What the discharge order does
The discharge is a court order, and it's permanent. It bars creditors from ever collecting the debts it covers. No calls, no letters, no lawsuits, no garnishments. A creditor who tries anyway is violating a federal court order, and the bankruptcy court can sanction them for it.
The order itself is short and doesn't list your debts one by one. It covers every debt that existed when the case was filed, except the kinds the law carves out.
What survives
Some debts come out the other side of a bankruptcy still owed:
- Child support and alimony.
- Most student loans.
- Recent income taxes and certain other tax debts.
- Criminal fines and restitution.
- Debts for injuring or killing someone while driving intoxicated.
- Debts a judge ruled non-dischargeable in the case, usually over fraud.
- Any debt you reaffirmed, meaning you signed a new agreement during the case to keep owing it.
- Debts that came into existence after the filing date.
Liens survive too
A discharge erases your personal obligation to pay. It doesn't erase a lien. A mortgage lender or car lender still has its claim on the property, so if payments stop, it can foreclose or repossess. What it can't do after a discharge is come after you for money beyond the property itself, unless the debt was reaffirmed.
Your credit report
Federal law lets credit bureaus report a bankruptcy for up to 10 years from the filing date. That's how long a Chapter 7 stays. The three major bureaus remove a completed Chapter 13 after seven years as a matter of their own policy.
Each discharged account is supposed to show a zero balance and a note that it was included in bankruptcy. Errors here are common, with old balances still showing as owed. Reports from all three bureaus are free at AnnualCreditReport.com, and each bureau has a dispute process for fixing mistakes.
A bankruptcy doesn't lock anyone out of credit for ten years. Lenders start sending offers soon after a discharge, often at high interest rates. Scores generally climb as time passes and new accounts are paid on time.
Protections the law gives you
- Government agencies can't deny, revoke, or refuse to renew a license or permit, or refuse to hire you, only because of a bankruptcy.
- Private employers can't fire or discriminate against an employee only because of a bankruptcy.
- Taxes: debt wiped out in bankruptcy isn't taxable income. Forgiven debt outside bankruptcy often is.
If a creditor contacts you anyway
It happens, usually because an old debt was sold to a collector who never got the notice. A copy of the discharge order ends most of these. When it doesn't, the bankruptcy court that entered the discharge is the one that enforces it, and a closed case can be reopened for that purpose.
A discharged debt can always be repaid voluntarily. The law only stops creditors from demanding it.
Filing again
The law sets waiting periods between discharges, counted from filing date to filing date:
- Chapter 7 after Chapter 7: eight years.
- Chapter 13 after Chapter 7: four years.
- Chapter 13 after Chapter 13: two years.
- Chapter 7 after Chapter 13: six years, with exceptions for plans that paid creditors in full or close to it.
A discharge can be revoked
It's rare. A court can take back a discharge that was obtained through fraud, such as hiding property or lying on the forms. In Chapter 7 the request has to come within a year of the discharge in most situations.
The papers that get asked for later
Two of them: the discharge order, and a complete copy of the petition and schedules. Mortgage lenders ask for both years afterward, and they're what settles a dispute with a collector or a credit bureau. The clerk's office and the federal courts' PACER system both provide copies for a fee.
These rules can change: credit reporting periods come from the Fair Credit Reporting Act and bureau policy, and the waiting periods come from the Bankruptcy Code. The U.S. Courts website keeps a current overview under Discharge in Bankruptcy.
For the steps that lead up to the discharge, see The filing process, step by step.