A discharge in bankruptcy relieves the debtor from personal liability for certain debts. By obtaining a discharge, the debtor obtains permission not to repay those debts. Not only do debtors not have to pay the discharged debts, creditors are prohibited from trying to collect these debts from the debtor. This includes attempts to request repayment of the debts through phone calls, letters, or otherwise.
Where a secured creditor has a lien however, that has not been made unenforceable, the secured creditor is still permitted to recover the property to which the lien has attached through enforcement of the lien.
How Does a Discharge Occur?
Unless there is litigation involving objections to the discharge, the debtor will usually automatically receive a discharge.
The Federal Rules of Bankruptcy Procedure provide for the clerk of the bankruptcy court to mail a copy of the order of discharge to all creditors, the U.S. trustee, the trustee in the case, and the trustee’s attorney, if any. The debtor and the debtor’s attorney also receive copies of the discharge order.
The notice, which is simply a copy of the final order of discharge, is not specific as to those debts determined by the court to be non-dischargeable, i.e., not covered by the discharge. The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt.
Any inadvertent failure on the part of the clerk to send the debtor or any creditor a copy of the discharge order promptly within the time required by the rules does not affect the validity of the order granting the discharge.
What Debts May be Discharged?
It is the debtor’s responsibility to inform the court as to all creditors of the debtor. Failure of the debtor to list a creditor may result in the debt to that creditor not being discharged.
Not all debts may be discharged. There are varying chapters under the United States Bankruptcy Code under which to file a bankruptcy. The types of debts that may be discharged will vary depending upon which type of bankruptcy has been filed.
For individual debtors, certain debts are classified as non-dischargeable under the section 523(a) of the United States Bankruptcy Code. None of those debts are dischargeable and all must be repaid after bankruptcy. The reasons for classifying these debts as non-dischargeable is generally based upon public policy concerns.