What Is a Bankruptcy Discharge?
5 minute read • Upsolve is a nonprofit that helps you get out of debt with education and free debt relief tools, like our bankruptcy filing tool. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool
A bankruptcy discharge is the order from the bankruptcy court that relieves the filer of the obligation to pay their discharged debts. It also prohibits creditors from ever trying to collect on that debt ever again. In other words, the discharge is a filer’s main goal in a bankruptcy, whether that’s a Chapter 7 bankruptcy or Chapter 13 bankruptcy. Let’s take a closer look at how this all works, what debts can’t be discharged, and what this all means for you.
Written by Attorney Jenni Klock Morel. Legally reviewed by Jonathan Petts
Updated December 10, 2024
What Is a Bankruptcy Discharge?
A bankruptcy discharge is a court order that legally wipes out your obligation to pay certain debts. Once a debt is discharged, creditors are permanently prohibited from trying to collect it. This means no more phone calls, letters, lawsuits, or any other collection activity related to that debt. The discharge is essentially the finish line for most people who file for bankruptcy. It’s the primary goal of both Chapter 7 and Chapter 13 bankruptcy cases.
In this article, we’ll break down how a bankruptcy discharge works, which debts can and can’t be discharged, and what a discharge could mean for your financial future. By understanding the ins and outs of this process, you’ll have a clearer picture of how bankruptcy can help you get a fresh financial start.
How Is a Bankruptcy Discharge Different From the Automatic Stay?
The automatic stay and a bankruptcy discharge are both powerful protections, but they serve different purposes and happen at different stages of the bankruptcy process.
The automatic stay is a temporary court order that takes effect as soon as you file your bankruptcy case. It stops creditors from contacting you, taking legal action against you, garnishing your wages, or pursuing other collection efforts while your case is active. However, the stay is not permanent. It only lasts until your bankruptcy case is completed or dismissed.
A bankruptcy discharge, on the other hand, is permanent. It’s the court order you receive at the end of a successful bankruptcy case, and it eliminates your legal obligation to repay most debts. Once you receive your discharge, creditors are permanently barred from trying to collect those debts.
In short, the automatic stay protects you during your bankruptcy case, while the discharge provides lasting relief after your case is successfully completed.
How Does the Bankruptcy Discharge Work?
At the end of a successful bankruptcy case, the court issues a discharge order. This order eliminates your legal obligation to pay most debts that were included in the bankruptcy. This usually includes credit card debt, medical bills, past-due utility bills, personal loans, and sometimes student loans.
The discharge also stops creditors from contacting you or trying to collect these debts in the future. Essentially, a discharge provides the long-term financial relief that makes bankruptcy a powerful tool for a fresh start.
Discharge orders are usually permanent, but in rare circumstances they can be revoked. For example, if the court discovers you lied on your bankruptcy paperwork, hid assets, or committed fraud, the discharge may be undone.
How Does a Discharge Work in Chapter 7 Bankruptcy?
In Chapter 7 bankruptcy, a discharge is usually granted within a few months of filing your petition. This type of discharge eliminates most unsecured debts, like credit card balances, personal loans, and medical bills. Once the court issues the discharge order, these debts are wiped out for good, and creditors can no longer contact you or demand payment.
To get a discharge in a Chapter 7 case, you have to pass the means test and complete all steps in the bankruptcy process. This includes attending the meeting of creditors and submitting required documents to your trustee. It could also include handing over any non-exempt property to the trustee, which they can use to pay your creditors. But most people who file for Chapter 7 don’t lose anything. That’s because most cases are “no-asset cases,” meaning filers get to keep all their property.
How Does a Discharge Work in Chapter 13 Bankruptcy?
In Chapter 13 bankruptcy, the discharge happens after you successfully complete a 3–5-year repayment plan. Unlike Chapter 7, Chapter 13 requires you to pay back some or all of your debts through a court-approved plan. Once the plan is completed, the remaining eligible debts are discharged.
