Bankruptcy Discharge Vs. Dismissal

A bankruptcy dismissal is different from a bankruptcy discharge — with the latter being more favorable to the consumer.

Bankruptcy Dismissal: What It Is And When It Happens

A bankruptcy dismissal means that the bankruptcy court has dismissed a debtor's bankruptcy petition, typically because a debtor has failed to meet certain conditions outlined in the petition and plan filed with the court.

Common instances that result in a dismissal can include but are not limited to a debtor's:

  • Failure to complete the requisite credit counseling
  • Inability to make the monthly payments as set forth in a Chapter 13 petition due to a job loss
  • Transfer of assets the trustee sees as fraudulent, for instance, to a family member or preferred creditor
  • Misrepresentation of income or property ownership

Unfortunately, when a dismissal occurs, the debtor no longer receives the protections afforded under the bankruptcy laws. The automatic stay is lifted and creditors can resume collection attempts. Credit card interest rates also continue to accumulate and home foreclosure proceedings resume.

In some cases, however, debtors with dismissed Chapter 13 petitions can refile under a Chapter 13 or Chapter 7 bankruptcy to maintain protections afforded by the law.

Bankruptcy Discharge: Financial Relief

A bankruptcy discharge means that the debtor has officially satisfied all conditions of the bankruptcy and the creditors can no longer collect on the discharged debts outlined in the petition.

For Chapter 13 filers, the debtor no longer needs to make any further monthly payments under the plan. For Chapter 7 filers, a debtor's unsecured debts are erased clean and they are no longer obligated to pay the outstanding balances.

Consulting With A Bankruptcy Lawyer

If you have additional questions about your situation that relate to a bankruptcy dismissal or discharge, consult with one of our experienced attorneys who can provide guidance.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.