Is My Bankruptcy Case Over When I Get a Discharge?

Your bankruptcy case ends when the court closes it, not when you get a discharge.

Getting a discharge of your debts is a significant step in your bankruptcy, but it is not the end of your case. Your case ends when the court enters an order closing it. For most people who file bankruptcy, the discharge is the last court action that directly affects them. And in many cases, the court will close the case soon after the entry of discharge. But in other cases, the bankruptcy will continue for some time after the discharge. In fact, for creditors, the trustee, and the court, the case may be just getting underway.

What Is the Bankruptcy Discharge?

The bankruptcy discharge is an order from the bankruptcy court that does two things:

  • It releases the debtor from liability for certain debts. In other words, the debtor is no longer legally required to pay the discharged debts. Not all debts can be discharged. (To learn which debts you cannot wipe out, see  Nondischargeable Debts in Chapter 7 Bankruptcy.
  • It prohibits against attempts by creditors to collect discharged debts, including lawsuits, demand letters and telephone calls.

The End of a “No Asset” Chapter 7 Case

In the vast majority of Chapter 7 cases, all of the debtor’s assets are exempt, which means the trustee will not require that the debtor give up assets to pay creditors. This is referred to as a  no-asset Chapter 7. To learn more about which assets are exempt, see  Bankruptcy Exemptions: Your Property in Bankruptcy

In a “no asset” bankruptcy case, when the court enters the discharge, the trustee files a report with the court stating that there were no assets to administer. Then, in most cases, the court enters an order closing the case. At this point, the case is no longer active.

The End of an “Asset” Chapter 7 Case

In some cases, the debtor will have non-exempt assets that the trustee will have to gather and sell. The process of gathering and selling assets can take months or years. The trustee may have to file lawsuits against creditors or others, or sell assets like real estate, vehicles or businesses.

Once the trustee has a pool of funds, the court will ask the creditors to file claims for what they contend the debtor owes. The trustee will file objections with the court to any claim that is deficient or improper and the court will hold hearings on the objections. When the claims are resolved, the trustee then mails checks to those creditors whose claims have been allowed by the court. That process may also take months or years.

When the non-exempt the assets have been gathered and liquidated (sold for cash), all the claims have been filed and resolved, and funds have been distributed, the trustee will file a report with the court. Only then will the court close the case.

The Debtor’s Duties in an “Asset” Case

If you file a Chapter 7 case with non-exempt assets, you must cooperate with the trustee’s efforts to find, liquidate and distribute your non-exempt assets. This is true even after you receive your discharge. If you fail to cooperate or the trustee discovers that you obtained your discharge by fraud, the trustee has one year after entry of the discharge to ask the court to revoke the discharge. The trustee can ask the court to revoke your discharge even if it has already closed the case.

Re-Opening a Closed Chapter 7 Case

Once the court closes your bankruptcy case, you can be re-open it under certain circumstances. A few examples of when a court might re-open your case include:

To add a debt that you forgot to list.  Debts that you don’t list in the bankruptcy case are not discharged. If you forgot to list a debt, you may ask the court to re-open the case to correct that oversight and to officially notify the creditor of the bankruptcy case.

To liquidate an asset that you did not list.  Sometimes, the trustee or a creditor will discover an asset that you did not list in your bankruptcy paperwork. The court will normally reopen the case if liquidating the asset will benefit the creditors. (Learn more about  reopening a bankruptcy case.)

The End of a Chapter 13 Bankruptcy Case

Chapter 13 cases are different. Instead of turning over assets to the trustee to liquidate, you make regular (usually monthly) payments to the trustee for three to five years based on a court-approved payment plan. The trustee sends payments (again, usually monthly) to those creditors who have filed proper claims with the court. (Learn more about how Chapter 13 bankruptcy works.)

If you make all of your payments according to your payment plan, and fulfill certain other obligations, the court will enter the discharge order. Once the trustee distributes all remaining funds to the creditors and files a final report with the court, the court will close the case.

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