Don’t confuse “dismissal” and “discharge” in bankruptcy

On Behalf of developers | November 6, 2021 | Bankruptcy

If you’re considering bankruptcy and starting to do some research on the subject, you likely have seen the terms “dismissal” and “discharge.” They might sound like the same thing, but they’re anything but that.

If you file Chapter 7 bankruptcy, you want to discharge as many of your debts as possible. When a debt is discharged, a debtor no longer owes their creditors. 

If you don’t meet the necessary requirements during the bankruptcy process, your bankruptcy could be dismissed. That means you essentially are denied bankruptcy. Your creditors can go back to taking any legal measures they want to collect on what you owe them. If you’re looking at foreclosure and/or wage garnishment, those can move forward.

What can get a bankruptcy case dismissed?

There’s no reason for a valid bankruptcy case to be dismissed if you do everything that’s required of you. However, when people don’t seek legal guidance with their case (or don’t follow that guidance), it can happen. Let’s look at some of the most common reasons why Chapter 7 cases are dismissed, which include:

• The debtor didn’t file accurate and complete financial schedules, statements and other required documents.
• They failed to participate in the required financial management course or file their certificate of completion. These courses, which can be taken online, are a requirement for Chapter 7 bankruptcies.
• They missed a Section 341 meeting with creditors. Although creditors rarely attend these meetings, the debtor is required to attend either in person or via videoconference or phone.
• They didn’t turn over non-exempt property

If you file Chapter 13 bankruptcy, that case can also be dismissed if you don’t adhere to the requirements. They’re different than Chapter 7, because Chapter 13 is a different type of bankruptcy.

Bankruptcy is a complex process with a lot of paperwork. The requirements are enshrined in the U.S. Bankruptcy Code. The best way to help ensure that it goes as smoothly as possible and that your debts are dismissed is to understand and abide by the requirements.