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From Executive Director
Whether people realize it or not, one of their main goals when filing bankruptcy is to obtain a bankruptcy discharge of their debts. Not everyone who files bankruptcy receives a discharge. And, in some cases, for people who do receive a bankruptcy discharge, not all of their debts are discharged.
What Is A Bankruptcy Discharge
A bankruptcy discharge is a permanent court order stopping your creditors from collecting or trying to collect a debt from you personally. A debt that is discharged in bankruptcy does not go away and is not deemed to be satisfied or paid. A bankruptcy discharge simply tells the person or entity to whom you owe a debt that they cannot take any action to try to collect from you personally. So, while the debt technically still exists, a creditor cannot do anything to collect from you personally.
It is important to realize that there is a difference between a creditor trying to collect from you personally and a creditor trying to collect by taking possession of collateral and selling it to pay a debt. A bankruptcy discharge stops a creditor from trying to collect from you personally, but does not stop a creditor from taking possession of collateral, selling the collateral, and applying the sales proceeds to the debt.
What Debts Does A Bankruptcy Discharge Cover
A Chapter 7 bankruptcy discharge and a Chapter 13 bankruptcy discharge will cover all of your dischargeable debts. I know that that is not very definitive, but because every bankruptcy case is different, it is impossible to state which of your debts will be discharged.
In general, most of your unsecured debts are discharged in bankruptcy. However, the following unsecured debts will not be discharged unless you pay them in full:
- Debts for alimony or child support,
- Debts for certain taxes,
- Debts for most government funded or guaranteed educational loans (there is a hardship
exception for some student loans),
- Debts for government benefit overpayments,
- Debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and
- Debts for restitution or a criminal fine included in a sentence if you have been convicted of a crime.
There are other unsecured debts that will likely be discharged in bankruptcy unless the respective creditor objects to you receiving a discharge of their debt by filing a timely objection and winning an action to have the debt declared nondischargeable. These debts include:
- Debts for money or property obtained under false pretenses,
- Debts for fraud while you were acting in a fiduciary capacity, and
- Debts for restitution or damages awarded in a civil case against you for your willful or
malicious actions that cause personal injury or death to a person.
Also, as you might suspect, a Chapter 7 bankruptcy discharge and a Chapter 13 bankruptcy discharge do not necessarily cover the same debts. Following are some debts that are dischargeable in Chapter 13 bankruptcy, but not in a Chapter 7 bankruptcy:
- Debts for willful and malicious injury to property (as opposed to willful and malicious injury to a person),
- Debts incurred to pay nondischargeable tax obligations, and
- Debts arising from property settlements in divorce or separation proceedings.
Finally, for a debt to be discharged, it has to be listed in your bankruptcy. Your are required to list all of your debts, assets, etc. If you truly forgot to list a particular debt, that debt will not be discharged in bankruptcy, even if the debt would have been discharged if it had been listed.
How Do You Get A Bankruptcy Discharge
You get a bankruptcy discharge by completing your bankruptcy. You do everything that is
required of you in the bankruptcy. If you do not complete your bankruptcy, your bankruptcy will be dismissed and you will not receive a bankruptcy discharge.
Can A Bankruptcy Discharge Be Denied
Aside from specific debts not being discharged as stated above, you can be denied a bankruptcy discharge if you committed fraud on the bankruptcy court, lied in your bankruptcy, hid assets, failed to comply with court orders, did not complete all of the requirements for your bankruptcy such as taking the debtor education class, have received a previous bankruptcy discharge within certain time periods and under certain conditions, or otherwise were not honest and cooperative in your bankruptcy.
Can A Bankruptcy Discharge Be Revoked
A United States trustee, bankruptcy trustee, or creditor can seek to have a Chapter 7 bankruptcy discharge revoked if:
- The discharge was obtained through the fraud and the requesting party did not know of the fraud until after the discharge was granted,
- You acquired property that is property of the estate, or became entitled to acquire property that would be property of the estate, and you knowingly and fraudulently failed to report the acquisition of or entitlement to the property, or to deliver or surrender the property to the bankruptcy trustee, or
- You failed to comply with any audit ordered by the United States trustee or misrepresented information in the audit (United States trustees do not request an audit very often, but if they do, you need to fully comply with them).
A United States trustee, bankruptcy trustee, or creditor can seek to have a Chapter 13 bankruptcy discharge revoked if:
- You obtained the bankruptcy discharge through fraud, and
- The requesting party did not know of such fraud until after such discharge was granted.
Request to revoke a bankruptcy discharge must be filed within one year of the discharge and you must be given notice of the request and there must be a hearing before the bankruptcy Court.
This is general information only. If you have any questions whatsoever, talk with a lawyer licensed in your state who has experience with Chapter 7 bankruptcy, Chapter 13 bankruptcy, or bankruptcy in general.
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