Difference Between a Bankruptcy Dismissal and a Discharge
If you are filing for bankruptcy for the first time, it is important to know the terminology used during the process. Many people are particularly confused about the difference between “dismissal” and “discharge” in bankruptcy proceedings.
Amourgis & Associates, Attorneys at Law is here to discuss bankruptcy dismissal vs. discharge, when they are applied, and what you need to know about the bankruptcy process.
What Is a Bankruptcy Discharge?
The goal of filing for bankruptcy is usually to discharge debt. A discharge is when the bankruptcy court enters an order declaring that you are no longer legally required to repay the discharged debt. After a discharge, most unsecured creditors cannot pursue legal action to recover any debt you owe them. They cannot communicate with you by any means, including letters, personal contact, and phone calls regarding the discharged debt.
You can’t discharge all types of debt in a bankruptcy case. Knowing which debt you should focus on will save you time and money. You could request to have the following types of debt discharged:
- Unsecured debt
- Auto accident claims
- Credit card debt
- Medical bills
- Past due utility bills
- Leases
- Personal loans
The debts below are generally not dischargeable without exceptional circumstances:
- Student loans
- Child support and alimony
- Certain taxes
- Government fines
- Debt from fraud
- Fines and restitution for criminal acts
When your debts are discharged will depend on which type of bankruptcy you filed. Chapter 7 bankruptcy usually discharges your debts a few months after your bankruptcy is granted. However, Chapter 13 bankruptcy cases are structured differently. In a Chapter 13, you participate in a reorganization plan that requires you to pay a portion of your debt back with a payment plan over a period of years. Once you have completed your payment plan, any remaining dischargeable debts will be discharged.
Discharging your debts can be a fresh start for you to get on top of your financial situation. Talk to a bankruptcy and debt relief attorney today to see what options are best for you.
What Is a Bankruptcy Dismissal?
A dismissal is typically a negative outcome when filing for bankruptcy. It means the court has dismissed your bankruptcy case without discharging your debt, leaving you still responsible for repaying your creditors.
Dismissals can be voluntary, and sometimes even strategic, when your circumstances change. But unfortunately, sometimes dismissals occur when the debtor didn’t meet a requirement of the bankruptcy code. This may mean they didn’t fill out or file the bankruptcy paperwork correctly. The reasons for dismissed cases vary depending on whether you filed for Chapter 13 or Chapter 7 bankruptcy. The most common reasons include the following:
- Not offering a Chapter 13 repayment plan that follows bankruptcy law
- Not making the agreed-upon payments
- Failing to file tax returns each year and submit a copy to the trustee
- Not completing credit counseling classes
- Not meeting eligibility requirements, such as maximum income limit
- Missing the required deadlines
- Submitting incomplete or inaccurate documentation required by the court
- Not paying court filing fees
What Does a Bankruptcy Dismissal Mean?
Once your bankruptcy is dismissed, you no longer have protection from collection actions. Creditors can begin contacting you to recover the debt again.
However, a dismissal isn’t always the end of your bankruptcy options. A bankruptcy lawyer can review your case and help you determine the best path for you to go from there.
What Happens if My Bankruptcy Is Dismissed?
Sometimes a bankruptcy can be reinstated if you move quickly after a dismissal. If a longer period of time passes, you may be able to refile a bankruptcy. Typically, the courts issue a dismissal “without prejudice.” “Without prejudice” means the dismissed case will not prevent you from refiling for bankruptcy. Unfortunately, if the dismissal is with prejudice, you might not be able to pursue bankruptcy or could be forced to wait for a specific time frame before filing again. Bankruptcy cases involving fraud do not allow the debtor to refile.
If you refile, you must resolve the issues leading to the dismissal before filing another case. In the meantime, your creditors are allowed to contact you and pursue legal action against you to recover your debt.
Since bankruptcy cases are complex, hiring a lawyer is crucial. With qualified legal representation, you could avoid dismissal in the first place. Your lawyer can handle each step on your behalf so you don’t make mistakes many people make when filing for bankruptcy.
Talk to an Experienced Bankruptcy Attorney in Ohio Today
At Amourgis & Associates, Attorneys at Law, our Ohio bankruptcy lawyers are here to provide knowledgeable guidance to those considering filing for bankruptcy. We have six conveniently located offices in Akron, Cincinnati, Cleveland, Columbus, Dayton, and Youngstown. We’re also available 24/7 by email, phone, and text, so you can reach us whenever you need us.
Call or contact us online today for your free consultation and let us assist you with your initial bankruptcy filing or dismissal.
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At Amourgis & Associates, Attorneys at Law, we only represent consumers. We fight for regular people who have been seriously hurt in accidents. We fight for people who are being crushed by overwhelming debt and need a fresh start. We fight for individuals and families. Never businesses. Never insurance companies. We are loyal to the consumer.