Sometimes referred to as a “super discharge,” Chapter 13 offers broader discharge protections than Chapter 7.Certain debts that can’t be eliminated in Chapter 7, such as debts from property settlements in divorce, may be discharged in Chapter 13 bankruptcy proceedings. However, obligations like child support, alimony, and private student loans remain non-dischargeable in both types of bankruptcy.
Upsolve Member Experiences
1,725+ Members Online
Who Is Eligible for a Bankruptcy Discharge?
To receive a bankruptcy discharge, you need to meet certain eligibility requirements, which vary depending on the type of bankruptcy you file. For Chapter 7, this means passing the means test, which evaluates your income and expenses. Additionally, prior bankruptcy filings can affect your eligibility, as there are specific waiting periods between discharges.
Chapter 7 Eligibility — The Means Test
To qualify for a Chapter 7 bankruptcy discharge, you must pass the means test, which determines whether your income is low enough to justify erasing your debts through Chapter 7. The test compares your household income to the median income for a household of your size in your state.
If your income is below the median, you automatically pass the means test and qualify for Chapter 7.
If your income is above the median, you’ll need to complete a more detailed analysis of your income and allowable expenses to see if you still qualify.
The goal of the means test is to ensure that Chapter 7 is reserved for people who truly can’t afford to repay their debts. If you don’t qualify, you may still be eligible for Chapter 13 bankruptcy, where you’ll pay back a portion of your debts through a repayment plan.
How Prior Bankruptcy Filings Affect Eligibility
Bankruptcy law sets time limits on how often you can receive a discharge to prevent abuse of the system. The waiting period depends on whether your prior discharge was for a Chapter 7 or Chapter 13 case:
If your previous case was Chapter 7: You must wait eight years from the date of filing your last Chapter 7 case to be eligible for another Chapter 7 discharge.
If your previous case was Chapter 13: You must wait six years from the filing date of your Chapter 13 case to receive a Chapter 7 discharge.
There’s no lifetime cap on how many times you can file for bankruptcy, but these time limits make it harder to erase debts repeatedly within short time frames.
What Debts Can and Can’t Be Discharged in Bankruptcy?
A bankruptcy discharge eliminates many types of debts, but not all debts can be erased.
Most unsecured debts — debts that aren’t backed by collateral — can be discharged in bankruptcy. These include:
Credit card debt
Medical bills
Personal loans
Utility bills
Certain types of old tax debts
Some debts are considered non-dischargeable, meaning they can’t be erased through bankruptcy. The most common examples include:
Recent tax debts: Taxes from the last few years are usually not dischargeable.
Child support and alimony: These obligations must continue to be paid.
Court fines and criminal restitution: Debts related to criminal activity, such as fines or restitution orders, can’t be discharged.
Debts from fraud: If you incurred debts by committing fraud, such as lying on a credit application or running up credit card debt with no intent to repay, those debts can’t be discharged.
Federal student loans can be discharged if you can provide proof that repaying them is causing undue financial hardship. You’ll have to submit additional paperwork to get your student loans discharged.
Life After Your Bankruptcy Discharge
Once your bankruptcy discharge is granted, your qualifying debts are erased, and you get a clean financial slate. Usually, shortly after the bankruptcy court grants your discharge, it will close your case. This can take longer if you don't have a no-asset case.
Once your discharge is in place, it’s time to focus on rebuilding your credit and financial life. Start by checking your credit report to ensure discharged debts show a zero balance. From there, you can begin to rebuild your credit score by making on-time payments for current bills, using tools like secured credit cards responsibly, and setting a budget to stay on track.
Let’s Summarize…
Receiving a bankruptcy discharge is the main goal in filing for bankruptcy. Your discharge order erases your debts and makes sure your creditors can never attempt collection activity against you again for those discharged debts. Bankruptcy gives filers the financial fresh start that they need.
If you’re hoping to file Chapter 7 bankruptcy to get your debts discharged, you can see if you’re eligible to use Upsolve’s free filing tool. If you have a complicated case, it’s a good idea to get personalized legal advice from a professional bankruptcy attorney. Upsolve can help you set up a free consultation with a lawyer near you.
