My name is Ron Drescher. I’m an attorney practicing bankruptcy and creditors’ rights in Maryland, Delaware, Pennsylvania and Virginia. And today I want to answer the question, “What’s the difference between dismissing a bankruptcy case and a discharge?”
Discharge is the desirable result of having a bankruptcy case, where the debtor does everything they’re supposed to do and, as a result of either confirming a plan or making all the payments under a plan or just nobody objecting to the bankruptcy in a Chapter 7 case, the court enters a discharge and so that way their creditors can’t sue them, can’t get judgments and can’t enforce their rights against the post-bankruptcy earnings of those debtors. That’s a discharge and I’ve called it the “pot of gold at the end of the bankruptcy rainbow.”
Dismissal is something very different. When a person files a bankruptcy case, then the court takes jurisdiction over that person and their property. When certain events happen, the court might decide that it doesn’t want to have jurisdiction anymore and that that debtor doesn’t belong in bankruptcy. When that happens, the case is dismissed. A dismissal could happen before or after discharge. If it happens before discharge, the debtor doesn’t get a discharge and then it’s as if you were never even in bankruptcy. When it happens after discharge, then that could be okay. The discharge order will stand, but the court no longer has jurisdiction. In a lot of Chapter 13 cases, the case will be dismissed before a plan is confirmed and before there is a discharge. When that happens, that’s usually not a good thing, and the debtor is going to have to go back and figure out what it needs to do before their creditors come and start exercising their remedies.
My name is Ron Drescher. I’m an attorney practicing bankruptcy and creditors’ rights. If you have a question about if your case has been discharged or dismissed, please pick up the phone and call me. I’d love to hear from you.