When someone files for bankruptcy, the goal is usually to obtain a discharge, which is a court order that eliminates certain debts and provides a fresh financial start. However, not every bankruptcy case reaches that outcome. Some cases are dismissed before debt relief is granted. Understanding the difference between a discharge and a dismissal is important for anyone considering bankruptcy.
What is a Bankruptcy Discharge?
A bankruptcy discharge is a court order that releases a debtor from personal liability for certain debts. Once a debt is discharged, creditors generally cannot continue collection efforts, file lawsuits, garnish wages, or otherwise pursue payment on those obligations. Common dischargeable debts may include credit card balances, medical bills, personal loans, and other unsecured debts.
Receiving a discharge is often the primary objective of filing for bankruptcy because it allows individuals to move forward without the burden of many pre-bankruptcy debts.
What Is a Bankruptcy Dismissal?
A bankruptcy dismissal occurs when the court closes a case before a discharge is granted. In a dismissed case, debts are generally not eliminated, and creditors may resume collection activities once the automatic stay is lifted.
Dismissals often result from a debtor’s failure to comply with bankruptcy requirements, such as:
- Missing filing deadlines.
- Failing to submit the required documents.
- Not completing mandatory credit counseling courses.
- Missing the meeting of creditors.
- Failing to make the required Chapter 13 plan payments.
- Not paying filing fees or other court-required costs.
However, it is possible you may decide you want to dismiss your own bankruptcy case. This is called a voluntary dismissal, and you will need the court’s permission to do it. The court will decide on whether or not to approve your request depending on which type of bankruptcy you filed and the reason for dismissing your case.
What Happens Next?
In many situations, a dismissed bankruptcy case is dismissed “without prejudice,” meaning the debtor can file another bankruptcy case. However, if the court dismisses a case “with prejudice,” there may be restrictions on refiling for a specific period. Courts may impose these restrictions when they believe the bankruptcy process has been abused or filings were made in bad faith.
A bankruptcy discharge becomes part of the public record and typically remains on a credit report for several years. A dismissed bankruptcy may have less impact on a credit report and, in some cases, may not appear at all if no discharge was entered. However, the underlying debts and any associated negative payment history can continue affecting credit scores.
Contact Us Today
If you are considering bankruptcy, you want to get a discharge. Getting a case dismissed is not good and means you are still responsible for your debts.
The Law Offices of Adam M. Freiman can help you get the best outcome for your bankruptcy case. We have decades of experience and have successfully discharged thousands of cases. Schedule a consultation with our office by calling (410) 486-3500 or filling out the online form.
