Bankruptcy

Discharge

A discharge is the bankruptcy court order releasing the debtor from personal liability for most debts, so creditors can never collect them again.

It is the point of consumer bankruptcy. After discharge, collection on a covered debt is a violation of a court order rather than merely improper, and the debt cannot be revived by a later demand.

Some debts survive. Most student loans, recent taxes, child support and alimony, and debts obtained by fraud are typically excepted, and a creditor who wants a fraud debt excepted must usually file an adversary proceeding to say so.

The discharge injunction is enforced seriously. Creditors who keep calling, report the debt as owing, or file suit anyway can face contempt proceedings in the bankruptcy court that issued the order. A discharge also does not erase liens. A mortgage or car loan security interest survives, so a debtor who wants to keep the collateral still has to pay for it despite the personal liability being gone.