How to Get the Bankruptcy Discharge

The bankruptcy discharge is a tool used to excuse a debtor from liability on a personal basis for some specific types of debt. A bankruptcy debtor is not obligated to repay debts that are discharged. A bankruptcy discharge is a form of permanent injunction or order that prevents creditors from undertaking collection on debts that have been discharged. Prohibited actions on the part of creditors include litigation, collection, and direct communications with a debtor (whether by phone, mail, or in person).

Are There Exceptions or Limits to the Reach of the Bankruptcy Discharge?

While a bankruptcy debtor is not liable for debts that have been discharged, valid liens that have not been avoided remain in full force and effect against a debtor and his or her property, even after the bankruptcy filing. A lien is a charge or claim upon specific property of a debtor intended to secure repayment for a debt. Avoidance of a lien means that a lien has somehow become unenforceable as a matter of law. As a result, secured creditors are permitted to enforce pre-bankruptcy liens to recover a debtor's property that is secured by that lien, so long as the lien has not been avoided within the bankruptcy context. Incidentally, bankruptcy laws provide a mechanism and procedure for the avoidance, stripping, or extinguishment of liens.

How Does a Debtor Obtain a Bankruptcy Discharge?

A bankruptcy debtor typically will receive a discharge automatically during his or her case. The exception to this occurs if a creditor, trustee, or other party in interest has filed an objection to the debtor's right and entitlement to receipt of the discharge. The Federal Rules of Bankruptcy Procedure detail that the clerk of court is to mail a copy of the debtor's discharge order to all creditors, the Office of the United States Trustee, the standing bankruptcy trustee assigned to the case, and any counsel for the standing trustee, in addition to the debtor and his or her attorney.

The notice of debtor's discharge is nothing more than a copy of the debtor's final order of discharge. The order is generic in form; it educates creditors that the debts owed to them are generally discharged and should not be collected unless they fall into a limited category of non-dischargeable debts under the Bankruptcy Code and the creditor has taken actions to classify the debt as non-dischargeable. Creditors who proceed with collection knowingly and intentionally in violation of the discharge order may be subject to a finding of contempt by the bankruptcy court. There are monetary sanctions that can be issued against such collecting creditors as punishment.