Where do you find the list of debts that were discharged in your bankruptcy? The answer to that simple question might surprise you!

Bankruptcy Creditors

The debtor in each bankruptcy case tells the court about their specific debts. Whether it be a car loan, credit card, or payday loan, the debtor is responsible for informing the court about all of their debts. After all, nobody knows the debtor’s business more than the debtor themselves.

A bankruptcy does not necessarily discharge all debts. For instance, under current law, student loans are not discharged by the bankruptcy court. Nonetheless, a debtor still lists their student loans on their bankruptcy court. This is because debtors are required to disclose all of their debts at the time of filing.

Where Discharged Debts Go

The bankruptcy court issues a “discharge” at the end of a successful Chapter 7 bankruptcy. The bankruptcy discharge paperwork often times surprises debtors because of what isn’t there.

The discharge paperwork merely states that the debtor’s debts are discharged. That’s right: debts discharged in a bankruptcy are not itemized by the court. Importantly, the court does not specifically enumerate the debts that were not included in the discharge.

Bankruptcy Law Can Be Complicated

Where does that leave a debtor confused about which debts were included in the discharge? Bankruptcy law is complicated. A vast majority of bankruptcy filers choose to hire an attorney to declare bankruptcy. A qualified bankruptcy attorney will determine which debts were discharged by the court.

Contact my office at (916) 333-2222 for questions about declaring bankruptcy in the Sacramento area.

Not all bankruptcy cases end in a bankruptcy discharge. For various reasons, some bankruptcy cases are dismissed prior to discharge. What happens after a bankruptcy is dismissed? Read on to learn more.

Some Bankruptcy Cases Are Dismissed

Bankruptcy can be very complicated. Not all debtors make it all the way through their bankruptcy to discharge. The bankruptcy court dismisses most bankruptcies. Other times, debtors themselves request that their bankruptcy case be dismissed.

Dismissal prior to discharge does not necessarily mean that the bankruptcy failed. A debtor may utilize a bankruptcy filing to delay a foreclosure or other legal event until such time that they can make other arrangements. This strategic use of the bankruptcy code is not explicitly forbidden, but is generally frowned upon. However, that does not stop it from happening. This is especially true in Chapter 13 court where a majority of dismissals occur.

Failing to file the required paperwork will also result in case dismissal. Occasionally the debtor does not show up to court when ordered. The bottom line is that not all cases end in a discharge.

Post-Dismissal

What happens after a bankruptcy dismissal depends on the chapter under which the bankruptcy case was filed.

In Chapter 7 cases, the court will dismiss the debtor and the automatic stay will terminate. The court will likely close out the case fairly quickly thereafter.

In Chapter 13 cases, the court will dismiss the debtor and the automatic stay will terminate — just like in the Chapter 13. If the Chapter 13 plan was no confirmed, the Chapter 13 Trustee will refund any Chapter 13 payments received back to the debtor. If the Chapter 13 plan was confirmed, the Chapter 13 Trustee will wrap up the administration of the bankruptcy case and issue a final report to the court. The court will proceed to officially close the case once the Chapter 13 Trustee’s administrative duties are resolved. Timing here could be 30-60 days from dismissal to closure, depending on the circumstances of the case.

Important to remember: dismissal terminates the automatic stay! You may need to make alternative arrangements to protect property once your bankruptcy case is dismissed.

My office handles Chapter 7 and Chapter 13 bankruptcy cases in the Sacramento area. Please call us at (916) 333-2222 to schedule a friendly bankruptcy consultation. 

Foreclosures are still occurring on a regular basis in the Sacramento area. Bankruptcy can be an effective way to stop a foreclosure. But only certain types of bankruptcy can help. Chapter 7 will not necessarily save your home. Read on for more information about Chapter 7 Bankruptcy and Foreclosure.

The Automatic Stay Halts Foreclosure

The “automatic stay” in bankruptcy stops most legal proceedings pending against the bankruptcy filer. This includes non-judicial foreclosure, the type of foreclosure that is common here in California. When a person files for bankruptcy, the automatic stay takes effect and prevents foreclosure from moving forward.

If a foreclosure sale still happens after the bankruptcy has been filed, the foreclosure is “void.” This means that the sale has no legal effect whatsoever. And the foreclosing creditor has an affirmative duty to unwind its post-bankruptcy actions.

As you can see, bankruptcy can be very powerful tool.

The Automatic Stay in Chapter 7 Can Be Challenged

The goal of a Chapter 7 bankruptcy is to liquidate debts and assets. The filing of a Chapter 7 will result in the stay of legal proceedings as discussed above. However, a creditor can challenge the automatic stay. This is known as asking for “relief from the automatic stay.”

If a creditor can demonstrate that the bankruptcy filer has defaulted on their mortgage by not making payments, the court will likely order that the stay be “lifted.” This means that the property is no longer protected by the bankruptcy. And the creditor can proceed with their foreclosure.

For this reason alone, I advise clients not to file Chapter 7 bankruptcy if they are trying to prevent foreclosure and stay in the home. The Chapter 7 bankruptcy will only provide a few months of protection, at most. This might not be enough time to reorganize finances and bring the mortgage current.

Chapter 13 Might be a Better Option

If your goal is to not only stop a foreclosure, but to stay in your home, Chapter 13 is the much better option. Chapter 13 will allow you to reorganize your finances over three-to-five years. As long as you stay current on your mortgage payments and pay back your mortgage arrears, you can stay in your home.

Bankruptcy is a very important decision. Please contact my office to discuss which type of bankruptcy would be right for your situation. You can reach my law firm at (916) 333-2222.