What is the Bankruptcy Discharge Process?

Bankruptcy discharge is the final goal of a bankruptcy.

A bankruptcy discharge is an action that replaces the automatic stay injunction. A creditor is prohibited from beginning or continuing any action to collect a debt after a discharge is granted.

341 Meeting

Before a discharge can occur the debtor must attend a 341 meeting of creditors. The debtor is placed under oath and asked questions regarding assets and liabilities. The creditors are invited to the meeting; however, many do not attend.

Trustee

Within 10 days after the 341 meeting of creditors, the trustee will report to the court whether the petition should be considered an abuse of the bankruptcy code under the guidelines outlined in 11 U.S.C. § 727.

Creditors

Creditors have 60 days after the 341 meeting to file an objection to the bankruptcy petition. If the creditor contests the petition, the debtor may have to appear in court again.

Time Frame

The duration of a bankruptcy discharge varies depending on the type of bankruptcy filed. A Chapter 7 bankruptcy discharge usually occurs 60 to 90 days after the 341 meeting of the creditors. A Chapter 13 bankruptcy discharge occurs after the debtor has made all scheduled payments outlined in the payment plan, typically three to five years later.

Order of Discharge

The bankruptcy court clerk will issue an order of discharge to the debtor, creditors, the trustee on the case and the U.S. Trustee. The order informs the creditor that the debtor no longer owes the debt and any attempt to collect the debt is a violation of a court order.

References

• United States Courts: Discharge in Bankruptcy
• Cornell University Law School: U.S. Code Title 11, 727. Discharge

Resources

• U.S. Courts: Bankruptcy Basics
• U.S. Courts: Bankruptcy Forms