Consumer Bankruptcy
[1] Introduction
[2] General Information
[3] Limitations on Filing
[4] The Automatic Stay
[5] Debt Treatment under Chapter 7
[6] Debt Treatment under Chapter 13
[7] Asset Treatment under Chapter 7 and 13
[8] Choosing Between the Alternatives
[9] Case Summary and Outline
[10] Getting Started
[11] Typical Pre-Filing Problem Areas
[12] Filing
[13] Typical Post Filing Issues
[14] The First Meeting of Creditors
[15] Chapter 7 Interim Administration
[16] Chapter 13 Interim Administration
[17] Chapter 7 Discharge
[18] Chapter 13 Discharge
[19] Typical Post Discharge Issues
[20] Fees and Costs
[21] Bankruptcy Reform

Booklet One
Booklet Two

Client Page

Bankruptcy Packet

Fees and Costs

Power Point
[1] Introduction & Priority Debt
[2] Secured Debt
[3] Executory Contracts & Unsecured Debt
[4] The Bankruptcy Estate
[5] Chapter 7
[6] Chapter 13
[7] Final Matters

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Chapter 17

Chapter 7 Discharge

1.0 Availability

A chapter 7 discharge under 11 U.S.C. § 727 is available only to individual debtors. This means that a corporate debtor does not receive a discharge. If the debtor has committed certain acts and an adversary proceeding is brought against him or her, the entire discharge may be denied. In addition, a discharge is not available in a chapter 7 if a discharge has been granted previously in a chapter 7 or 11 within the previous six years. Thus, such a case should never be filed. A discharge in chapter 7 is also not available if the debtor has obtained a discharge in a chapter 13 within less than 1 year, unless 100% payment was made on unsecured claims or there was a 70% repayment on unsecured debt and this was purposed in good faith and was the debtor's best effort.

Under the new law there are additional restrictions. First, you must have complete the Financial Management class. Second, under 727(a)(12) the court must certify that the debtor has not been convicted of (nor is there pending an action for) a securities law violation or intentional injury to an individual in the last 5 years.

2.0 Extent

The chapter 7 discharge, discharges debts arising before the commencement of the case, as well as those arising under §502 which are treated as having risen before the petition was filed. It does not effect the validity of liens (other than judicial liens) on the debtors property, but only the debtors personal liability on those debts. This means that a lien can be collected post discharge upon the property of the debtor securing that lien but by no other assets of the debtor. Further, the discharge is limited by 523 and 727 (non-dischargeable debts) and does not effect a trustees ability to continue to administer the case or its assets. As a result, if the trustee has asked you to turn over property of the estate you must still do so even if a discharge has been entered.

3.0 Revocation

A discharge obtained by fraud may be revoked under section 11 U.S. C. § 723(d) within one year of issuance if the fraud is not discovered until after the discharge is granted. A discharge may also be revoked within the latter of one year after issuance or the date the case is closed if the debtor acquires property of the estate and fails to report it's acquisition and turn it over to the trustee, or if the debtor refuses to obey any lawful order of the court or to answer a material question where no 5th Amendment privilege applies.

4.0 Effect

11 U.S.C. §523(a) operates as a permanent injunction to protect the debtor from any action to collect discharged debts as a personal liability of the debtor. It also protects the debtors post -bankruptcy property from the claim of discharged debts. A violation of this injunction is punishable by the bankruptcy court. It may be brought before the court by an order to show cause. It should be noted again, however, that a creditors lien remains on any property of the debtor unless otherwise avoided during the bankruptcy proceeding, and the creditor may enforce such lien, only to the extent of the property's value. 11U.S.C. §525 also gives other protections regarding employment and licensing.

5.0 Notice

Once the Bar Date has passed, the Court will begin processing your discharge. Approximately one (1) to two (2) weeks after the discharge date, you will receive your discharge notice in the mail. A copy of that notice is sent to each of your creditors and to the attorney.

6.0 Case Closing

Once the attorney receives a copy of your discharge, you will be sent a letter giving you two (2) weeks to obtain any documents which you may want from your file. After that date, your file may be disposed of except for the signature pages that the attorney must retain.

If you need copies of documents after that date, the only documents that will be available are those that have been scanned into the “Pacer” system by the Court. You can obtain copies of those documents by contacting the Bankruptcy Court directly, or through your attorney. However, there is a charge for downloading these documents from the Court Website.