What Is a Bankruptcy Discharge?

A bankruptcy discharge is an order that wipes out qualifying debt, such as credit card balances, utility bills, and medical debt. You'll receive it toward the end of your Chapter 7 or Chapter 13 bankruptcy, and for most bankruptcy filers, the bankruptcy discharge is the most important part of a bankruptcy case.

Once entered, the filer is no longer responsible for the discharged debt. A creditor can't call, send demand letters, report nonpayment of the obligation to credit reporting agencies, file a lawsuit, or take other actions to collect the discharged debt.

When To Expect the Bankruptcy Discharge

If your bankruptcy chapter proceeds as planned—you satisfied all requirements and no one successfully objects to your filing—you'll receive the discharge at the end of your matter after you've done the following:

• filed the official petition, schedules, and required local forms
• provided the court with accurate documentation of your debts, assets, income, and financial dealings
• attended the meeting of creditors (and the confirmation hearing in Chapter 13)
• participated in a session with a credit counselor and took a financial management course, and
• if filing under Chapter 13, made all Chapter 13 repayment plan payments.

The court will notify you by mailing out a document called an "order of discharge." However, the order won't close your case.

The bankruptcy case will remain open until the bankruptcy trustee—the official who manages your matter—disperses available money to creditors or until any outstanding bankruptcy litigation ends.

Timewise, in a Chapter 7 case, the court sends out the order approximately three to four months after filing. In a Chapter 13 bankruptcy, the discharge comes after completing the three- to five-year repayment plan. In both cases, the order wipes out qualifying debt.

Learn more about debts discharged at the end of Chapter 13 bankruptcy.

Will the Discharge Order List Discharged Debts?

No—and many find this fact surprising. Instead of listing the wiped-out debts, the order will provide general information about debt categories that don't go away in bankruptcy or "nondischargeable debt." For instance, it will explain that you'll likely remain responsible for paying:

• domestic support obligations (spousal or child support)
• most student loans and tax debt
• accounts that the court decides you can't discharge
• most fines, penalties, and criminal restitution
• some debts that you failed to list correctly
• particular loans owed to a retirement plan
• money owed as a result of injuring someone while operating a vehicle while intoxicated, and
• liabilities covered by a reaffirmation agreement (a court-approved agreement to continue paying a creditor).

For certain other debts, the creditor must file a lawsuit within the bankruptcy case asking the judge to declare that the bankruptcy will not discharge the debt. Obligations arising from fraud committed by the debtor or personal injury caused by the debtor while intoxicated are debts that the court might declare nondischargeable.

Liens Remain on Property

Although a discharge relieves you of your responsibility to pay a debt, it won't get rid of a lien that a creditor might have on your property. A lien allows the creditor to repossess and sell the collateral to recover at least some of the money you borrowed if the debt remains unpaid—even if the court discharged the debt in your bankruptcy case. Some liens can be removed, however, even after the closure of the bankruptcy case. A local bankruptcy lawyer will be able to advise you about your options. Learn more in What Happens to Liens in Chapter 7 Bankruptcy?

After the court issues the discharge, creditors holding nondischargeable debts can continue collection efforts. Although the order doesn't provide the clarity that many debtors desire, it might be helpful to understand that creditors are expected to know whether a particular debt is dischargeable.

Protections exist, too. A creditor that attempts to collect a discharged debt wrongfully is subject to paying for any resulting losses.

Learn which debts you cannot discharge in Chapter 7 and which debts you cannot wipe out in Chapter 13.

The Court Can Deny or Revoke a Discharge

If you fail to cooperate with the court or the trustee, are not truthful in your paperwork or testimony, fail to turn over assets, or are otherwise undeserving of a discharge, the court can deny your discharge. Likewise, if the court learns that you committed some act that would have caused the court to deny your discharge, the court can revoke it.

Learn more about objections to a bankruptcy discharge.

Keep Your Discharge Order After Bankruptcy

It's not a bad idea to keep your discharge paperwork somewhere you can easily find it because you might need it in the future. For instance, a lender might ask for a copy if you apply for credit or a home mortgage. Also, you'll want to be able to provide the following to any creditor that calls to collect a discharged balance:

• bankruptcy case number
• filing date, and
• discharge date.

The information allows the creditor to verify the bankruptcy and that the discharged debt is no longer collectible. You'll find the filing date and case number at the top of almost any document you receive from the court. The discharge date will appear on the left-hand side of the discharge order immediately next to the issuing judge's name (you'll find the case number in the top box).

Why does the filing date matter? Qualifying debts that you incur before filing for bankruptcy are eligible for discharge. The discharge order won't include any obligations that arise after filing for bankruptcy.

Why does the discharge date matter? Just because you file for bankruptcy does not mean you'll receive a discharge, as discussed above. Providing the discharge date will help you resolve a collection issue more expediently.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.