Everyone who files for bankruptcy is seeking to get out of debt. But there’s a difference between a dismissed and discharged bankruptcy case.
It’s every bankruptcy filer’s goal to have their debt discharged. A discharge means that a debtor is relieved from repaying qualified debt acquired before filing for bankruptcy. In short, a discharge means that a bankruptcy filer has successfully completed the bankruptcy process, and their remaining debt is forgiven.
A bankruptcy dismissal and discharge are not the same. A dismissed bankruptcy case typically occurs when the bankruptcy filer has failed to uphold an agreement, such as not making repayments, not attending credit counseling, or not filing documents properly. As a result, a filer’s bankruptcy case could be canceled before their debt has been eliminated.
Bankruptcy dismissal is a bad thing. A discharge in bankruptcy is what you want. So let’s take a closer look at each.
Bankruptcy Dismissal and Discharge Are Not the Same
Even though the terms discharge and dismissal sound similar, their meanings are different. Discharged debt is an eventual goal, whereas a dismissed bankruptcy case indicates a termination without debt being forgiven. To obtain a discharge, a bankruptcy filer must successfully complete the terms of their bankruptcy process, which can include making scheduled repayments, attending credit counseling, appearing in court, filing paperwork correctly, and other requirements.
A Discharge in Bankruptcy Is What You Want
No matter which type of bankruptcy you filed, Chapter 7 or Chapter 13 a discharge is a legally backed measure that relieves you from having to pay back certain remaining debts. If filing for bankruptcy, a discharge in bankruptcy is what you want because:
- A discharge acts as a court order that relieves you from having to pay back any unsecured debt.
- A discharge can prohibit creditors from making further attempts to sue you or collect on discharged debts again.
So what can and cannot be discharged in bankruptcy? Unsecured debt (meaning debt not backed by collateral), such as credit card debt and medical expenses, can typically be discharged. With secured debt (which involves debt backed by collateral, like a mortgage or car loan), bankruptcy protections can still help protect these assets even if related debt cannot be discharged.
Keep in mind that some additional forms of debt cannot be discharged. U.S. bankruptcy code lists several types of debt that cannot be discharged, including debts related to:
- Alimony
- Most tax debt
- Criminal penalties and related fees
- Child support
- Student loans
If your bankruptcy case includes these types of debts, you’ll likely still have to pay them even after a discharge. Many bankruptcy filers have different types of debts, however, so a successful discharge could still improve your overall financial well-being.
Bankruptcy Dismissal Is a Bad Thing
Bankruptcy is ultimately designed to give debtors a second chance and to reset their financial outlook when they’re struggling the most. But achieving debt relief requires following through and complying with the bankruptcy process.
When debtors do not comply, things can go wrong. In some cases, a debtor’s bankruptcy case can be dismissed. A dismissed bankruptcy case occurs when the bankruptcy court stops a bankruptcy case before granting a discharge order.
A deficiency occurs when a person filing for bankruptcy fails to meet bankruptcy code requirements and fails to uphold agreed upon measures. From there, a bankruptcy court provides notice of the deficiency. If the deficiency is not addressed and corrected within a given amount of time, the filer’s bankruptcy case could be dismissed.
What to Do If Your Bankruptcy Case Was Dismissed
Ideally, your bankruptcy case would never be dismissed. If you follow the agreed upon requirements of your bankruptcy case, like attending credit counseling and making regular payments, your case should not be at risk of dismissal.
But if a dismissal occurs, you and your bankruptcy attorney in Ohio can file a motion to reinstate your case. The motion includes a letter to the bankruptcy judge presiding over your case; the letter would need to explain how you corrected the deficiency that caused your case’s dismissal. There are typically time limits within which to reverse a dismissal, however.
If you cannot cancel a dismissal, then you may have to attempt to file a new bankruptcy case or file a motion to reopen your case.
By working with an Ohio bankruptcy lawyer, you can be sure that you’re fulfilling all the requirements needed to keep your bankruptcy case on track. At the least, be sure to complete the steps and requirements below to avoid a dismissal:
- Pay agreed-upon bankruptcy payments in their full amount, on time
- Submit the required documents and paperwork for your case correctly
- Attend court dates
- Complete credit counseling courses required
- Attend your creditors’ meeting
A dismissal should never come as a surprise, as a deficiency or multiple deficiencies would precede your bankruptcy case being dismissed. By staying on top of your bankruptcy case requirements, you can prevent any deficiencies and avoid dismissal.
Considering Bankruptcy? We Can Help.
Whether you’re exploring your financial options or have decided to declare bankruptcy and need help filing, our team of experienced Ohio bankruptcy lawyers at Fesenmyer Cousino Weinzimmer can help. We’ve helped thousands of people just like you file for bankruptcy and prepare for life after bankruptcy.
We can make sure you’re making the best financial decisions and can guide you throughout the bankruptcy process. Ask for a free consultation by giving us a call at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).
