Bankruptcy Discharge Order

The Discharge Order Officially Clears Away the Debts and gives you a Fresh Start

In a personal bankruptcy case (as opposed to a corporate case), your Bankruptcy Discharge Order is the Federal Court Order signed by the judge that officially “Discharges” (clears away) your debts.

The Discharge Order does not list debts

The Discharge Order does not list debts that were discharged.  Instead, it is a general order.  It is simply understood that it will not apply to debts that are not dischargeable, such as student loans and child support, or any debts that you reaffirmed.  But it will apply to other dischargeable debts that were listed in your case, such as credit cards and medical bills (as long as those creditors did not object).

No Discharge Order necessary for Corporation or LLC Cases

When an entity like a Corporation or LLC files Chapter 7, any assets are liquidated and the debts are cleared away.  The business is then dead and can operate no longer.  There is no reason to issue a Discharge Order because the business does not need a “Fresh Start.”  It is simply understood that the debts were cleared when the business went insolvent, filed bankruptcy, and shut down.  Now if you are a sole-proprietor and run your business out of your own name, you simply file a personal bankruptcy and will still receive a discharge

Liens on Car Payments and Mortgages are not Discharged

If you receive your Discharge Order, and you did not reaffirm your mortgage or car payment, then the personal liability on that debt is discharged.  However, the lender’s lien on the house or car (called the collateral) is still alive.  What this means is that if you stop making payments, they can repossess or foreclose on the collateral to enforce their lien.  But they will not be able to sue you or collect any money from you, because the personal liability on the debt was discharged.

List of Debts Discharged (Generally – There are exceptions)

  • Credit Cards
  • Medical Bills
  • Unsecured Loans
  • Lines of Credit
  • Personal Loans
  • Payday Loans
  • Broken Leases
  • Broken Gym Memberships
  • Foreclosure Deficiencies
  • Repossession Deficiencies
  • Collection Accounts
  • Old Utility Bills
  • Most Judgments
  • Sometimes old IRS taxes

List of Debts Not Discharged (Generally – There are exceptions)

  • Student Loans
  • Child Support
  • Most Taxes
  • Alimony
  • Promises made in Divorce Decrees
  • Judgments against you caused by you driving drunk or on drugs
  • Debts incurred by fraud
  • Debts incurred after the filing date