Bankruptcy Dismissal vs Discharge

who carries the most debt in america

Bankruptcy Dismissal vs Discharge

bankruptcy dismissal vs dischargeMaking sense of all the bankruptcy terms can be difficult, especially if you’re going through the process for the first time. Two of the key terms that you need to understand, however, are a discharge and a dismissal. While you’ll be looking for one of those in your Arizona bankruptcy, you will also be hoping that the second one doesn’t become effective.

What Is a Bankruptcy Discharge?

A bankruptcy is a procedure that enables you to wipe out some of the debt you’ve accumulated. This process is legally known as getting a discharge.

A bankruptcy discharge is approved by the court if you qualify for a Chapter 7 bankruptcy. In the case of a Chapter 13 Arizona bankruptcy, you will have to pay back some of your debt over the course of the coming three to five years. Once the payment plan is completed, you will once again get a discharge.

Once the discharge is approved, creditors can no longer go after you in an attempt to collect payments.

What Is a Bankruptcy Dismissal?

While a discharge is the ultimate goal in a bankruptcy filing, some cases end in a dismissal.

A dismissal is a court decision to close the bankruptcy case before a discharge is granted. This means that the debtor doesn’t satisfy some of the terms and conditions required to move forward with the bankruptcy and get a discharge.

A dismissal can sometimes stem from a missing document or a failure to follow one of the essential Arizona bankruptcy procedures. Being represented by an experienced bankruptcy attorney is one of the best options for avoiding such problems.

In some instances, however, dismissals stem from much more serious circumstances. Here are a few of those:

  • A failure to pay the necessary filing fees
  • A failure to attend the so-called creditor meeting (the 341 meeting)
  • A failure to provide truthful information or an attempt to falsify some of the data provided by the bankruptcy court (in which case you will also be committing bankruptcy fraud)
  • Inability to pass the means test (in the case of a Chapter 7 bankruptcy filing)
  • The lack of certificate for the completion of financial counseling
  • A failure to make all of the necessary Chapter 13 payments
  • Doing multiple filings within a short period of time

Very often, a dismissal can be countered. If a single document is missing, you can provide it to court and move forward with the bankruptcy process. If you intentionally provided misleading information, however, or you failed following one of the more demanding procedures, chances are that the bankruptcy filing will be dismissed without a chance to counter the error.

Bankruptcy Cases Closed without a Discharge

Bankruptcy law envisions one third option that is neither a discharge or a dismissal.

It’s possible for the bankruptcy filing to go through without a discharge in the end. There isn’t a procedural error or a problem with the documentation. A bankruptcy case that does not result in a discharge is rare and it can occur in a strict set of circumstances.

The first instance is a Chapter 13 filing that comes too close in time to a previous Chapter 7 filing. Once the repayment plan is completed, the bankruptcy case is closed without a discharge. This is the so-called Chapter 20 bankruptcy filing.

Closing without a discharge is also possible whenever the debtor does not provide evidence that an Instructional Course Concerning Personal Financial Management has been completed. In this situation, however, the debtor can file a motion to reopen the case. When the documents are sorted out, the bankruptcy discharge will take place.

Click here for information on millennials and debt in the United States.