Chapter 7 Discharge Facts

A chapter 7 discharge releases you from personal liability for discharged debts and prevents creditors from taking any action against you or your property to collect the debts.

The chapter 7 discharge, as a general rule, is granted in more than 99 percent of the cases filed excluding cases which are dismissed or converted. Unless creditors file a complaint objecting, the discharge is normally granted within 60 to 90 days after the date of the first meeting of creditors.

  1. What are the grounds for denying a discharge?
  2. What is reaffirmation?
  3. What is voluntary repayment?
  4. Which debts cannot be discharged?

Up    1. What are the grounds for denying a discharge?

Denying a discharge is very rare but the acceptable grounds for doing so are you:

  • failed to keep or produce adequate books or financial records;
  • failed to explain satisfactorily any loss of assets;
  • committed a bankruptcy crime such as perjury;
  • failed to obey a lawful order of the bankruptcy court; or
  • fraudulently transferred, concealed, or destroyed property that would have become property of the estate.

Up    2. What is reaffirmation?  

Reaffirmation is an agreement between you and the creditor that you will pay all or a portion of the money owed, even though you have filed bankruptcy. The creditor promises in return, not to repossess or take back the property (as long as payments are made).

In certain jurisdictions, secured creditors may retain some rights to seize pledged property, even after a discharge is granted. If you wish to keep pledged property, such as an automobile or home, you’ll need to “reaffirm” the debt.

The written reaffirmation agreement must be filed with the court prior to the granting of a discharge. If represented by an attorney, the judge must approve the agreement because of the requirement that reaffirmation agreements contain an explicit statement advising you that the agreement is not required by bankruptcy or non-bankruptcy laws.

WARNING! The new Bankruptcy Act imposed several new changes and restrictions on reaffirmation agreements. Specifically, the Act eliminated the ride-through option. It is in your best interest to discuss reaffirmation with an attorney.

NOTE: Reaffirmation agreement forms are frequently provided by creditors in order to meet their specific needs.

Up    3. What is voluntary repayment?  

You may choose to repay any debt voluntarily regardless of whether or not a reaffirmation agreement exists.

Up    4. Which debts cannot be discharged?  
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 greatly expanded the types of debts that cannot be discharged:

  • Fees on prisoners
  • Debts for fines and penalties
  • Pension and profit sharing debts
  • Certain tax debts including state and local taxes
  • Alimony, child maintenance and child support obligations
  • Student loans from for-profit and non-governmental agencies
  • Homeowner association, condominium and cooperative fees
  • Debts for money or credit obtained through fraud or false statements
  • Cash advances of $750 (per credit line) made within 70 days of filing
  • Debts for certain government educational benefit overpayments or loans
  • Debts for willful and malicious injury by you to another person or property
  • Debts for criminal restitution orders under title 18, United States Code. 11
  • Debts for luxury goods and services made within 60 days and owed to a single creditor totaling more than $500
  • Debts for death or personal injury caused by your operation of a motor vehicle, vessel, or aircraft while intoxicated from alcohol or other substances

If after the case has concluded and the Trustee is unable to pay off the above debts, (by liquidating your assets) you are still responsible for paying them.

See our more complete listing of dischargeable and non-dischargeable debts

SPECIAL NOTE: Unless a creditor files in a timely manner and prevails in court, the following debts can also discharged. If the debt is a result of:

  • Money or property obtained by false pretenses;
  • Fraud or defalcation while acting in a fiduciary capacity;
  • Malicious injury by you to another person or property
  • Arising from a property settlement agreement incurred during or in connection with a divorce or separation

WARNING! The court may revoke a discharge on the request of the trustee or creditor if it was obtained through fraud, or if you acquired property that is the property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee.

How to file chapter 7 bankruptcy

The role of the Trustee

Chapter 7 bankruptcy forms

Alternatives to Chapter 7 Bankruptcy