What is the Difference Between a Bankruptcy Discharge and Dismissal?
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Debtors sometimes confuse the difference between a discharge and dismissal but they are two very different and distinct outcomes of bankruptcy.
Discharge Defined
A discharge means that all the requirements set by the court have been met by the debtor. In a Chapter 13 bankruptcy this means that all the debtor’s payments have been made in full and on time. For a Chapter 7 bankruptcy it means that all the creditors and unsecured debts listed in the bankruptcy petition (filed with the Court) have been wiped out. Once the case has been discharged creditors can no longer attempt to collect the debts owed to them. This allows the debtor a fresh start and he/she can move on without the burden of insurmountable debt.
Discharge Time Frame
A discharge usually happens more quickly in a Chapter 7 because assets are liquidated to pay creditors. A Chapter 13 discharge can take as long as three to five years because debts are partially repaid over that time according to the Court approved bankruptcy plan. A discharge is a favorable outcome for the debtor and is his/her goal for filing bankruptcy in the first place.
Dismissal Causes
On the other hand, a dismissal is not the desirable outcome for a debtor. A dismissal happens more frequently in a Chapter 13 than a Chapter 7. A case can be dismissed for many reasons like not being able to afford the Chapter 13 payments because life circumstances have changed (i.e. job loss, etc.). In either type of bankruptcy, not completing required credit counseling and financial management courses could cause a dismissal as well as if the case was improperly filed. A case can also be dismissed for fraudulent reasons, i.e. excessive credit card abuse indicating that the debtor was trying to accumulate massive debt that he never intended to repay or property transfer to a relative just prior to filing.
Dismissals, Creditors & Credit Report
Once a case is dismissed, the automatic stay placed on the creditors that prevented them from being able to collect a debt is lifted, and the creditor may resume attempts to collect a debt. After a Chapter 13 dismissal the debtor cannot file another bankruptcy for 180 days. Whether your case is dismissed, discharged, or active all three statuses will show on your credit report.
One way to ensure a favorable discharge and not a dismissal is to convert a Chapter 13 into a Chapter 7 before it is dismissed. This can be accomplished by consulting your bankruptcy attorney who is familiar with the laws and procedures.
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In my case I filed BK7 in 12-2008 and it was dismissed (5-09) without a discharge due to a court fee I did not pay. I applied for the waiver of the fee but it was not granted. I am in the process of re-opening the case and paying the fee so that they will correcty discharge my case but it’s been 5 years. what will happen with the original discharge date on my credit reports? will it remain the same or will it show that my case (assuning they will discharge) has just been discharged this year? I am concerned becuase I am planing on buying a house at the end of the year and I am worried they will re-set dates on my credit report.
Sandra,
It’s really going to depend on what the bankruptcy judge says and how they rule. I don’t know where you are located so I can’t answer specifically about your situation unless you are in the Middle District of North Carolina. However, I would guess that your proper discharge date would be the one coming up, not the old one. You, technically, couldn’t receive a discharge before so it never actually happened. Of course, that doesn’t mean the credit bureaus won’t say that it was the old date. I hope this helps at least a little bit. Thanks!
Damon Duncan
I have been dismissed in my first ch13 and refiled for my second. I then chose to have it dismissed and I am filing for my third. My meeting of the creditors is next week and I just received a letter from my mortgage company’s lawyer saying they are asking for denial of it cuz they aren’t getting enough. Does this mean I will be denied this third filing and lose my childhood home?
Anonymous,
It’s tough to really give you an answer to that question because I don’t know why they are objecting specifically. Not getting enough is not a legal argument but I have a feeling their objection is probably more detailed and probably because you aren’t paying the arrearage amount and other mortgage fees back within the 60 month time frame. If you filed with an attorney they should be able to help you fix that. If you haven’t, you should have really used an attorney to help you on this. Going forward I would try contacting the Trustee to see if they will be willing to give you more information on what would need to be done to have a successful Chapter 13 plan. You may also want to see if there are any attorneys that would be willing to be hired on to your case. I understand you may want to save some money by not having an attorney but, as you can see, it could end up costing you your childhood home instead. Good luck with everything!
