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D is for Discharge

D is for Discharge

Obtaining a Discharge is the goal in every individual Chapter 7 case and it's also the goal in about 99% of Chapter 13 cases too. It's the final Order of the Court indicating that your case has completed successfully and you are legally 'Discharged' of all of your debts....with certain exceptions. It's a piece of paper that's symbolic of your 'fresh start'.

In a Chapter 7 case, assuming all goes according to plan, Discharge will enter approximately 90-100 days after the case is commenced. The most common types of debts that survive a Chapter 7 Discharge are student loans and domestic support obligations. Also excepted from Discharge are any debts that are 'reaffirmed'. The most common types of debts that are 'reaffirmed' are car loans.

The most common obstacle to obtaining a Discharge in a Chapter 7 case is completely avoidable. It's making sure that both required credit counseling sessions are completed. If the second session isn't completed timely the case will close without Discharge. In order to obtain a Discharge in this situation - a hefty 're-open' fee will need to be paid to the Court.

Another potential obstacle to obtaining a Discharge in a Chapter 7 case is a challenge from the United States Trustee ('UST"). This would come if the UST believes there may be 'substantial abuse'. What this means is that the UST believes you may not be entitled to a Chapter 7 Discharge - most likely because they believe a Chapter 13 Plan would be more appropriate given your income and expenses. An experienced bankruptcy attorney can help gauge this potential risk.

In a Chapter 13 case, assuming all goes according to 'Plan', Discharge will enter with a few months after a Plan is completed. Chapter 13 cases generally go for 36-60 months. While it takes much longer to obtain a Discharge in a Chapter 13 case, this type of Discharge can cover certain debts that are not subject to a Chapter 7 Discharge. Thus, in certain circumstances even though you may qualify for relief under Chapter 7 - it may not be as beneficial to filing a Chapter 13. So of course, f you're considering bankruptcy it's always best to consult with an experienced bankruptcy attorney to determine which Chapter may be appropriate for you.


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