WHAT DOES MY DISCHARGE ORDER MEAN?
The most important part of a bankruptcy case for many individual debtors is the bankruptcy discharge – this is the final court order that wipes out most debt, such as credit card balances, utility bills, and medical debt.
Once the discharge is entered, you are no longer responsible for the discharged debt, and a creditor can’t call, send demand letters, report nonpayment of the debt to credit reporting agencies, file a lawsuit, or take other actions to collect the discharged debt.
WILL THE ORDER LIST DISCHARGED DEBTS?
No (surprisingly). Instead of listing the debt that is wiped out, the order simply provides general information about debt categories that don’t go away in bankruptcy (nondischargeable debt). For instance, it will explain that you’ll likely remain responsible for paying:
- domestic support obligations (alimony or child support)
- most student loans and tax debt (although some tax debt can be wiped out – check with your lawyer)
- 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. Debts that arise out of fraud committed by the debtor, or for personal injury caused by the debtor while intoxicated, are debts that the court might declare are nondischargeable.
After the court issues the discharge order, creditors holding nondischargeable debts are free to 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 discharged.
Protections exist, too. A creditor that attempts to wrongfully collect a discharged debt is violating the law and is subject to paying for any resulting losses.
KEEP YOUR DISCHARGE ORDER AFTER BANKRUPTCY
It’s not a bad idea to keep your discharge paperwork in case you 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.
This information allows your 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 judge’s name (you’ll find the case number at the top of the order).
Why does the filing date matter? Qualifying debts that you incur before you file for bankruptcy are eligible for discharge. Any debts that arise after you file for bankruptcy are not included in the bankruptcy.
Mostly, your discharge order means your case is over, you are out of debt and can move forward with less stress. Moving forward, to maintain and improve your credit score, try to avoid taking out new debt if at all possible and pay all bills on time.
Our clients are always welcome to call us any time with questions or for clarification. Sometimes bankruptcy can be a confusing process. Hopefully, we’ve made it less so!