Order of Discharge, Chapter 7: Debts Wiped and Debts That Survive

In a Chapter 7 case, the order of discharge is the court document, signed by a bankruptcy judge, that permanently erases your personal obligation to repay most of the debts you owed when you filed. Once it’s entered, the creditors covered by it are barred for good from suing you, calling you, or sending you a letter about those debts.¹ For most people who file, this order is the whole point of the process.

What the Order Actually Does

The discharge severs the legal link between you and each qualifying creditor. Before the order, a credit card company could sue you and garnish your wages. After the order, that same company is permanently prohibited from taking any step to collect. The order itself doesn’t itemize the debts it eliminates. It describes the categories of debt that federal law leaves standing, and everything outside those categories is wiped out.²

The order eliminates your personal liability, not liens on your property. A mortgage on your house or a lien on your car survives the discharge, so the lender can still foreclose or repossess if you stop paying, even though it can no longer sue you personally for the balance.³ More on that below.

When You’ll Receive It

The court enters the discharge after the deadline for creditors to object and the deadline to file a motion to dismiss have both passed, and once no other blocking motions are pending.⁴ In a typical case, the order arrives roughly three to four months after you file your petition, without any hearing.

Two requirements catch more filers off guard than they should:

You must complete an approved personal financial management course after filing. This is separate from the pre-filing credit counseling. Skip it and the court will not grant your discharge. These courses are widely available online and generally cost around $20.⁵
Your filing fee must be paid in full, or waived. If it isn’t, the court holds the discharge.⁴

Debts the Order Wipes Out

Most unsecured debts you owed on your filing date are gone. The list is broad and covers the debts most people are filing to escape: credit card balances, medical bills, personal loans, overdue utility bills, and back rent owed to a former landlord. Deficiency balances left after a car repossession qualify too.²

Civil court judgments against you can be discharged as personal debts, though the judgment record stays in place and any lien the judgment created on property you owned at filing may survive separately. Government benefit overpayments, such as Social Security overpayments, are generally dischargeable, unless the agency proves you obtained the money by fraud.

Debts That Survive

Federal law carves out specific categories the discharge cannot touch.⁶ The big ones:

Child support and alimony. Any domestic support obligation survives entirely.
Most student loans. Government-backed and qualified private education loans stay unless you can prove that repaying them would impose an undue hardship on you and your dependents. That standard is notoriously hard to meet, though courts have grown slightly more willing to consider it in recent years.
Certain income taxes. Not dischargeable if the return was due within the past three years, was filed late and less than two years before you filed for bankruptcy, or was never filed at all.
Debts from fraud. Money, property, or services obtained through false pretenses or misrepresentation stay. Luxury purchases over $900 from a single creditor within 90 days of filing, and cash advances over $1,250 within 70 days of filing, are presumed fraudulent.⁷
Government fines and penalties. Criminal fines, traffic tickets, and similar penalties owed to government agencies.
Debts for death or personal injury caused by driving while intoxicated.⁶

Some of these exceptions apply automatically. For others, such as fraud, a creditor who wants a specific debt declared non-dischargeable has to file an adversary proceeding (a mini-lawsuit inside the bankruptcy case) and prove it.

Keeping a Car or House Through the Discharge

Because liens survive, keeping secured property takes a little planning. You generally have two options. You can keep making payments and hope the lender leaves you alone, since your personal liability is gone but the lien is not. Or you can sign a reaffirmation agreement, which is a new contract restoring your personal obligation on that specific debt.

A reaffirmation must be signed before the discharge is entered. You then have 60 days after it’s filed with the court to change your mind and cancel it.¹ If you weren’t represented by an attorney during the negotiation, the court has to independently approve the agreement and find it won’t impose an undue hardship on you.

Reaffirmation carries real risk. If you reaffirm a car loan and later default, the lender can repossess the car and still pursue you for any deficiency, exactly as if you’d never filed. Think hard before signing one, especially on a depreciating asset you’re upside down on.

When the Court Can Deny or Take Back a Discharge

A Chapter 7 discharge is not automatic. If the court denies it, you remain liable for every debt in the case, and you’ve gone through the process for nothing.

Common grounds for denial:⁵

Transferring, hiding, or destroying property within a year before filing, or after filing, with intent to defraud creditors.
Concealing, falsifying, or failing to keep financial records that would show your true financial condition.
Making false statements under oath or presenting false claims during the case.
Failing to satisfactorily explain missing assets.
Disobeying a lawful court order or refusing to answer material questions.
Having received a Chapter 7 discharge in a case filed within the past eight years.
Failing to complete the post-filing financial management course.

A discharge that’s already been granted can also be revoked. The trustee, a creditor, or the U.S. Trustee can ask for revocation if the discharge was obtained by fraud that wasn’t discovered until later, or if you hid assets from the estate. A fraud-based request must be filed within one year of the discharge. Other grounds must be raised by the later of one year after discharge or the date the case is closed.⁵

What to Do If a Creditor Keeps Trying to Collect

The order operates as a permanent injunction. A creditor that tries to collect a discharged debt is in contempt of court, whether the contact takes the form of a collection letter, a phone call, a lawsuit, or an informal demand for payment.¹

If it happens to you, file a motion for contempt in the bankruptcy court. Courts apply an objective standard: the creditor is in contempt if there was no reasonable basis to doubt that its conduct violated the injunction. The creditor’s own belief that it was acting lawfully won’t save it when that belief was objectively unreasonable. Available remedies include attorney’s fees for bringing the motion, compensatory damages for actual harm, and in egregious cases, punitive sanctions.

Taxes and Your Credit Report

Forgiven debt is normally taxable income. A debt discharged in bankruptcy is expressly excluded from that rule, so you owe no federal income tax on the amounts your discharge wiped out.⁸ The catch is that the discharged amount can reduce other tax attributes you’d otherwise carry forward, such as net operating losses or credit carryovers.⁹

The Chapter 7 filing stays on your credit report for 10 years from the filing date. Federal law caps it there, and credit reporting agencies cannot report it beyond that window.¹⁰ Individual accounts included in the bankruptcy usually fall off sooner, since most negative account information drops off after seven years. The credit impact is heaviest in the first two to three years and fades as you begin rebuilding, often with a secured card or a small installment loan.

Filing Chapter 7 Again Later

You cannot receive a second Chapter 7 discharge if your prior Chapter 7 case was filed within the past eight years.⁵ The clock runs from the filing date of the earlier case, not the date of the earlier discharge. You can technically file inside that eight-year window, but the court will deny the discharge, which defeats the purpose. If you’re still in the window and facing new financial trouble, a Chapter 13 repayment plan may be an option, though different rules and waiting periods apply.

1
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge
2
United States Courts. Discharge in Bankruptcy
3
United States Courts. Chapter 7 Bankruptcy Basics
4
GovInfo. Federal Rules of Bankruptcy Procedure – Rule 4004
5
Office of the Law Revision Counsel. 11 USC 727 – Discharge
6
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
7
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
8
Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness
9
Internal Revenue Service. Publication 908 – Bankruptcy Tax Guide
10
Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports