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. 

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 nondischargeable debt isn't included. If you have nondischargeable debt, those creditors can continue to pursue you for payment.

Nondischargeable 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. 

We rounded up a few articles on related topics. Please take a look:

• Practical solutions for overcoming tax debt

• Manage your student loan debt

• Getting help with credit card debt over $50,000

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.