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Chapter 7 starting at $999, plus filing fees and costs.

Chapter 7

Chapter 13 starting at $2,500, plus filing fees and costs.

Chapter 13

What is a bankruptcy discharge?

The discharge is the order from the court forgiving the debtor from certain debts. Creditors may not collect any of the discharged debts after bankruptcy.

Does bankruptcy discharge all debts?

Not all debts are discharged in bankruptcy. See Non-Dischargeable Debts.

Also, Chapter 7 discharge voids only pre-petition debts. Chapter 13 discharge can void both pre-petition and post-petition debts.

Finally, a discharge only eliminates the debtor’s personal liability for a discharged debt, i.e., secured creditors are only limited to their collateral and are barred from collecting any deficiency from the debtor. See Reaffirmation and Redemption in Chapter 7. Also, re-affirmed debts are non-dischargeable and creditors may pursue collection if the debtor defaults on the re-affirmed debts.

How long does it take to get a bankruptcy discharge?

The timing of the discharge differs depending on the chapter that the debtor files bankruptcy. For example, in a Chapter 7 case, the discharge order may be entered after 60 days following the meeting of creditors if no objections to the discharge have been filed within that time frame, or about 3-4 months after the date the debtor filed bankruptcy. If the objection to the debtor’s discharge has been filed, the discharge can be substantially delayed. The Chapter 13 discharge generally occurs only when the debtor completes all payments under the confirmed plan, which is 3-5 years.

How often can you get a bankruptcy discharge?

The time bar is calculated between bankruptcy filing dates, not discharge dates.

Chapter 7 after Chapter 7

Discharge may be obtained every 8 years.

Chapter 7 after Chapter 13

Discharge can be obtained in 6 years.

Chapter 13 after Chapter 13

Discharge can be obtained in 2 years.

Chapter 13 after Chapter 7

Discharge can be obtained in 4 years.

Can a bankruptcy discharge be denied?

Not all debtors receive the Chapter 7 discharge. The most common grounds for denial of the discharge are:

  • Fraudulent transfers within a year of the bankruptcy or in that bankruptcy case (e.g., transfers for no or value, transfers to relatives or friends, the debtor’s continued use of the transferred property, destruction or concealment of property that would have otherwise been available for distribution to creditors, etc.)

  • Unjustified failure to keep proper financial records (e.g., concealment, destruction, falsification of records, or a mere failure to keep or preserve records of the debtor’s true financial condition or transactions, etc.)

  • Commission of a bankruptcy crime pertaining to the bankruptcy case (e.g., making a false oath or account, failure to list a valuable asset on the schedules, presenting or using a false claim, the debtor’s extortion, bribery, withholding documents relating to the debtor’s property or financial situation from the trustee, etc.)

  • Failure to satisfactorilyy explain the reasons for the debtor’s financial downfall or insolvency (e.g., vague, general or suspicious explanations and lack of supporting documentation)

  • Failure to cooperate in the bankruptcy case (e.g., refusal to testify at the meeting of creditors or comply with bankruptcy court orders, such as turn over property, amend schedules, or produce documents)

  • Failure to complete personal financial management course (this course must be completed after the bankruptcy filing and before the discharge hearing and the debtor must file a certificate of completion with the court within 60 days of the meeting of creditors.

Chapter 13 Hardship Discharge

In Chapter 13, the debtor can receive a discharge only upon completion of the re-payment plan and the personal financial management course. Occasionally, however, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may attempt to modify the plan and complete performance under the plan as modified. If the modification of the plan is not practicable, the debtor may ask the court to grant a “hardship discharge.”

Generally, a “hardship discharge” may be granted by the court only if:

  • The debtor’s failure to complete plan payments is due to circumstances beyond the debtor’s control and through no fault of the debtor;

  • Creditors have received at least as much as they would have received in a chapter 7 liquidation case, i.e., the “best interests” test has been carried out; and

  • Modification of the plan is not possible, such as when there has been a natural disaster, a long-term layoff, family injury or illness severe enough that precludes employment sufficient to fund even a modified plan.

The debtor must meet all 3 requirements to receive a discharge. The hardship discharge is, however, limited. It does not apply to secured debts, debts that are non-dischargeable in a Chapter 7 case, or long-term debts on which payments would have been made after the end of the plan period.

How can we help?

If some cases, an adversary proceeding may be brought against the debtor to obtain a court’s order denying bankruptcy discharge of all debts. See Adversary Proceedings. Generally, the adversary proceeding involves both factual circumstances and legal questions that need to be tried in front of the bankruptcy judge. Although legal representation for an individual plaintiff or defendant is not required to defend an adversary proceeding, one must be familiar with the Federal Rules of Bankruptcy Procedure, local court rules, and substantive bankruptcy law. It is therefore strongly recommended that the debtor facing an adversary proceeding retain legal counsel. At Anna Handy Law Firm, P.A. we can file an adversary proceeding on your behalf or defend it.

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