There is a big difference between a discharge and a dismissal when it comes to debt. Discharged debt means that the debt is forgiven. Whereas, a dismissal means that your debts are not discharged and the bankruptcy filing is void.
The discharge of a debt in bankruptcy means that the debtor is no longer legally required to repay the debt. When a debt is discharged, the court protects the debtor from any further collection actions by creditors on the discharged debt, such as phone calls or lawsuits.
On the other hand, when a bankruptcy case is dismissed, the case is considered void. This means that the debtor who declared bankruptcy is back in the same position they were before filing. Creditors can act as if the filing had never occurred.
Reasons for a dismissal vary. Examples include a voluntary dismissal, innocent mistakes, to outright bankruptcy fraud. If the judge finds that the debtor has not filed his or case in “good faith,” the case may be dismissed with prejudice. Consequences of such a dismissal may result in a temporary bar from re-filing (usually 6 months). Or, a permanent ban on discharging the debts in the dismissed case that otherwise would have been dischargeable.
If you’re contemplating filing bankruptcy, hire a competent bankruptcy attorney who will provide legal guidance, build your case from the ground up, and prevent simple mistakes that lead to dismissals. Contact our office for more information.