Bankruptcy Discharge vs. Bankruptcy Dismissal
Two bankruptcy terms that filers sometimes confuse are “discharge" and “dismissal." The words have similar connotations of “sending away, " so it’s easy to get the two mixed up, but in bankruptcy law these two terms have very different meanings.
When deciding between bankruptcy discharge and bankruptcy dismissal, it’s important to learn the exact definitions of each term. While you may not know the ins and outs and detailed legalities of your case, you should at least be aware of the basic definitions of the common terms you may hear during your case; in addition, you and your bankruptcy attorney can communicate effectively and will have a better grasp of where you are in your case.
A bankruptcy discharge means basically that your bankruptcy was accepted and is complete. A discharge is granted when you have met all the requirements made by the bankruptcy court. In a Chapter 7 bankruptcy this happens when the proceeds of your liquidated non-exempt property has been utilized to pay off your creditors. This does not normally take a very long time. A Chapter 13 bankruptcy, on the other hand, may take between three and five years before you receive a discharge. This is because in Chapter 13, instead of your property being sold to pay off your debts, you work out a repayment plan with the court that you pay out over time.
In both cases, a discharge is a positive outcome. It means that your debts are wiped out and you are able to have a fresh start. Creditors can no longer continue to pursue you for debts that have been cleared through bankruptcy, and you can move on with your life.
Unlike a bankruptcy discharge, a bankruptcy dismissal is not something to be desired. A dismissal means that your bankruptcy was not accepted or that the terms were not fulfilled. If you get a dismissal, the automatic stay that goes into effect upon filing bankruptcy will be lifted, which means that your creditors can resume their collection attempts. Once your bankruptcy is dismissed, you cannot attempt to file again for 180 days.
Avoiding a Dismissal
There are many reasons why a bankruptcy might be dismissed. In some cases, it’s because the filer did not meet the requirements for credit counseling/money management courses. Sometimes, the filer did not submit the right paperwork, or made mistakes in the documentation. Suspected fraud can be another cause for a bankruptcy dismissal; this can happen if there is reason to believe the filer was trying to hide assets or was abusing credit purposely.
The laws surrounding bankruptcy are quite detailed and complicated. A simple mistake can be the difference between a discharge and a dismissal. It’s understandable that many people considering bankruptcy go into the process with a great deal of anxiety and questions.
It’s in your best interests to ensure that a Dallas bankruptcy lawyer can be of assistance when you file. A Dallas bankruptcy lawyer will be experienced in handling both Chapter 7 and Chapter 13 bankruptcy cases, and can help you through either bankruptcy dismissal or bankruptcy discharge.