Bankruptcy: Discharge versus Dismissal
Posted on 16. Nov, 2009 by emmettjones in Bankruptcy
Bankruptcy cases usually end one of two ways. Debtors either receive a discharge, or they receive a dismissal.
So…which one is good and which one is unwanted?
A discharge in bankruptcy occurs at the end/completion of your bankruptcy proceedings. It is the bankruptcy discharge that takes away your obligation to pay back outstanding debts as a debtor, and takes away the creditors rights to enforce the debt against you.
Bankruptcy dismissals on the other hand, usually deal with either a misstep procedurally (i.e. the entire bankruptcy petition was not completed in time, leading to a dismissal) or a failing within the bankruptcy process itself (i.e. debtor fails to make their chapter 13 plan payments). Dismissals are important because it means that the automatic stay protection, that is granted to a debtor when a bankruptcy is initially filed, has ended. Creditors will now have the chance to enforce all of the remedies they had available prior to the bankruptcy filing (foreclosures, lawsuits, etc.).
Another point to remember with a dismissal is that there are two types of dismissals, “with prejudice or without prejudice”. When your bankruptcy case is dismissed “without prejudice” you have the option of refiling your case, and can petition the court for a new grant of protection under the automatic stay. Debtors who’s cases dismissed “with prejudice” are precluded from filing another bankruptcy proceeding for 180 days. More than enough time to create a very daunting situation if your creditors had already brought a complaint in foreclosure prior to the bankruptcy filing. Although judges do like to err on the side of caution when dismissing a case “with prejudice”, one has to remember that bankruptcy is a very important tool that can carry serious consequences when used improperly.
So, to answer the question? Bankruptcy discharges are great. Dismissals? you may want to consult your lawyer and discuss your options.
