Understanding the difference between a discharge and a dismissal

If you feel overwhelmed by debt and cannot afford to make monthly payments, filing for bankruptcy can be a solution. However, filing for bankruptcy can be a confusing process, full of new and uncertain terms. As an experienced Newburgh bankruptcy lawyer, I know that two terms that debtors frequently confuse are “discharge” and “dismissal.” It is important to understand the difference between these two terms because, although they sound similar, they have very different meanings.

Discharge

At the successful conclusion of your bankruptcy case, your Newburgh bankruptcy attorney will inform you that you have received a bankruptcy discharge. A bankruptcy discharge signifies the end of bankruptcy process and the discharge of all of the debts that were included in the bankruptcy petition. Once debts are discharged, you have no further liability for them and creditors cannot attempt to collect them from you.For a Chapter 7 bankruptcy debtor, the bankruptcy discharge will usually occur shortly after the meeting of the creditors. Conversely, in a Chapter 13 bankruptcy, the debtor receives a bankruptcy discharge after the debtor completes the Chapter 13 repayment plan. The debtor must make all Chapter 13 payments in full and on time each month for the life of the plan to receive a bankruptcy discharge. While the bankruptcy court will discharge all debts included in either the Chapter 7 or the Chapter 13 bankruptcy case, the bankruptcy discharge will have no impact on debts that were not included in the bankruptcy case or on debts that by law cannot be discharged.

Dismissal

In contrast, a bankruptcy dismissal means that the bankruptcy court has terminated your case and you will not receive a bankruptcy discharge. Once your case is dismissed, your creditors can resume their collection efforts.A bankruptcy court may decide to dismiss your bankruptcy case for a number of different reasons. For example, a bankruptcy court may dismiss a debtor’s case if the debtor is not eligible to file for bankruptcy. A debtor may be ineligible for bankruptcy if the debtor failed to satisfy the Chapter 7 means test or if the debtor does not have regular and reliable income to qualify for Chapter 13 bankruptcy. However, a debtor whose case is dismissed for filing under the wrong chapter may re-file the bankruptcy petition under the correct bankruptcy chapter.In addition, if the debtor has filed for Chapter 7 bankruptcy more than once within the last few years, the bankruptcy court may dismiss the debtor’s case. The court may also choose to dismiss the debtor’s bankruptcy case if the debtor is hiding assets or acting fraudulently.For a complete list of reasons why the court could dismiss a bankruptcy case, without granting the debtor a discharge, see Grounds for dismissal of a bankruptcy case

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