Public Debt Disposal vs. Convertibility

General Discharge of Debts

When bankruptcy attorneys talk about “discharge,” we are referring to the discharge order issued by the court at the end of a Chapter 7 or Chapter 13 case. Often, we will refer to this as the general discharge order. The general discharge order tells the world that the debtor (the person who filed the bankruptcy case) has done what is required under bankruptcy laws and is therefore relieved from the obligation to pay any further dischargeable debts.

Dischargeability of Individual Debts

However, not all debts are dischargeable. Although the debtor receives a general discharge, some of their debts may be excluded from discharge. In other words, they are non-dischargeable in the case.

Unfortunately, the general discharge order does not include a list of debts that were actually discharged. This can be frustrating for both the debtor and creditors. Instead, the order itself includes some clarifications on the back (or on an additional sheet attached in the envelope) informing us what is discharged and providing examples of types of debts that are not discharged. Even in this case, the instructions are somewhat vague, with descriptions like “most tax debts” and “some debts that were not properly listed by the debtor.”

The general rule in a bankruptcy case is that a debt is discharged unless one of the four matters is true:

1. The bankruptcy law explicitly states that the type of debt is not dischargeable.
2. The creditor files a lawsuit, called an adversary proceeding, in the case to challenge the dischargeability of a specific debt, resulting in a ruling from the bankruptcy judge that the debt is non-dischargeable.
3. The debtor reaffirms the debt.
4. The debtor’s general discharge is denied.

All of this raises the question of which debts were actually discharged in a particular case. It depends on the type of debt, and in some cases, it depends on whether the creditor or debtor took action during the case to ask the bankruptcy judge to declare the debt non-dischargeable. This is what we typically refer to as the dischargeability of the debt.

Determining Whether a Debt Was Discharged

If you have a question about whether a debt was discharged, how can you find the answer? The best way to determine this is to ask an attorney who is knowledgeable about the case. This could be the attorney representing the debtor or someone with access to the case file. Case files are public records and are typically available online for a fee through the PACER system of federal courts.

If you are a creditor and have questions about whether a debt was discharged, it would be wise to seek legal advice before taking action to collect the debt. If you attempt to collect a debt that has been discharged, it could be a costly lesson for you as you could be held in contempt of court and be required to pay damages to the debtor.

Source: https://www.thebalancemoney.com/discharging-debts-general-discharge-vs-dischargeability-316152