When individuals file for Chapter 7 bankruptcy, they can expect one of two options: either they receive a discharge and their debts are wiped clean, or they receive a dismissal and are still responsible for paying back their debts. A discharge is the most desirable option, but a client might receive a dismissal for a number of reasons.
Differences between a discharge and a dismissal
When a client receives a discharge from the court after filing for Chapter 7, they’re no longer held liable for certain debts. Creditors can no longer get in touch with them, and the case is officially over. However, if they receive a dismissal, they’re still held liable for their debts. The case is closed, and creditors can demand payment from them once more.
A dismissal can occur if the individual doesn’t comply with the court proceedings. An individual can also dismiss their case voluntarily or receive a dismissal if they attempt fraud. Once they receive a dismissal, they can refile their case immediately afterwards unless the judge blocks them from refiling.
Whether they receive a discharge or a dismissal, filing for bankruptcy has a negative impact on an individual’s credit score. The bankruptcy will potentially remain on their credit score for a decade.
What to do when filing for bankruptcy
An individual interested in filing for personal bankruptcy might find it beneficial to hire an attorney. An attorney may be able to help them navigate the process and figure out which course of action will lead to the best possible outcome. An attorney may also help them gather the necessary documents, which could include tax returns, bank statements, pay stubs and more. By working with an attorney, an individual might be able to file for Chapter 7 bankruptcy and receive a discharge rather than a dismissal.