Discharge
Discharge summary:
A bankruptcy discharge is a court order that relieves you of your legal responsibility to pay a debt. It’s the goal when people file for bankruptcy protection.
To receive a discharge, you'd need to complete all the steps that are required for the type of bankruptcy protection you seek.
Not all debts can be discharged through bankruptcy.
Discharge definition and meaning
A discharge is a court order that says you're no longer legally responsible for repaying a debt. Only a bankruptcy judge can grant a discharge.
Key concept: Bankruptcy discharge is the goal of filing bankruptcy. To get a bankruptcy discharge, the person who files for bankruptcy protection must fulfill all the requirements for the type of bankruptcy they want.
More about debt discharge
When you file for bankruptcy protection, you start a process that helps you pay what you can and get rid of what you can't. If you complete the necessary steps on time and in the correct order, you could eventually receive a discharge and relief from your debt.
Steps to receive a debt discharge
Here are the steps you might complete in order to receive a discharge:
Attend pre-bankruptcy credit counseling.
File the official petition, schedules, and any local forms.
Document your debts, assets, income, and financial relationships.
Attend the meeting of creditors
Attend a confirmation hearing if you’re filing Chapter 13.
Complete a financial management course.
Submit your nonexempt assets if you’re filing Chapter 7. Nonexempt assets are things you’ll have to give up so that the court can sell them and give the money to your creditors. Bankruptcy exemptions are things you’re allowed to keep.
Submit all plan payments if you’re filing Chapter 13. Chapter 13 payment plans last for three years (if you’re low-income) or five years.
Once you've worked through the process, the court will send you a discharge letter or discharge order. Expect this to happen within a few months of filing for Chapter 7 or a few weeks after making your last Chapter 13 plan payment.
Your discharge doesn't list the debts included in your bankruptcy. It does state that non-dischargeable debt isn't included. If you have non-dischargeable debt, those creditors can continue to pursue you for payment.
Non-dischargeable debt could include:
Domestic support obligations (like spousal or child support)
Most student loans and tax debts
Accounts that the court decides you can't get rid of
Most fines, penalties, and criminal restitution
Debts you didn't list correctly
Loans you owe to a retirement plan
Money you owe for injuring someone while driving under the influence
Debts you agreed to keep paying through a reaffirmation agreement (a court-approved agreement with a creditor)
It's important to understand that a bankruptcy discharge isn't guaranteed. You have to follow the law. If you don't cooperate with the trustee, if you give untruthful information, or give the court reason to believe you're abusing the system, the judge can deny your discharge. If that happens, your bankruptcy case might be dismissed, which means your creditors can start coming after you again for payment.
The information provided in this article is intended for general informational purposes only and should not be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.
Discharge FAQs
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 bankruptcy requires you to give up some of your assets in exchange for forgiving your debts. This type of filing often makes sense for people who have large amounts of unsecured debts, such as credit cards or medical bills, that they can't afford to repay.
Chapter 13 lets you keep your assets but requires you to give up your disposable income (anything not needed for basic living) for several years. Your income must be under specific thresholds for you to be eligible to file Chapter 7. Your debt must be under specific thresholds to be eligible to file for Chapter 13.
How long does bankruptcy take?
Chapter 7 bankruptcy can usually be completed within six months. The actual time it takes you to receive a discharge is determined by the complexity of your case.
Chapter 13 bankruptcies take up to three years for people with lower incomes and five years for everyone else. Bankruptcies are public record, and any entity that pulls your credit report will know that you've filed.
Once you're out of bankruptcy you may be looking at another 12 to 18 months to begin to see a recovery in your credit scores.
Can bankruptcy help with student loan debt?
It's possible to discharge student loan debt in bankruptcy, but rare. You'd have to prove that you wouldn't be able to maintain even a minimal standard of living if you had to repay the debt. This is called "undue hardship." Because most student loans offer income-driven repayment plans, that's a hard burden to meet.
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