In bankruptcy cases, the term “discharge” is frequently used. In the most straightforward sense, to have one’s debts discharged means that those debts are wiped out and their slate is cleared; the debtor’s liability for the discharged debt is essentially erased. However, the reality is more complicated. Often, it is only certain types of debts that are discharged, and which are forgiven is usually determined by what type of bankruptcy proceedings are occurring, which types of debts are involved, and the identity and past actions of the debtor. In short, often some or many debts will linger, even after Chapter 7.

Qualifying for a Discharge

Before debts will qualify for a discharge under Chapter 7, several criteria must be met:

• Debt discharges can only occur once during each nine-year period.
• According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individual debtors seeking discharge must enroll in and complete a personal financial management class.
• The debtor must have history of cooperation and honesty. If there were incidents such as poor record keeping before filing, fraudulent transfers, or ignoring orders made by the court after filing, the court is much more likely to deny the discharge.

When Your Discharge is Granted

Once a discharge is granted, the debtor is afforded some protections:

• Legal action cannot be taken for collection of discharged debts.
• Accordingly, any letters, phone calls or other communications related to the discharged debt must stop.

What A Discharge Does Not Do

Unfortunately, a debt still exists after it’s been discharged; the debt is not completely cancelled. Attempts to collect on the debt from the debtor who had it discharged must cease, as the debtor is no longer personally liable, but the discharge does not automatically protect any guarantor or co-debtor from continued or further liability.

A debtor filing for Chapter 7 relief must also consider any outstanding liens. Liens are not affected by bankruptcy discharge. Here’s an illustrating example: a debtor had previously secured a $6000 loan with a vehicle that was worth $2000, and the $6000 was left unpaid. The debtor files for Chapter 7 bankruptcy and is granted a discharge on the debt. In this situation, the creditor’s security interest is not eliminated with the rest of the debt; the car can still very well be repossessed. The protection provided to the debtor under the bankruptcy discharge only applies to the leftover debt that remains between the value of the car and the amount of the original loan, or $4000.

Discharges Can Be Revoked

Under certain circumstances, usually involving dishonest behavior on behalf of the debtor, discharges are revoked. A Chapter 7 discharge can be reversed by the court in these scenarios:

• A revocation is requested by a creditor or the trustee.
• The debtor misstated or omitted crucial information in connection to the audit of their case.
• The debtor acquired property and purposefully did not report that property or give it to the trustee.
• The debtor used fraudulent means to obtain the discharge.