If you’re considering bankruptcy, you probably already know that the discharge of the bankruptcy is the final goal in the process. The discharge is the order from the bankruptcy court that will release you from liability for the debts that are dischargeable.
Once the bankruptcy is discharged, creditors can no longer legally contact you or otherwise seek payment of those debts. If you’re filing Chapter 7 bankruptcy, the discharge will follow your handing over the non-exempt assets that are being liquidated to help pay your debts.
What can prevent a discharge?
Discharge isn’t guaranteed, however. There are situations in which a court can decide to dismiss a case and deny a discharge. These cases typically involve some sort of wrongdoing (intentional or not) by the person filing for bankruptcy. Some examples are:
- Destroying financial records
- Hiding property or failing to explain its loss
- Making false statements about assets, debts or income
- Not disclosing a prior bankruptcy
- Not completing any required financial management or credit counseling course
- Violating any court order in conjunction with the bankruptcy
It’s important to note that some of these things, if done intentionally, rise to the level of federal crimes.
Responding to the complaint
Generally, a discharge denial is precipitated by a complaint filed by the bankruptcy trustee or one of the creditors. If you receive a complaint, you have 30 days to respond. You can respond to the allegations in the complaint or file a motion to dismiss it if there’s cause. If you don’t respond within the designated timeframe, your bankruptcy won’t be discharged.
Note that even if your discharge is not approved, it may be possible for the court to keep some of your property. That means you lose your belongings, yet you don’t get the protection that bankruptcy offers.
You can avoid these issues and help ensure that your bankruptcy proceeds smoothly by having experienced legal guidance throughout the process. Then you can get back on solid financial ground.