Bankruptcy Dismissal Versus Discharge
Individuals who file for bankruptcy typically expect to have their debts discharged at the end of their bankruptcy case — whether that is several months after filing a Chapter 7 bankruptcy petition or years after filing a reorganization bankruptcy case under Chapter 13 or 11. Yet in some cases, rather than receiving a discharge, a bankruptcy case will be dismissed. While the terms discharge and dismissal might sound similar, they are two very different outcomes for an individual bankruptcy case. Our West Palm Beach bankruptcy lawyers can discuss the difference, and we can speak with you today if you need assistance with your bankruptcy case.
What is a Bankruptcy Discharge?
A bankruptcy discharge is a permanent court order — a legal action — that occurs at the end of a bankruptcy case. This specific order eliminates the debtor’s liability for any eligible debts. In a given bankruptcy case, many debts are eligible for discharge, but there are certain “exceptions to discharge” in the US Bankruptcy Code. Once a debtor receives a discharge, they are no longer liable for the debts that were discharged, and the elimination of that liability is permanent.
Individual bankruptcy filers can be eligible for discharges in both liquidation and reorganization bankruptcy cases, while businesses do not receive discharges in liquidation cases under Chapter 7. Debtors who can receive a discharge in a Chapter 7 case will typically receive that discharge within four to six months of filing, while a discharge in a Chapter 13 bankruptcy case will not happen until the terms of the reorganization plan have been met, or approximately three to five years from the date of filing.
What is a Bankruptcy Dismissal?
Although a dismissal might sound like it could be similar to a discharge, it is a completely different legal action in a bankruptcy case. A dismissal means that the bankruptcy case is closed without a discharge. Whether or not the debtor is able to refile their bankruptcy case depends on whether they receive a dismissal without prejudice or a dismissal with prejudice.
A dismissal without prejudice can occur when a debtor misses deadlines or other requirements such as paying the filing fee or appearing at the 341 meeting of creditors. When a bankruptcy case is dismissed without prejudice, the debtor can usually refile. A dismissal without prejudice is less common and typically occurs in cases involving fraud or serious issues. A debtor cannot refile their bankruptcy case when there is a dismissal with prejudice.
Contact Our West Palm Beach Bankruptcy Attorneys Today
If you have any questions about consumer bankruptcy cases, you should seek legal advice. Whether you are considering the possibility of filing for bankruptcy or need assistance with a particular aspect of your bankruptcy case, an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller can assist you. Do not hesitate to contact our firm to discuss a bankruptcy discharge or concerns about dismissal, or any other aspects of personal bankruptcy in South Florida.
Sources:
law.cornell.edu/uscode/text/11
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/discharge-bankruptcy-bankruptcy-basics
