For many, bankruptcy is unfamiliar territory and there are a lot of things that are new. For instance, filing for bankruptcy typically results in learning a lot of new terms. Understanding these terms and knowing the difference between ones that seem similar can be frustrating, especially if you’re already feeling overwhelmed and intimidated by the experience.
One of the most common points of confusion in bankruptcy is the difference between dismissals and discharges. You’re likely to hear both terms when you decide to file, so understanding what they mean before you get started can help you feel better about your situation.
A discharge in bankruptcy is what happens when the bankruptcy court grants the elimination of a debt. This means the creditor is no longer legally allowed to pursue you for payment of the debt even though you never paid it.
Bankruptcy discharges occur in both Chapter 7 and Chapter 13, but discharges are limited in Chapter 13 and debtors are usually required to pay a portion of the debt over time before a discharge occurs.
Discharge typically takes a few months in Chapter 7 and 3 to 5 years in Chapter 13.
A bankruptcy discharge is a good thing and it’s one of the primary reason people file for bankruptcy, especially Chapter 7. Discharge gives you a clean slate with debt and allows you to begin rebuilding your credit and financial well-being without a debt hanging over your head.
On the other hand, a dismissal is not something you’re seeking when you file for bankruptcy. It’s a negative thing and avoiding dismissal is one of the primary reasons you should work with an experienced attorney when you decide to file for bankruptcy.
A dismissed bankruptcy case means it has been unsuccessful and the debtor is still responsible for the debt.
Dismissal can occur because paperwork isn’t filled out or filed properly. It’s also possible if someone fails to provide information required by the court when filing for bankruptcy. Another reason a case might be dismissed is that a debtor fails to meet obligations related to pre- or post-bankruptcy education, such as credit counseling.
There’s also a risk for dismissal if you submit false information knowingly or by mistake. The frightening thing about this is if you submit false information and the court believes you’ve done it intentionally, you can also be charged with bankruptcy fraud.
To learn more about what happens when bankruptcy fraud is suspected, check out this information from Nolo.com.
Dismissal can also happen in Chapter 13 if a debtor fails to meet his or her payment obligations during the payment plan.
The important thing to remember about bankruptcy is that your goal is getting a fresh financial start. This is the case with Chapter 7 or Chapter 13, even though it takes a while longer to achieve your goals in Chapter 13. Having your debt discharged is your ultimate goal and you need to do whatever the court requires to achieve this.
The calculator below will help estimate if you qualify for a Chapter 7, feel free to use it to consider bankruptcy as a fresh start.
An experienced bankruptcy attorney can help you avoid a bankruptcy case dismissal and get debt discharged. If you have questions about the process or you’d like to learn more about filing for bankruptcy, contact the Law Office of Robert M. Geller at (813) 254-5696 to schedule a free consultation to discuss your financial situation.
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