Do You Have to Wait for Your Bankruptcy Discharge Papers to Be Fully Done With Bankruptcy?
Bankruptcy is a serious step with long-lasting consequences. If you file a Chapter 7 bankruptcy, you may receive your discharge within three or four months after you file, but if you file a Chapter 13 bankruptcy, you may have to wait three to five years for your discharge. Although in both cases your bankruptcy is effectively over once you receive your discharge, your case is technically not over until it is closed.
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Bankruptcy Discharge
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A bankruptcy discharge is the objective of any bankruptcy filing. Your bankruptcy discharge paper is a court order preventing your creditors from pursuing you in an effort to collect a debt. In the case of a Chapter 7 bankruptcy, the court grants a discharge if you have properly filed a complete bankruptcy petition in a timely manner and if your creditors and the bankruptcy trustee have not objected within a specified time frame. Thereafter, you are essentially finished with your bankruptcy case, as your creditors no longer have the legal right to collect on a debt. For a Chapter 13 bankruptcy, you earn your discharge after a period in which you make court-approved payments to creditors.
Case Closure
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In legal terms, your bankruptcy case is not concluded until you receive notice of your case closure. Most bankruptcy cases are closed shortly after the issuance of a discharge. However, if you file a Chapter 7 bankruptcy and own assets above allowable exemption levels, you must turn those assets over to the bankruptcy trustee for the benefit of your creditors. While asset forfeiture does not delay the issuance of your discharge, it will postpone the closure of your case. Once your assets are liquidated and distributed to your creditors, the court will close your case and your bankruptcy will officially be complete.
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Credit Report and Score
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Even after your case is closed and you receive your bankruptcy discharge, your bankruptcy filing will appear on your credit report for up to 10 years for a Chapter 7, seven years in the case of a Chapter 13. While in a legal sense your bankruptcy will be complete upon the closure of your case, your credit report and score will still be damaged for years afterward.
Effects
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The positive effect of having your bankruptcy behind you is that all of your debts are generally eliminated and you get a "fresh start." The negative effect is that you may find it difficult or even impossible to obtain credit cards, car loans or even apartment rentals for a period of time after the closure of your case.
Fraud
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The closure of a bankruptcy case is final except in the case of fraud. If you are found to have deliberately deceived the court or otherwise lied in your bankruptcy petition or proceedings, the U.S. Trustee has the power to revoke your discharge and reinstate your responsibility to pay your debts. You may also be subject to legal proceedings and prison time.
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