EXPLANATION OF BANKRUPTCY DISCHARGE IN A CHAPTER 7 CASE
When the court order grants a discharge to the person named as the debtor, it is not a dismissal of the case and it does not determine how much money, if any, the trustee will pay to creditors.
Collection of Discharged Debts Prohibited
The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor. [In a case involving community property.] [There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case.] A creditor who violates this order can be required to pay damages and attorney's fees to the debtor.
However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtors property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. Also, a debtor may voluntarily pay any debt that has been discharged.
Debts That are Discharged
The chapter 7 discharge order eliminates a debtors legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt existed on the date the bankruptcy case was filed whether the debt was included in the schedules or omitted from them. (If the case was begun under a different chapter of the Bankruptcy Code and converted to chapter 7, the discharge applies to debts owed when the bankruptcy case was converted.)
Debts That are Not Discharged
Some of the common types of debts which are not discharged in a chapter 7 bankruptcy case are:
a. Debts for most taxes;
b. Debts that are in the nature of alimony, maintenance, or support',
c. Debts for most student loans;
d. Debts for most fines, penalties, forfeitures, or criminal restitution obligations;
e. Debts for personal injuries or death caused by the debtors operation of a motor vehicle while intoxicated;
f. Some debts which were not properly listed by the debtor,
g. Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged;
h. Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts.
This information is only a general summary of the bankruptcy discharge. There are exceptions to these general rules. Any party may request reopening of a bankruptcy case to determine whether a particular debt was included within the scope of the discharge. In re Beezley, 994 F. 2d 1433 (9th Cir. 1993). Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in this case.
LEGAL DISCLAIMER Nothing contained herein should be construed to constitute advice for your personal circumstances. This document is intended as an overview of the various options available, but by no means is this a comprehensive or exhaustive analysis of bankruptcy law. Whether or not you should file a bankruptcy will vary depending on your personal circumstances and should only be undertaken after careful consideration and analysis, and after consultation with a professional. This informative summary may contain information and rules peculiar to the Southern District of California.