What Is the Difference between a Maryland Bankruptcy Dismissal and a Discharge?
When you have filed for bankruptcy, discharge is the desired outcome of that filing and discharge occurs when the debtor does everything they’re supposed to do. The court enters a discharge once you, as the debtor:
- have confirmed a bankruptcy plan,
- made all of the payments under a plan, or
- when nobody objects to the bankruptcy in a Chapter 7 case,
Once the discharge has been entered:
- the debtor’s creditors can’t sue them,
- the debtor’s creditors can’t get judgments, and
- the debtor’s creditors cannot enforce their rights against the post-bankruptcy earnings of a debtor following discharge. I’ve called it the “pot of gold at the end of the bankruptcy rainbow.”
Dismissal is something quite different. Once a person files a bankruptcy case, the court has jurisdiction over that person and their property. When certain events occur, the court may well decide that it no longer has jurisdiction and the debtor doesn’t belong in bankruptcy. If the court decides that it no longer has jurisdiction, the case is dismissed.
A dismissal can occur either before or after a discharge. Dismissal occurring after discharge can end up being a favorable development for the debtor. While the discharge order will stand, the court no longer has jurisdiction.
If dismissal occurs before discharge, the debtor doesn’t qualify for a discharge; it’s as though you were never in bankruptcy. In many Chapter 13 cases, the case will be dismissed before a plan is confirmed and before there is a discharge. Dismissal occurring before discharge usually is not a favorable development for the debtor. At this point, the debtor must determine what needs to be done before their creditors begin exercising their remedies.
If you have questions about a bankruptcy dismissal or discharge, please pick up the phone and call me at telephone number 410-484-9000. I’d love to hear from you.