May people confuse the difference between a bankruptcy discharge vs dismissal but they are two very different and distinct outcomes of bankruptcy.
A bankruptcy discharge means that the requirements set out by the court have been met by the debtor(s) (the party filing the bankruptcy). In a Chapter 13 bankruptcy a discharge means that all the required payments have been made by the debtors to the Trustee. In a Chapter 7 bankruptcy a discharge means that the creditors and unsecured debts listed in the bankruptcy petition (papers filed with the Court) have been eliminated or wiped away. After the case is discharged creditors can no longer attempt to collect on the debts owed to them thereby allowing the debtor to get a fresh start and he or she can move on with their life without the burden of excessive debt. Usually a discharge takes place quickly in a Chapter 7 case since assets are supposed to be liquidated to pay off the creditors – if there are any assets (most cases in Utah are No-Asset Cases). In a Chapter 13 case a discharge can take up to three or five years because the debts are partially repaid over a period of time according to bankruptcy plan. A discharge is the favorable outcome for the debtor and is the main goal of filing for bankruptcy.
So then what is a dismissal? This is not the desirable outcome for a debtor. A dismissal happens more frequently in Chapter 13 than in Chapter 7 cases. A case may be dismissed for many reasons like not being able to afford the Chapter 13 payments because life circumstances have changed (i.e. divorce, job loss, etc.). In either type of bankruptcy, not completing required classes could cause a dismissal as can failing to attend the required hearings or if the case was improperly filed. A case may also be dismissed for fraudulent reasons, misstatements to the court and other improper acts on the part of the filer.
If a case gets dismissed then the automatic stay that was placed on the creditors which prevented them from being able to collect on the debt is removed and the creditors may resume attempting to collect on the debts. No matter whether your case is dismissed, discharged, or active all three statuses will show on your credit report.
Can you refile after a discharge? Yes. The way in which your case closes may have a large effect on when you can receive another discharge, or even when you can re-file for bankruptcy. For example, if you file for Chapter 7 and you receive a discharge, you will be eligible to receive another discharge after eight years. If you received a discharge under Chapter 13, you only have to wait two years to receive another discharge under Chapter 13 or six years under Chapter 7.
Can you refiling after a dismissal? Yes. Unless the bankruptcy court has barred you from refiling, you can usually do so immediately if your case was dismissed rather than discharged. If the court bars you from immediately refiling it is likely to impose a 180-day waiting period before you can submit a new petition. Bankruptcy courts do this when someone deliberately fails to follow a court order or procedure. Dismissals can also affect your right to an automatic stay if you refile. If you do so within a year, your stay will be limited to 30 days. If you’ve had two or more dismissals within a year, you won’t receive the benefit of the automatic stay upon filing.
A bankruptcy discharge vs dismissal are different and have consequences. Working with an experienced Utah bankruptcy lawyer can help you determine your best course of action. Call us if you would like to talk about you financial problems usually we can help quickly.