A discharge in bankruptcy law is a release of personal liability of a debtor from certain debts. This means that the debtor is no longer required to pay the debts that are discharged. There are certain debts that can never be discharged, called non dischargeable debts. A bankruptcy discharge varies depending on the type of bankruptcy the debtor files (chapter 7, 11, 12, or 13).
The most common non-dischargeable debts include:
- All debts not listed in the bankruptcy petition
- Student loans – unless undue hardship to repay
- Taxes – Federal, state, and municipal
- Fines for violating the law: including criminal fines and traffic tickets
- Alimony and child support
- Debts for personal injury caused by driving while intoxicated
In addition, a creditor (see the article "Creditor’s Rights") may ask a court to determine that some debts are non-dischargeable, including:
- Debts incurred because of fraud
- Debts for willful injury to another’s person or their property
- Divorce and other property settlements
- Debts from embezzlement
No, the debtor does not have the absolute right to a discharge and a creditor can object to the debtor being granted a discharge. In most states the discharge is automatically granted unless a creditor objects to the discharge. If a creditor does object to the discharge, the creditor has the burden of proving that the debtor is not qualified for the discharge. The grounds for denying a discharge include:
- Debtor transferred or concealed the property to defraud creditors
- Debtor destroyed or concealed records
- Debtor failed to explain an asset loss
- Debtor committed perjury or other fraudulent acts
- Debtor violated of a court order
No, a creditor cannot collect after a discharge has been granted. If a creditor continues trying to collect a debt after the debt has been discharged, the debtor can file a motion with the court to halt collection efforts. A creditor who tries to collect a debt after it has been discharged can be sanctioned by the court and usually must pay a fine.
Filing for bankruptcy is a very complicated process. The law varies depending on where a bankruptcy is filed and also depends on which type of bankruptcy is filed (chapter 7, 11, 12, or 13). A bankruptcy lawyer knows the particulars of filing for bankruptcy, can recommend what chapter of bankruptcy is right for you, and can ensure that your paperwork is filed correctly so that all eligible debts are discharged.