Once you start looking into bankruptcy and considering it, you will hear about the bankruptcy discharge. There are many terms you will need to learn if you will file, but the discharge is perhaps one of the most important to understand.
According to the United States Courts, a discharge in a bankruptcy is when the court finalizes your case and dismisses outstanding debts.
When your bankruptcy discharge happens depends on the type of case you file. Chapter 7 cases generally are the fastest. You can expect a discharge to occur about four months after you file. It occurs once creditors have the chance to file an objection and the court resolves any outstanding issues.
Chapter 11 will take much longer because you must complete your repayment plan before the court issues your discharge. This could take anywhere from three to five years.
The discharge happens automatically when the court issues the order. You and your creditors will receive a notice.
The discharge in bankruptcy is so important because it protects you from creditors. If the court discharges a debt, a creditor cannot try to collect that debt any further from you.
Keep in mind that not all debts will discharge. There are some debts you cannot discharge in bankruptcy. Those will remain and creditors can still collect on them.
In addition, the discharge does not remove liens. Your creditor can still enforce them. For example, if you have a car loan and you do not pay it, once the automatic stay lifts, which happens when the court issues the discharge, your creditor can repossess the car since it has a lien on it.