It depends. There likely is not an automatic stay in place because it is your third filing within a short period of time. You would have to request for an extension of the automatic stay. I’m not sure if you were working with an attorney or not during any of these bankruptcies but, if not, I would highly suggest you get an attorney for this filing. If it gets kicked out again the judge could dismiss it with prejudice (not allow you to file again for a certain period of time). As you are aware, you are running the risk of losing an important family home so it is probably worth the cost of having an experienced attorney help you.
I have just been discharged from Chapter 13 , how long does it take to get car title? Does it send paperwork showing that my land is clear to courthouse or to me?
Christy,
The answer to your questions will really depend upon more specifics in your case. If your cross was cross collateralized then they may not send you the title. Or if you had a lien on your house but there was never a motion to avoid a judicial lien filed then it too may not have been removed. If everything went through smoothly and you don’t have either of those two problems then you should be able to get the title by contacting the finance company and requesting that from them since the amount owed on the car should have been paid back. You can also check with the register of deeds in your county to see if there is still a lien on your house. If there is, contact your bankruptcy lawyer. Good luck!
I did a CH7 and shows on 2 out of 3 credit agencies as Discharged but Equifax shows dismissed and I just recently try to get a loan for a car and the dealer told me that is why I was denied because of dismissed instead of discharged. I filed a dispute with Equifax and provided the paper stating the discharge and they said the report is reading correctly. Is dismissed on credit report the same as discharged? Thanks.
They are not. Discharge is more favorable. You should be able to get a copy of your discharge paperwork. I would send a copy of that, certified mail with a return receipt requested, to Equifax. Write a letter explaining to them what is going on and that if the issues is not corrected within 30 days that you will file a complaint under the Consumer Financial Protection Bureau (http://www.consumerfinance.gov/complaint/#credit-report). That should get them moving. If not, file the complaint and attach a copy of your letter and your certified mail receipt so you can prove they’ve been given notice. Good luck!
need your advice on what to do please. My husband (now ex) talked me into bankruptcy. Filed 6/29/2010. Date dismissed by me 5/27/2011. Chapter 13.
Status: dismissed
Amt $0
Went thru bankruptcy attorney – made agreed payts as agreed. Credit for auto loan told me they were getting $9 mo payts. I checked and 98% of our payts were used for attorney administrative fees.
Receptionist at attorney office if I didn’t like it quit paying payments, court would dismiss case and I could pay the creditors which I did.
Now it shows as dismissed on credit report as of 9-3-15 and is hurting my credit score horribly.
I thought I did good to pay off creditors full amounts. I never wanted to do a bankruptcy
What do I do to change credit report? Thank you
Since you did file a bankruptcy and it was dismissed I’m not sure there is a lot you can do. It doesn’t sound like you are disputing the fact that you filed and it was dismissed. If your debts are paid off I would focus on trying to operate on a cash basis for now and as time goes by your credit will start going back up.
My lawyer put me in a Chapter 13. I do not own any property or have a lot of money. Therefore, I terminated our business relationship. I filed for a dismissal from the bankruptcy court, and it was approved.
It now shows up on my credit report as a dismissal. How can i have it removed from my credit report?
You typically can’t. The bankruptcy was filed so it will appear on your credit report. The fact it was dismissed is doesn’t change the fact that it was filed and it, therefore, will likely be on your credit report for up to 7 years.
On a credit report .. I filed for chapter 13 because of medical debt..then after 1 year and 6 months ..insurance paid me so I paid creditors .. And stopped paying bankruptcy .. now it’s 9 years later and it’s still on my credit report.. If it was dismissed .. Not discharged..Can’t I have it removed or ? Is it anything I can do
When you say “it’s still on my credit report” I’m not sure if you’re talking about the bankruptcy or the medical bill debt. A Chapter 13 bankruptcy is typically on your credit report for 7 years from the date of filing. If it’s been more than that I would recommend contacting the credit bureaus and asking them why it’s not removed.
In 1996 I files a BK7 to buy more time and not get evicted from my home, although I did not have any debts listed, I had a hearing date for it and I didn’t show up so it was dismissed but it showed in my credit report for the next year’s. Shouldn’t it be off my record since it was dismissed?.
I’ll appreciate a reply.
Thank you
The fact that it was dismissed does not matter. As soon as a bankruptcy is filed it will be listed on your credit report for, typically, 7 to 10 years. Of course, if it was back in 1996 it should be off by now.