A Bankruptcy Discharge
by Gene Frendo
A bankruptcy discharge is the completion of a process. In almost all cases, the bankruptcy of an individual begins with the filing of an assignment through a Trustee and ends with a formal discharge from bankruptcy by way of a certificate of discharge, issued by the Trustee, or an order of discharge issued by the court.
A bankruptcy discharge releases a debtor from all those debts dischargeable by a bankruptcy.
By filing an assignment in bankruptcy, a Stay of Proceedings is put in place which stops most creditors from further legal action against an individual. That Stay of Proceedings stays in place until the Trustee is discharged, which generally occurs two to three years from the filing of the assignment.
If the Trustee is discharged without the debtor being discharged, than the creditors have the right to begin action against the debtor again. In other words, by not being discharged, the debtor runs the risk of having to deal with his or her creditors all over again.
A bankruptcy discharge is the most important part of the bankruptcy process.
Fortunately, getting discharged does not have to be difficult. With few exceptions, a person filing for bankruptcy for a first or second time is entitled to an automatic discharge. An automatic discharge is issued by the Trustee and does not involve the court.
Generally speaking, a person will not be discharged automatically if they fail to perform their duties while in bankruptcy, there is an opposition filed, or if they have a large personal income-tax debt. A large personal income-tax debt is defined as being over $200,000 and representing at least 75% of the total unsecured debt of the individual.
Therefore, for the most part, whether an individual is discharged from bankruptcy or not, really depends on whether they comply with their responsibilities while in bankruptcy. These responsibilities include attending two financial counselling sessions, keeping the Trustee advised of any change of address, disclosing income while in bankruptcy, providing the Trustee with tax information, and generally cooperating with the Trustee’s office when required.
An individual who is not entitled to an automatic discharge would have to seek their discharge from the court via an order of discharge.
At Frendo and Partners, bankruptcy is only one option.
If you would benefit from a free, no-obligation one-on-one consultation with a licensed insolvency professional where you can discuss your current financial situation and learn about all the options available to help you rid yourself of your debt, please call us at Frendo and Partners: 289-273-2841 or email: gene@frendoandpartners.com.