What Is a Discharge?

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You can think of a discharge as wiping out debts.  Call us at 651-639-0313 and we will talk to you about debt elimination.  If you like details, keep reading.  Technically, a discharge:

  1. Voids any judgment to the extent it determines the personal liability of the debtor to a debt discharged under the case filed by the debtor (whether Chapter 7, 9, 11, 12 or 13) 11 U.S.C. §524(a)(3);
  2. Enjoins (stops or prohibits) the start or continuation of an action or an act to collect, recover or offset a debt as a personal liability of the debtor 11 U.S.C. §524(a)(2); and
  3. Enjoins certain actions against community property — ask you lawyer if you or your spouse have lived in a community property state See 11 U.S.C. §524(a)(3).

The law specifically allows the debtor to voluntarily repay a debt which has been discharged.  11 U.S.C. §524(f).

Unlike the automatic stay, the discharge does not stop actions against the property of the debtor or against guarantors of obligations of the debtor.  See 11 U.S.C. §524(e); §524(a)(1)&(2).  However, the personal liability of the debtor will be discharged (unless the debt is not dischargeable).  For instance, the personal liability of the debtor to pay a secured debt can be discharged, but the creditor would retain its interest in the collateral.

Only natural individuals, NOT artificial entities such as corporations, can receive a discharge.  11 U.S.C. §727(a)(1).

A discharge can be denied in other cases, including (but not limited to) the following:

  1. If another Chapter 7 case has been filed within 8 years or a Chapter 13 filed in the preceding 6 years.  11 U.S.C. §727(a)(8)&(9).
  2. If the debtor has transferred, mutilated or destroyed property of the bankruptcy estate with the intent to hinder, delay or defraud a creditor or an officer of the estate a discharge will be denied.  11 U.S.C. §727(a)(2).
  3. If the debtor has concealed, transferred, destroyed, concealed, mutilated or failed to keep or preserve certain recorded information on the debtor’s financial condition or business transactions, such as books, documents, records or papers — unless the circumstances as a whole justify such act or failure to act.  11 U.S.C. §727(a)(3).
  4. The debtor knowingly and fraudulently made a false oath, presented or used a false claim, gave, offered, received or attempted to obtain money, property or advantage (or promise of same) for acting or forbearing an act.  11 U.S.C. §727(a)(4).
  5. Failure of debtor to explain loss or deficiency of assets to meet liabilities.  11 U.S.C. §727(a)(5).
  6. Failure to obey a lawful order, or to testify on a material question.  11 U.S.C. §727(a)(6).
  7. If the debtor does not complete an instructional course in personal financial management and file a certification of completion.  11 U.S.C. §727(a)(11).

A discharge can also be revoked after it has been granted but the grounds are more limited.  Discharge can be revoked only if:

  1. Discharge was obtained through debtor’s fraud which the requesting party was unaware of on the discharge date;
  2. The debtor knowingly and fraudulently failed to either report property or turn over property to the bankruptcy estate;
  3. Failure of the debtor to obey a court order; or
  4. The debtor failed to give a satisfactory explanation to a material misstatement or failed to make documents or other things available for an audit by the trustee or bankruptcy administrator.  11 U.S.C. §727(d).

The discharge is normally granted roughly 90 days after filing of a Chapter 7 or shortly after the final payment of a completed Chapter 13 Plan.

For a discussion of what debts may be discharged see {What Debts Can Be Discharged?}

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Have further questions that are not covered in our Bankruptcy FAQ pages, we understand.  Contact us today for help and assistance with your financial issues.  A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life.  Contact us today!

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