Debt Discharge and Bankruptcy Dismissal

Debt Discharge and Bankruptcy Dismissal

Some people consider bankruptcy relief the last resort in retaining their sanity.

Others reply that any person involved in any kind of bankruptcy doesn't have both oars in the water and perhaps, has ruined their lives forever. Common sense might lean toward the first sentence about relief and sanity if it concerns total debt discharge in a Chapter 7.

But let's not get ahead of ourselves, folks! Debt discharge and bankruptcy dismissal are not the same.

• Eliminating or discharging a person or business debts depends on which bankruptcy chapter you file under, be it Chapter 7, Chapter 11, or Chapter 13.
• A bankruptcy can be dismissed for several reasons such as fraud, or abuse of a bankruptcy plan that a court requires. The whole scenario boils down to this. If the debtor who files debt discharge and bankruptcy dismissal, and everything is completed per the courts requirements, will likely obtain a discharge which is what the original goal was in the first place.

Discharge Function

Any debtor seeking a discharge of debts will have their own personal reasons. Buried under a mountain of debt is usually the prime reason for getting a debt discharge. There is nothing like benefiting from a fresh start in life and being able to move forward with a smile, not a frown or migraine.

Bankruptcy Dismissal Function

When a bankruptcy is dismissed, what is called an "automatic stay" is lifted. This simple means that while the bankruptcy is in the ongoing process of discovery, no creditors can hound the debtor for collection. However, once the bankruptcy is dismissed, the "automatic stay" is lifted allowing creditors to continue efforts to collect from the debtor.

When a person files bankruptcy with the courts for debt discharge, if successful, and after the judge pounds the table with his gavel ending the proceedings, and ruling in favor of the debtor, creditors may not collect any debts that were discharged, now or in the future.

So let's summarize this brief discussion about debt discharge and bankruptcy dismissal. One common question worthy of note is the time involved in bankruptcy filings. Actually, it's been proven that a debt discharge filing for a Chapter 7 is much faster than a Chapter 13. Why? Usually, a Chapter 7 involves primarily dismissal of debts of credit card abuse, and not many assets. When filing a Chapter 13, the debtor's assets are not dismissed, but tossed into a court bankruptcy plan and repaid over a certain amount of time.

With the availability of internet information concerning any type of bankruptcy, debt discharge and/or bankruptcy dismissal, common sense should tell you to be diligent, and be informed on any new laws that may apply.