Bankruptcy Dismissal Vs Discharge

Bankruptcy Dismissal Vs Discharge

difference between dismissed bankruptcy and bankruptcy dischargeSince most people do not find themselves in a situation where they have to file for bankruptcy, many are ignorant about what bankruptcy actually entails. For this reason, many people are not familiar with most terms used in the bankruptcy process.

This can be very frustrating for someone who is thinking of filing for bankruptcy for the first time. The two words you may hear when you decide to file for bankruptcy are “dismissal” and “discharge”.  Some people think that the words can be used interchangeably but that is not true.

Bankruptcy Dismissal – Definition

In order to file for bankruptcy there are certain requirements that you must meet. For instance, the U.S. Bankruptcy Code requires all debtors to go through a credit counseling course within 180 days before filing their petition.

If they do no not comply with this and other requirements, it will result in the automatic dismissal of their bankruptcy case.  Some other reasons why a bankruptcy case can be dismissed include:

  • Failing to explain why assets are missing
  • Lying under oath
  • Not keeping records or destroying records
  • Trying to defraud creditors by concealing or transferring property within one year of filing
  • Not meeting certain deadlines
  • Failing to make pan payments within time given for Chapter 13 case
  • Not attending the meeting of creditors
  • Not filing the correct forms with the court

Once your case is dismissed creditors can continue with their debt collection efforts just as they did before you filed. That means that creditors are free to garnish your income or wages to get their money back.

Bankruptcy Discharge – Definition

A discharge in bankruptcy is when the court gives an order for the elimination of a debt. In this situation, you gain the protection of the automatic stay, which protects you from all creditor collection activities. In other words, you no longer need to pay the debt, and the creditors are not allowed to pursue you for that debt. That means creditors cannot do things such as sending letters, calling or suing you over debt once the debt is discharged. A Chapter 7 and Chapter 13 bankruptcies both have discharges but a discharge if more limited for a Chapter 13 bankruptcy. Those who file for a Chapter 13 bankruptcy still have to pay a portion of the debt for a certain period of time before a discharge happens.

Debts That Cannot Be Discharged

In a Chapter 7 bankruptcy the following debts cannot be discharged:

  • Retirement plan loans
  • The debts you did not list while on your bankruptcy
  • Debts you accrued because of a drunk driving conviction
  • Court costs
  • Child support, alimony and other debts under a marriage settlement agreement
  • Certain taxes
  • Debts that you discharged in a previous bankruptcy

Dismissed Bankruptcy Chapter 13

Most the debts above can also not be discharged in a Chapter 13 bankruptcy. Other loans you cannot discharge under a Chapter 13 bankruptcy include student loans and debts incurred because of malicious actions. Consult a resourceful bankruptcy attorney if you want to know all the debt relief options available for your case.