The discharge order is one of the most important elements of a bankruptcy case. It signifies that your debts have been wiped out and that creditors can no longer collect them. The discharge order is issued by the bankruptcy court after certain conditions have been met, but it does not mean that your case has been closed. The requirements and timing of the discharge depend on which chapter of bankruptcy protection you have requested and how the debts will be settled.
- In Chapter 7 bankruptcy, your creditors usually have four months to challenge the proposed discharge. If you don’t have any assets that can be liquidated to repay your creditors, the discharge can proceed quickly.
- If you have nonexempt possessions that can be liquidated, the discharge will be granted in the same time frame, but you must continue cooperating with the trustee who is responsible for handling the property and transferring the proceeds to your creditors.
- With Chapter 11 or Chapter 13 bankruptcy, the discharge doesn’t occur until all of the payments have been made. An automatic stay prevents creditors from suing you or collecting the debts after you file for bankruptcy, so you are protected. However, the discharge won’t be granted until the repayment plan is complete. This usually occurs three to five years after filing.