The Holy Grail… King Arthur sought it (long before Monty Python), as did Indiana Jones in the Last Crusade. The Holy Grail is a mythical artifact synonymous with a treasure that is sought by all who accept the quest before them.
In the bankruptcy realm, the “treasure” that you seek when you file a bankruptcy case is a discharge order. A discharge order is the bankruptcy court’s way of giving you a fresh start, effectively telling you that you are done with your case and you no longer owe most, if not all, of your unsecured debt.
If you’re considering bankruptcy in Alabama and need help getting a discharge order, reach out to the experienced Birmingham bankruptcy lawyers at Nomberg Law Firm for a free consultation.
What is considered an unsecured debt?
Unsecured debts are debts such as credit card debt, payday loans, and medical bills. They are “unsecured” because they don’t have anything to “secure” the debt, such as a house or car. Mortgages on a house and car loans are discharged as well unless the debt is reaffirmed.
What type of debt cannot be discharged?
Debts that are not discharged usually include domestic support obligations, like child support or alimony, most taxes, federally guaranteed student loans, and debts procured by fraud.
While it seems like a lot of debt is not discharged, the truth is that most people who file for bankruptcy don’t owe much in the way of debt that cannot be discharged. Once you get your discharge order, you are not legally obligated to pay any of the unsecured debts that you owed at the time you filed, ever! Even if you inadvertently failed to list a creditor.
What happens if I forget to list a creditor during bankruptcy?
Failure to list a creditor during bankruptcy does not automatically render that debt non-dischargeable. As long as the creditor has not suffered some sort of prejudice by not being able to file a claim or a complaint alleging fraud, the debt is still discharged.
If you file bankruptcy and realize a year or two later that you forgot to list someone, don’t panic. Just notify the creditor of your bankruptcy case, and then notify your bankruptcy attorney in case the creditor continues to harass you.
In most instances, the creditor will stop any further collections. If the creditor has a basis for pursuing fraud or missed an opportunity to file a claim, then you may have to work something out with the creditor to avoid additional litigation.
The bottom line is that if you and your attorney do everything right, you should get a discharge order.
What’s required to get a discharge order during bankruptcy?
To get a discharge order, you need to follow all the rules in the Bankruptcy Code, complete a required credit counseling course and a financial management course, and, most importantly, be honest. You are required to disclose (“list”) every company or person you owe (“all creditors”) and everything you own (“all assets”).
The purpose of the bankruptcy laws is to allow the “honest but unfortunate” debtor to get a fresh start. If you don’t follow all of the rules or don’t disclose something, you could be denied a discharge.
That is why it is so important to tell your attorney everything about your financial situation. Even if you don’t think it’s important.
While the discharge order may be your “Holy Grail,” it may not necessarily be the end of the case. If the trustee finds assets to sell, the trustee could continue to liquidate those assets and use the proceeds to pay a portion of your debts, even though you are relieved from your debts.
Most debtors use bankruptcy exemptions to protect their assets, in which case, the trustee will file a no-asset report. Therefore, most Chapter 7 Bankruptcy cases end with a discharge order.
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How long does a discharge order take?
In a Chapter 7 case, an individual can get a discharge order within about 3 months of filing the case. In a Chapter 13 case, an individual can get a discharge order after making all required plan payments pursuant to a plan confirmed by the bankruptcy court. The Chapter 13 discharge order typically occurs 3 to 5 years after filing, depending upon the length of the plan term.
Who can’t get a discharge order?
Corporations cannot get a discharge order in Chapter 7. Corporations can only receive a discharge in a confirmed Chapter 11 plan that is substantially consummated. Individuals who are found to have committed fraud by lying on their bankruptcy petition cannot get a discharge order.
Also, a person cannot file another Chapter 7 within 8 years of the bankruptcy filing that resulted in a Chapter 7 discharge order. You can file a Chapter 13 after filing a Chapter 7, but you cannot obtain a discharge order in that Chapter 13 case if it is filed within 4 years of the prior Chapter 7 filing date.
So, it is extremely important that you tell your attorney about any and all prior bankruptcies that you may have filed before seeking to file another bankruptcy case.
The timing of your prior case will be crucial in determining whether and when you should file another case.
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Looking for the best bankruptcy attorneys in Birmingham?
If debt is affecting your day-to-day life or making it hard to plan ahead, getting clear legal guidance can make a real difference. Bankruptcy isn’t a one-size-fits-all solution, and the right approach depends on your income, assets, and long-term goals. Working with an experienced attorney can help you understand your options and avoid costly mistakes.
At Nomberg Law Firm, Birmingham bankruptcy attorney Steven D. Altmann has spent more than 25 years helping individuals and business owners evaluate their financial situation and move forward with a plan that makes sense for them. If you’re thinking about filing bankruptcy, Steve can walk you through what to expect and how to protect what matters most.
Attorney Steven D. Altmann has earned recognition from Martindale-Hubbell, Super Lawyers, and Birmingham Magazine for his work in bankruptcy law.
To talk through your options, contact our office online or call us at 205-882-5005 and schedule a free consultation.
We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.