DEFINITION of 'Discharge In Bankruptcy'

A permanent order that releases the debtor from personal liability for certain specified types of debts, thereby releasing the debtor from any legal obligation to pay any discharged debts. The discharge in bankruptcy order also prohibits creditors from taking any form of collection action on the discharged debts. However, valid liens on specific property to secure payment of debts that have not been discharged, will remain in effect after the discharge, and a secured creditor has the right to enforce the liens to recover such property.

BREAKING DOWN 'Discharge In Bankruptcy'

All debts are not discharged in a discharge in bankruptcy. In fact, there are 19 types of debt that are exempted from discharge for bankruptcy filings under chapters 7, 11 and 12, with a more limited list of exceptions applicable for Chapter 13 filings.

The timing of the discharge also varies, depending on the chapter under which the bankruptcy filing is made. In individual cases under chapters 11, 12 or 13, the court typically grants the discharge as soon as practicable after the debtor completes all payments under the plan.

  1. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  2. Charge And Discharge Statement

    An accounting statement for an account or estate over which someone ...
  3. Bankruptcy Abuse Prevention And ...

    Legislation enacted by President George W. Bush in 2005 that ...
  4. Keep And Pay

    A bankruptcy allowance that lets an individual keep an asset ...
  5. Constructive Discharge Claim

    An insurance claim made by an employee who has quit his or her ...
  6. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
Related Articles
  1. Taxes

    5 Myths About Personal Bankruptcy

    There are some persistent myths that hover over the process of bankruptcy that are either half-truths or completely false.
  2. Taxes

    When To Declare Bankruptcy

    When is bankruptcy the best or only route– and when is it better to look at alternative solutions? And should you always hire a lawyer?
  3. Personal Finance

    The Other Personal Bankruptcy Option: Chapter 13

    In a Chapter 13 bankruptcy, filers develop a plan to repay all or part of their "past due" debt. Any allowable debt left afterward is discharged.
  4. Taxes

    Student Debt: Is Bankruptcy The Answer?

    Student loans can be a huge financial burden, but bankruptcy won't necessarily save you from paying.
  5. Taxes

    How to Hire a Bankruptcy Lawyer

    How do you find the right bankruptcy lawyer? What you should look for to determine the right attorney for you.
  6. Personal Finance

    What You Need To Know About Bankruptcy

    Don't choose this last-resort option until you learn how it will affect your future.
  7. Taxes

    How To Survive A Bankruptcy Filing

    Learn how to make filing for bankruptcy less painful so you can successfully rebuild your financial life.
  8. Financial Advisor

    An Overview Of Corporate Bankruptcy

    When public company files for corporate bankruptcy, the bondholders are first in line to receive their share back. Equity holders on the other hand, are second in line to bondholders when a corporate ...
  9. Personal Finance

    Should You File for Bankruptcy?

    Find out how to determine whether bankruptcy will help or hurt your financial situation.
  1. Are student loans dischargeable after bankruptcy?

    In limited cases of bankruptcy, the courts may discharge a filer's partial or full student loan debt. Read Answer >>
  2. What are the differences between Chapter 7 and Chapter 13 bankruptcy?

    Read about some of the primary differences between a Chapter 7 and Chapter 13 bankruptcy, including who may be ineligible ... Read Answer >>
  3. What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2 ...

    Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy ... Read Answer >>
  4. What are the financial consequences of filing for bankruptcy?

    Learn about the various consequences, both positive and negative, that you can expect to result from your filing for bankruptcy. Read Answer >>
  5. How are my cosigners affected if I file bankruptcy?

    Learn how cosigners and guarantors are affected by bankruptcy filings and how cosigner treatment changes based on the type ... Read Answer >>
Hot Definitions
  1. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center