Bankruptcy Dismissal Vs. Discharge: What’s The Difference?

In the case of bankruptcy, the terms “discharge” and “dismissal” are at opposite ends. For whatever reason, however, the topic of bankruptcy dismissal versus discharge is frequently a blurry one. For those needing bankruptcy protection, terms like “Chapter 7″, “Chapter 13”, “discharge”, and “dismissal” are important things to know. The quickest and easiest way to become familiar with anything and everything having to do with a bankruptcy case is to confer with a trusted professional. That said, here’s some information about bankruptcy discharge and dismissal.

Here’s the easiest way to quickly distinguish the difference when it comes to discharge versus dismissal bankruptcy cases:

• Dismissal – Seldom seen as a win and, in fact, usually considered a loss.
• Discharge – Absolutely a win.

Naturally, the following will go into much more detail as far as the topic of bankruptcy dismissal versus discharge is concerned.

Bankruptcy Dismissed Meaning

Simply put: In the case of dismissal, before a discharge was entered, a bankruptcy case was closed resulting in what could be considered a loss. But let’s expand on that.

If a discharge or bankruptcy protection is no longer needed, at the request of the debtor, a dismissal may be applied. Sometimes, in order to complete the sale of an endangered home, to bide time, Chapter 13 is filed. The “automatic stay” would no longer be needed once the sale is complete.

Generally speaking, a Chapter 7 case can’t be voluntarily dismissed by a debtor. They may be able to change the case to an alternate chapter, but the option of changing their mind and escaping bankruptcy is not usually available to the debtor.

On the other hand, a Chapter 13 case, by contrast, does allow the debtor the right for dismissal. If there are major unknowns or if a situation is fluid, the go-to chapter for some professionals is Chapter 13. The case can always be dismissed if things go horribly sideways.

More times than not, dismissal is the result of a motion of the court or the trustee – most times for abuse of the system or failure to file a document in a timely manner. But if the case is “dismissed” this means that, without a discharge, the case has been closed.

What Does Discharge Mean in Bankruptcy?

Simply put: Your legal liability to pay a debt (on a personal level) is wiped out by bankruptcy discharge. This is considered a win. Let’s look at that in closer detail.

Here, the courts wipe out your legal obligation to pay. It is hereafter unenforceable for creditors to try to get you to pay your unsecured debts because bankruptcy discharge has been legally ordered.

There are, of course, some things that can’t be discharged like family support and recent taxes. Additionally, on anything you own, liens that are attached remain unaltered when they pass through bankruptcy. However, following the underlying debt discharge, those liens don’t attach to acquired assets. The only thing a creditor can do, even if the lien survives, is to get money from you through foreclosure or levy. You can’t be sued by them.

Struggling with Bankruptcy Dismissal and Discharge? The Debt Defenders by Ciment Law Firm, PLLC Can Help

With help distinguishing between Chapter 7 and Chapter 13 bankruptcy, and for assistance with your bankruptcy protection case so you don’t come out on the losing end, confer with the experts at The Debt Defenders by Ciment Law Firm, PLLC.

Contact us today at 866-493-1308 for an appointment. You can also fill out our convenient online form to begin communication.