March 1, 2016

Difference Between a Bankruptcy Discharge and Dismissal

Bankruptcy Discharge vs. Dismissal

If you haven’t filed for bankruptcy in the past, you are free to file for Chapter 3 or Chapter 7 relief at anytime. However, you must satisfy certain requirements to obtain a discharge to be officially released from your debts. If the bankruptcy court discharges your case, it means that you are not legally liable for further repayment of your debts, creditors can’t continue to pursue you, and you can move forward with a clean slate. All debts will be cleared except for debts that automatically survive bankruptcy such as tax debts, child support, alimony, and student loans, among others.

But not all cases end in discharge.  The bankruptcy court ultimately decides which cases will be heard and which will be dismissed. If you don’t complete the necessary steps of the bankruptcy process, the court can dismiss your case. If your petition for relief was dismissed, that the court was dissatisfied with one or more components of your case and has determined that granting a bankruptcy discharge is unsuitable. This means that creditors can still go after your bank accounts and wages to collect payment. 

The court can deny a case with or without prejudice. It can be frustrating to have your bankruptcy case dismissed, but there is a silver lining if you receive a dismissal without prejudice. It allows you to immediately file another bankruptcy case. If you receive a dismissal with prejudice, you will be required to wait a certain amount of time before you are eligible to file again. 

Without prejudice is typically granted if an applicant makes a procedural mistake. Most cases are without prejudice, unless you abuse the bankruptcy process or lie about your debts. The court will most likely dismiss your case without prejudice if you:

  • Don’t provide all the necessary forms and supporting documents
  • Fail to comply with the mandatory credit counseling prior to submitting a petition
  • Do not meet all requirements for the specific Chapter you filed for
  • Fail to pay the filing fees
  • Don’t attend a mandatory court hearing
  • Make any other minor procedural error

What to do if your Case was Dismissed 

In this situation, you have a few options. You can:

  • File again immediately, if your case was dismissed without prejudice
  • File again after the time limit elapses
  • Appeal the ruling

If your bankruptcy case was dismissed, we understand that it can be discouraging and frustrating. But don’t give up just yet. The attorneys at The Law Office of Michael Alan Siddons may be able to help you appeal so that you can get a fresh financial start.  Call us today for a free consultation at (610) 255-7500.