A bankruptcy discharge means that the debtor has been released from personal liability for certain specified types of debts. In simple terms this means that the debtor is no longer legally required to pay the discharged debt. Bankruptcy discharge is a permanent order which prohibits the creditors from making any collection effort.
When You Can Get A Discharge
Whether you can get a discharge or not depends on the type of bankruptcy that you have filed. In other words, it would depend on whether you have filed Chapter 7, 11, 12 or 13.
If you have filed for Chapter 7, the court will grant you a discharge on expiration of the time fixed for filing an objection to the discharge. The creditors are given 60 days following the first meeting to file a complaint against the discharge. In most cases, debtors can get a discharge of about four months after filing the Chapter 7 bankruptcy petition.
In individual bankruptcy cases relating to Chapter 11, 12 and 13, discharge is obtained as soon as the debtor completes all payments under the repayment plan. In Chapter 12 and 13, a debtor is given 3 to 5 years to repay the debt. Therefore, a discharge is usually obtained about four years after the date of filing.
Hardship Discharge
A discharge is usually given once the debtor has made all the payments as per the plan. However, if a debtor is unable to complete all the payments as per the plan due to certain circumstances beyond his/her control, he/she can request the court for a “hardship discharge.” A hardship discharge is available under Chapter 7, 13 and 12.
According to the Federal bankruptcy rules, the clerk of the bankruptcy court is required to mail a copy of the discharge order to all your creditors, the US trustee, the trustee appointed to your case and the trustee’s attorney, if any. The notice informs the creditors that the debts owed to them have been discharged.
Debts That Cannot Be Discharged
One must also remember that not all debts can be discharged. The following debts cannot be discharged –
• Certain types of tax claims
• Child support
• Alimony
• Debts due to willful and malicious injuries to person or property
• Certain types of student loans
• Any fines or penalties that you owe to government units
• Debts due to personal injury caused by the debtor driving under the influence of alcohol.
• Debts that you owe to certain tax-advantaged retirement plans
• Certain condominium or cooperative housing fees
Scope Of Discharge
The scope of bankruptcy discharge varies according to the type of bankruptcy that a debtor has filed for. Discharge available to debtors under Chapter 13 is broader than that available under Chapter 7. Debts incurred due to willful and malicious injury to property, paying non-dischargeable tax obligations and property settlements in divorce proceedings, can be discharged under Chapter 13 but not under Chapter 7.
Discharge Not An Absolute Right
Another important point that you must understand here is that a debtor does not have an absolute right to a discharge. Your creditors, the US trustee and the trustee appointed in your case can always file an objection to your discharge. When you file for bankruptcy, a notice is sent out to all your creditors. They are given a time frame within which they can object to the discharge that you are seeking.
Can Be Denied
The bankruptcy court can also deny you a Chapter 7 or Chapter 13 discharge if you fail to complete a debtor educational class. A debtor can also be denied a Chapter 7 discharge if he/she
• Fails to provide the requested tax documents
• Conceals or transfer property with the intent to defraud the creditors
• Conceals or destroys books or records related to the case
• Commits perjury related to the case
• Fails to account for the loss of assets
• Violates a court order
Since a discharge is not automatically available, it is important that you understand all the requirements thoroughly before you file for bankruptcy. A good bankruptcy lawyer will explain you all the details so that you can get the discharge without any hindrance.