharge.
  • Adverse actions by creditors or the trustee — If a creditor or the bankruptcy trustee successfully brings an action or files an objection to the discharge, alleging fraudulent behavior, misrepresentation, or other grounds for denial, the court could deny or revoke the discharge after a hearing and review of the evidence.

Keeping Your Discharge Order Upon Completing the Bankruptcy Process

It is advisable to preserve your discharge order even after completing the bankruptcy process. The discharge order is an important legal document that serves as proof that your debts have been discharged and you are no longer legally obligated to repay them.

Here are a few reasons why it is important to keep your discharge order:

  • Documentation of debt discharge — The discharge order provides evidence that your debts have been legally eliminated through the bankruptcy process. It serves as official confirmation that you are no longer responsible for repaying those debts.
  • Credit reporting and disputes — Keeping a copy of the discharge order can be helpful if you encounter any issues with credit reporting agencies or creditors in the future. If discharged debts continue to be reported incorrectly on your credit report, you can provide the discharge order as proof to request corrections.
  • Future financial transactions — Having the discharge order on hand will be helpful when applying for loans, mortgages, or other financial transactions in the future. It can help demonstrate that your debts have been discharged and your financial obligations have been resolved through bankruptcy.
  • Legal protection — In case you face any potential legal challenges related to discharged debts in the future, having a copy of the discharge order can serve as important documentation to protect your rights and prove that the debts have been legally eliminated.

Maintain multiple copies of the discharge order in a safe place, for example, in a secure folder or a digital backup. You also want to provide a copy to your bankruptcy attorney for their records.

When you receive documents from the court related to your bankruptcy case, like the discharge order, you can typically find the filing date and case number at the top of those documents. The filing date represents the date when your bankruptcy case was officially filed with the court.

The discharge date, on the other hand, will appear on the left-hand side of the discharge order, usually next to the issuing judge's name. This date signifies the day on which your debts were discharged, providing you with a fresh financial start.

Additionally, the case number is typically included in the top box of the discharge order and other court documents. The case number uniquely identifies your bankruptcy case within the court's system and is used for reference and organization purposes.

By referring to these dates and the case number, you can keep track of important milestones in your bankruptcy case and have the necessary information for future reference or inquiries related to your bankruptcy discharge.

Why the Filling Date is Important

The filing date in a bankruptcy case is significant because it determines which debts are eligible for discharge. Debts that you incur before filing for bankruptcy are generally eligible for discharge, meaning they can be eliminated through the bankruptcy process.

Once you file for bankruptcy, an automatic stay goes into effect, which puts a halt to most collection actions and legal proceedings by creditors. Any debts you incur after filing for bankruptcy are generally not included in the bankruptcy case and are not eligible for discharge. These post-filing debts remain your responsibility and are not covered by the discharge order.

Therefore, the filing date serves as a cutoff point for determining which debts are included in your bankruptcy case and eligible for discharge. Debts incurred prior to filing are subject to the bankruptcy process and may be discharged, while debts incurred after filing are not affected by the bankruptcy and must be addressed separately.

Note: Certain exceptions to this general rule exist. They include certain types of post-filing debts that can be included in a Chapter 13 repayment plan.

Why the Discharge Date Matters

The discharge date in a bankruptcy case is a crucial milestone as it represents the point at which your eligible debts are officially eliminated or discharged. It signifies the successful completion of the bankruptcy process and provides you with relief from the obligation to repay those debts.

While filing for bankruptcy initiates the process, it does not automatically guarantee a discharge. The court assesses various factors, including compliance with bankruptcy requirements and the nature of your debts, before granting a discharge. Therefore, it is possible for a bankruptcy case to be filed without ultimately receiving a discharge.

The discharge date holds significance in resolving collection issues more expediently. Once you have received a discharge, you can provide the discharge date as evidence that the debts included in the bankruptcy have been legally eliminated. This can help address any ongoing collection attempts by creditors who are unaware of the discharge or who continue their collection efforts despite the discharge.

By providing the discharge date, you can help expedite the resolution of collection issues and assert your rights under the bankruptcy discharge. The date serves as documentation of the finality of the bankruptcy process and can assist in protecting your financial interests moving forward.

Contact a Bankruptcy Attorney Near Me

If you are seeking a knowledgeable and experienced bankruptcy attorney in Los Angeles, reach out to the Los Angeles Bankruptcy Attorney. Our team of skilled professionals can provide you with expert guidance and support throughout the bankruptcy process.

Whether you need assistance with Chapter 7 or Chapter 13 bankruptcy, our attorneys are well-equipped to handle your case. They can help you understand your options, navigate the legal complexities, and work towards achieving the best possible outcome for your financial situation.

To take the first step towards a fresh financial start, contact us today at 424-285-5525.