What is the Difference Between Discharge and Dismissal in a Bankruptcy Case?
When most individual debtors begin the process of planning for a bankruptcy filing, the goal is to eliminate debt. Debtors who file for Chapter 7 bankruptcy aim to have most or all of their debts discharged in order to get a fresh financial start at the conclusion of the bankruptcy case, which is often approximately four to six months from the date of filing. Even in a reorganization bankruptcy, where a debtor repays secured and priority creditors in full over a period of three to five years, such debtors often still anticipate eliminating certain unsecured debts by the end of the case and being up-to-date with all creditors.
In order to become free of debt through either type of bankruptcy filing, what debtors are seeking is a discharge of their debts. However, the term “dismissal” is also relevant to bankruptcy cases, and debtors can become confused about the difference between a discharge and a dismissal. These terms are entirely distinct from one another in the context of bankruptcy law, and our South Florida bankruptcy attorneys can explain in more detail.
Discharge Versus Dismissal in Bankruptcy Cases
When a debtor receives a “discharge,” this means that the bankruptcy court is entering an order to relieve the debtor of their debts. A discharge eliminates the debtor’s liability for various types of debts, including credit card debt, bank loan debt, medical debt for individuals, and much more. An individual debtor can receive a discharge in a Chapter 7 bankruptcy filing, while multiple types of debtors — including an individual or a business — can receive a discharge in reorganization bankruptcies such as Chapter 13, Chapter 11, and Chapter 12.
A “dismissal” is something quite different. As the Internal Revenue Service explains, “a dismissal ends the bankruptcy protection and does not relieve debts.” More specifically, a dismissal results in an end of the bankruptcy case without any debts being discharged. Sometimes a dismissal is voluntary, coming at the request of the debtor. In other cases, a dismissal can be involuntary, meaning that the debtor has not consented to the dismissal, and may occur when legal issues arise in the bankruptcy case.
If you have any questions about your eligibility for discharge or concerns about a dismissal, you should seek legal advice.
Contact Our West Palm Beach Bankruptcy Lawyers Today for Assistance with Debt Discharges and Case Dismissals in Florida
Although the terms of discharge and dismissal might sound alike, they have two very different meanings in the context of American bankruptcy law. If you have questions or concerns about a discharge or a dismissal in relation to your bankruptcy case, it is important to seek legal advice. One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC can discuss the details of your case with you today and can answer any questions you have about dischargeable debts, and we can also work with you to address any factors that could ultimately result in a dismissal. Contact our firm today to learn more about how we can assist you with your South Florida bankruptcy.
Sources:
law.cornell.edu/uscode/text/11
irs.gov/businesses/small-businesses-self-employed/bankruptcy-frequently-asked-questions
