Bankruptcy Discharge – How To Discharge Your Debt Across Different Chapters

A bankruptcy discharge can be seen as a “new beginning” as it releases the debtor from any liability for certain kind of debts. This means that a debtor is not required to pay the debts that have been discharged by the bankruptcy court. The creditors cannot file a lawsuit or contact the debtor for collection of the debts once a bankruptcy debt discharge has been granted to the debtor. Bankruptcy discharge is permanent but it can be revoked by the judge in extreme circumstances. There are certain kinds of debts that cannot be discharged under any chapter — be it chapter 7, 11, 12 or 13, such as federal taxes, state taxes, child support, alimony and student loans.

[adsense_id=”1″]

The timing of the discharge depends upon the chapter under which the bankruptcy is filed. Under chapter 7, bankruptcy debt discharge is granted promptly after the stipulated time is passed after filing of the petition. In chapter 11, chapter 12 and chapter 13 cases, a discharge in bankruptcy is only granted after all the payments have been made according to the repayment plan.

Chapter 13 bankruptcy discharge

A debtor can receive a bankruptcy discharge under chapter 13 if:

• All payments under the repayment plan outlined by the debtor are made.
• All domestic obligations related to supports have been paid.
• The debtor, in some prior case, has not received a discharge within a certain time frame.
• Has completed the financial management course as directed by the bankruptcy judge.

If all the above points are fulfilled then a debt discharge in bankruptcy can be obtained. As a result, all the creditors that have been paid no longer have the right to initiate any legal action against the debtor. All non-dischargeable debts are still to be paid by the debtor.

Chapter 7 bankruptcy discharge

Under chapter 7, the court grants a discharge within a certain time limit of receiving the petition. In this type of bankruptcy cases, the creditors and the trustees can object to the discharge. Soon after the case is filed with the court, the creditors receive a notification with a deadline. They can revoke the discharge by alleging fraud on the part of the debtor. The creditors and trustees can object and file for a lawsuit before the deadline expires.

The court has the right to deny bankruptcy discharge if the debtor fails to provide financial statements, or can’t explain any asset and property loss, or destroys property and misleads the court.

Chapter 11 bankruptcy discharge

To receive a discharge, a debtor filing for chapter 11 bankruptcy, has to prepare a payment plan. Once the plan is confirmed, the debtor is supposed to make payments to the creditors according to the plan. After all the payments are made, then only the debtor will be eligible to receive a discharge.

There are certain exceptions to the fact that a confirmation of the plan will grant you a discharge. Confirmation will get you a discharge from most types of debts except the non-dischargeable debts mentioned before. Also, you will only get a discharge when all the payments are made.

Chapter 12 bankruptcy discharge

Obtaining a discharge under chapter 12 follows the same procedure that has been outlined under chapter 13. You can receive a discharge if you have made the full payments according to the repayment plan and fulfill the criteria completely.

Thus, across chapter 11, chapter 12 and chapter 13, you can only receive a bankruptcy discharge after you have made full payments to your creditors according to the repayment plan. Once the payments are done, the debtor gets the discharge which prohibits any creditor to file a lawsuit against the debtor. In chapter 7, however, the court orders a discharge after a designated time of filing the petition. But this chapter gives the creditors a right to object to the discharge and file a lawsuit against the debtor.