When (pertaining to time) does the court hands down the discharge?
A discharge is automatically handed down to the case; once the conditions of the bankruptcy are fulfilled (how Chapter 7 is discharged differs from Chapter 13). However, in both chapters, if the there is an objection to the discharge filed by the trustee or creditors, there is going to be another hearing set by the court, in which the trustee or creditor will present evidence to support his/her claims (burden of proof).
Who can file an objection?
Both the consumer and the creditors can file a Complaint to Determine Dischargeability during the bankruptcy proceeding.
How does it work?
Shortly after the case is filed the creditors will receive a notice that contains the deadline for objecting to the discharge. The importance of the deadline is so that creditor can file a complaint in the bankruptcy court before it expires. Once the objection is filed an "adversary proceeding" is going to be set.
If there are no objections, and sixty days after the meeting with the creditors, all parties (creditors, the trustee in the case, the consumer, and his/her attorney) will receive a Notice of Discharge from the court. It contains general information on debts that were discharged but it does not discuss the particular debts. The important thing about it though is that explicitly informs the creditors that they should not attempt further collection or the court will be holding them in contempt.
*Failure of the clerk to send the consumer or any of the creditors a copy of the discharge order promptly would not affect the validity of the order.
When is a discharge granted?
The discharge of a bankruptcy case depends on which chapter it was filed.
• In a Chapter 7 case, the court grants the discharge 1.) On the expiration of the time that was set for filing a complaint objecting to discharge 2.) and the time that was set for filing a motion to dismiss the case for substantial abuse, which is 60 days after the first date that was set for the 341 Creditors Meeting (four months after the consumer files the petition with the court clerk).
• In Chapter 13 (repayment plan), the court generally grants the discharge as soon as the consumer fulfills all payment obligations under the plan. A Chapter 13 plan is typically designed to be paid in three to five years, so then the court grants the discharge at about four years after the date of filing.
When (pertaining to eligibility) is a discharge not granted?
Aside from the above mentioned debts that will survive bankruptcy, the following are additional reasons why the court may deny a Chapter 7 discharge:
• The consumer’s failure to complete a course on personal financial management (post-filing requirement).
• Failure to account for the loss of assets.
• Failure to provide requested tax documents.
• Transference or concealment of property with intent to hinder, delay, or defraud the creditors.
• (Attempted and successful) Destruction or concealment of books or records.
• Violation of a court order or an earlier discharge in an previous case that started within certain time frames before the date that the petition was filed.
*If the issue of the consumer's right to a discharge goes to trial, the objecting party (the creditor or trustee) has the burden of proof, meaning that he/she would have to present evidence to prove his/her suspicion.
A consumer is ineligible for a discharge in Chapter 13 if he or she has had a prior discharge in another case. Unlike in Chapter 7, the creditors do not have anything to object to a Chapter 13 discharge. Creditors can object to the confirmation of the repayment plan, but cannot object to the discharge of the debts if the consumer has completed or fulfilled the requirements of the plan.
Is it possible for a consumer to receive a second discharge in a later Chapter 7 case?
• If the first Chapter 7 case was filed within eight years before the second petition is filed, the court will not allow the second discharge.
• If the consumer has previously received a Chapter 13 case discharge inside of the six years before the second case is filed, the court would not allow a discharge, although it might make an exception if (1) the consumer was able to pay in full all "allowed unsecured" claims in the previous case or (2) if the consumer was able to make payments in the first plan that is at least 70 percent of the allowed unsecured claims and if the consumer can show good faith, the court may reconsider.
• If the consumer received a Chapter 7 discharge just four years after his/her Chapter 13 was filed, the discharge will be denied.
After obtaining a discharge and if there are no more complications or issues from the trustee or the creditors, the consumer must make sure that he/she has a copy of the all important Discharge Order. This is his/her proof and shield against creditors who might try to collect in the future.
If the consumer loses or misplaces the discharge order, another copy can be obtained by contacting the bankruptcy court clerk that entered the order.
What is the importance of a copy?
The copies are to be mailed to the creditors who are trying to attempt to collect from the consumer after the case has been closed, and the debts that they are trying to collect were clearly dischargeable debts. Even in cases where in the consumer is not sure whether his/her debt was discharged (especially if his/her student loan hardship application was denied) since the paper does not specify which debts were wiped out, the consumer can still present the paper to the creditor, and attach it to a letter requesting him/her to cease collection.
Are there going to be fees?
• The clerk will charge a fee for searching the court records
• An additional fee for making and certifying copies.
• If the case has been closed and archived there will also be a retrieval fee, and obtaining the copy will take longer.
*The discharge order may be available electronically. The PACER system provides the public with electronic access to selected case information through a personal computer located in many clerk's offices. The consumer can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically.