Understanding the Bankruptcy Discharge

One of the biggest advantages of filing for Chapter 7 or Chapter 13 bankruptcy is the bankruptcy discharge of certain debts that comes along with successful completion of the proceedings. 

A Bankruptcy Discharge Is…

A bankruptcy discharge is a permanent court order prohibiting creditors of the bankruptcy debtor from taking any action to collect discharged debts. This includes legal action as well as direct communications with the debtor (text messages, phone calls, emails, letters, etc.). In other words, the discharge effectively releases the debtor from his or her personal liability for paying the remaining amounts owed on the discharged debts.

Debts Not Subject To Bankruptcy Discharge

As discussed in earlier Florida bankruptcy blogs, not all debts can be discharged, meaning the debtor cannot escape liability of these debts even through bankruptcy. The Bankruptcy Code specifically excludes different categories of debts from the discharge given to individual debtors. These exceptions to bankruptcy discharge are limited and usually correspond with public policy or fairness considerations such as the nature of the debt or the fact that the debts were incurred by debtor who acted fraudulently.
The most common types of non-dischargeable debts are taxes, debts not listed by the debtor as required by the court in the bankruptcy proceeding, debts for alimony or child support, debts for willful and malicious injuries, debts to the government for fines and penalties, debts for most government funded or guaranteed educational loans, debts for injuries the debtor caused by operating a vehicle while intoxicated, and debts for certain condominium or cooperative housing fees. More exceptions can be found at 11 USC §523.

Continued Oversight of Debts after Bankruptcy Discharge

The road doesn’t end once a bankruptcy discharged is obtained. The debtor should still expect oversight of the debt and in certain situations the discharge can be revoked. The potential legal reasons for revocation of the bankruptcy discharge includes, but is not limited to, fraud, failure to disclose relevant facts relating to your property during the bankruptcy proceeding, failure to explain disparities discovered during review of the case, or failure to provide required documents or information requested by certain parties.
A revocation of the bankruptcy discharge can be requested by any interested party. As a practical matter, the most common interested parties to request a revocation of the bankruptcy discharge are creditors or the US Trustee’s office. This request for a revocation usually must be done within a year of the discharge. While creditors cannot pursue recovery of the debt after the discharge, they may with their attorneys’ assistance continue to look for a reason to get the discharge revoked. The US Trustee’s office, for its part, is focused on ensuring proper operation of the bankruptcy courts and requesting a revocation might further this goal.
If a party moves for revocation, the debtor will have a fair opportunity to present his or her side to the bankruptcy court. The court will then determine whether the allegations made against the debtor are true and whether it warrants revocation of discharge. Yet, if possible, it is better to avoid the threat of revocation of bankruptcy discharge altogether. Using a Jacksonville bankruptcy discharge attorney, like the ones at Adam Law Group, will help do this. However, you should also help the attorney by providing them with full and accurate information in response to their questions and finding any paperwork that the attorney requests.