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Chapter 7 Discharge

What is a chapter 7 discharge?
It is a court order releasing a debtor from all of his or her dischargeable debts and ordering the creditors not to attempt to collect them from the debtor.  A debt that is discharged is a debt that the debtor is released from and does not have to pay.

How does a person obtain a chapter 7 discharge?
A chapter 7 discharge is obtained by filing and maintaining a chapter 7 bankruptcy case and being eligible for a chapter 7 discharge.  However, not all debts are discharged by a chapter 7 discharge.  Certain types of debts are by law not dischargeable under chapter 7 and debts of this type will not be discharged even if the debtor receives a chapter 7 discharge.

Who is eligible for a chapter 7 discharge?
Any person who is qualified to file and maintain a chapter 7 case is eligible for a chapter 7 discharge except for the following:

a. A person who has been granted a discharge in a chapter 7 case that was filed within the last 8 years.  
b. A person who has been granted a discharge in a chapter 13 case that was filed within the last 6 years, unless 70 percent or more of the debtor’s unsecured claims were paid were paid off in the chapter 13 case.
c. A person who conceals, transfers, or destroys his or her property with the intent to defraud his or her creditors or the trustee in the chapter 7 case.
d. A person who makes false statements or claims in the chapter 7 case, or who withholds information from the trustee.
e. A person who fails to satisfactorily explain any loss or deficiency of his or her assets.
f. A person who refuses to answer questions or obey orders of the bankruptcy court, either in his or her bankruptcy case or in the bankruptcy case of a relative, business associate or corporation with which he or she is associated.  
g. A person who, after filing the case, fails to complete an instructional course on personal financial management.

What types of debts are not dischargeable in a chapter 7 case?
All debts of any type or amount, including out-of-state debts, are dischargeable in a chapter 7 case except for the types of debts that are by law non-dischargeable in a chapter 7 case.  It is your responsibility to provide a listing of all your creditors with correct addresses.  The following is a list of the most common types of debts that are not dischargeable in a chapter 7 case:

h. Most tax debts and debts that were incurred to pay non-dischargeable federal tax debts.
i. Debts for obtaining money, property, services, or credit by means of false pretenses, fraud, or a false financial statement, if the creditor files a complaint in the bankruptcy case.
j. Debts not listed on the debtor’s chapter 7 forms, unless the creditor knew of the bankruptcy case in time to file a claim.
k. Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the bankruptcy case.
l. Debts for domestic support obligations, which include debts for alimony, maintenance, or support, and certain other divorce-related debts, including property settlement debts.
m. Debts for intentional or malicious injury to the person or property of another, if the creditor files a complaint in the bankruptcy case.
n. Debts for certain fines or penalties.
o. Debts for most educational benefits and student loans, unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependents.
p. Debts for personal injury or death caused by the debtor’s operation of a motor vehicle, vessel or aircraft while intoxicated.
q. Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge.