Bankruptcy Attorney in Michigan  

Walter A. Metzen, Michigan Bankruptcy Attorney

Board Certified Consumer Bankruptcy Specialist

American Board of Bankruptcy Certification

 


 

 Bankruptcy Basics: The Discharge in Bankruptcy

The Discharge in
Bankruptcy

The bankruptcy discharge varies depending on
the type of case a debtor files: chapter 7, 11,
12, or 13. Bankruptcy Basics attempts to
answer some basic questions about the
discharge available to individual debtors
under all four chapters including:
1. What is a discharge in bankruptcy?
2. When does the discharge occur?
3. How does the debtor get a discharge?
4. Are all the debtor’s debts discharged or
only some?
5. Does the debtor have a right to a discharge
or can creditors object to the discharge?
6. Can the debtor receive a second discharge
in a later case?
7. Can the discharge be revoked?
8. May the debtor pay a discharged debt after
the bankruptcy case has been concluded?
9. What can the debtor do if a creditor
attempts to collect a discharged debt after the
case is concluded?
10. May an employer terminate a debtor’s
employment solely because the person was a
debtor or failed to repay a discharged debt?

WHAT IS A DISCHARGE IN
BANKRUPTCY?

A bankruptcy discharge releases the debtor
from personal liability for certain specified
types of debts. In other words, the debtor is no
longer legally required to pay any debts that
are discharged. The discharge is a permanent
order prohibiting the creditors of the debtor
from taking any form of collection action on
discharged debts, including legal action and
communications with the debtor, such as
telephone calls, letters, and personal contacts.
Although a debtor is not personally liable for
discharged debts, a valid lien (i.e., a charge
upon specific property to secure payment of a
debt) that has not been avoided (i.e., made
unenforceable) in the bankruptcy case will
remain after the bankruptcy case. Therefore, a
secured creditor may enforce the lien to
recover the property secured by the lien.

WHEN DOES THE DISCHARGE
OCCUR?

The timing of the discharge varies, depending
on the chapter under which the case is filed. In
a chapter 7 (liquidation) case, for example, the
court usually grants the discharge promptly on
expiration of the time fixed for filing a
complaint objecting to discharge and the time
fixed for filing a motion to dismiss the case
for substantial abuse (60 days following the
first date set for the 341 meeting). Typically,
this occurs about four months after the date
the debtor files the petition with the clerk of
the bankruptcy court. In individual chapter 11
cases, and in cases under chapter 12
(adjustment of debts of a family farmer or
fisherman) and 13 (adjustment of debts of an
individual with regular income), the court
generally grants the discharge as soon as
practicable after the debtor completes all
payments under the plan. Since a chapter 12 or
chapter 13 plan may provide for payments to
be made over three to five years, the discharge
typically occurs about four years after the date
of filing. The court may deny an individual
debtor’s discharge in a chapter 7 or 13 case if
the debtor fails to complete “an instructional
course concerning financial management.”
The Bankruptcy Code provides limited
exceptions to the “financial management”
requirement if the U.S. trustee or bankruptcy
administrator determines there are inadequate
educational programs available, or if the
debtor is disabled or incapacitated or on active
military duty in a combat zone.

HOW DOES THE DEBTOR GET A
DISCHARGE?

Unless there is litigation involving objections
to the discharge, the debtor will usually
automatically receive a discharge. The Federal
Rules of Bankruptcy Procedure provide for the
clerk of the bankruptcy court to mail a copy of
the order of discharge to all creditors, the U.S.
trustee, the trustee in the case, and the
trustee’s attorney, if any. The debtor and the
debtor’s attorney also receive copies of the
discharge order. The notice, which is simply a
copy of the final order of discharge, is not
specific as to those debts determined by the
court to be non-dischargeable, i.e., not
covered by the discharge. The notice informs
creditors generally that the debts owed to them
have been discharged and that they should not
attempt any further collection. They are
cautioned in the notice that continuing
collection efforts could subject them to
punishment for contempt. Any inadvertent
failure on the part of the clerk to send the
debtor or any creditor a copy of the discharge
order promptly within the time required by the
rules does not affect the validity of the order
granting the discharge.

ARE ALL OF THE DEBTOR’S DEBTS
DISCHARGED OR ONLY SOME?

Not all debts are discharged. The debts
discharged vary under each chapter of the
Bankruptcy Code. Section 523(a) of the Code
specifically excepts various categories of
debts from the discharge granted to individual
debtors. Therefore, the debtor must still repay
those debts after bankruptcy. Congress has
determined that these types of debts are not
dischargeable for public policy reasons (based
either on the nature of the debt or the fact that
the debts were incurred due to improper
behavior of the debtor, such as the debtor’s
drunken driving).
There are 19 categories of debt excepted from
discharge under chapters 7, 11, and 12. A
more limited list of exceptions applies to cases
under chapter 13.
Generally speaking, the exceptions to
discharge apply automatically if the language
prescribed by section 523(a) applies. The most
common types of non-dischargeable debts are
certain types of tax claims, debts not set forth
by the debtor on the lists and schedules the
debtor must file with the court, debts for
spousal or child support or alimony, debts for
willful and malicious injuries to person or
property, debts to governmental units for fines
and penalties, debts for most government
funded or guaranteed educational loans or
benefit overpayments, debts for personal
injury caused by the debtor’s operation of a
motor vehicle while intoxicated, debts owed
to certain tax-advantaged retirement plans,
and debts for certain condominium or
cooperative housing fees.

The types of debts described in sections
523(a)(2), (4) and(6) (obligations affected by
fraud or maliciousness) are not automatically
excepted from discharge. Creditors must ask
the court to determine that these debts are
excepted from discharge. In the absence of an
affirmative request by the creditor and the
granting of the request by the court, the types
of debts set out in sections 523(a)(2), (4) and
(6) will be discharged.
A slightly broader discharge of debts is
available to a debtor in a chapter 13 case than
in a chapter 7 case. Debts dischargeable in a
chapter 13, but not in chapter 7, include debts
for willful and malicious injury to property,
debts incurred to pay non-dischargeable tax
obligations, and debts arising from property
settlements in divorce or separation
proceedings. Although a chapter 13 debtor
generally receives a discharge only after
completing all payments required by the
court-approved (i.e., “confirmed”) repayment
plan, there are some limited circumstances
under which the debtor may request the court
to grant a “hardship discharge” even though
the debtor has failed to complete plan
payments. Such a discharge is available only
to a debtor whose failure to complete plan
payments is due to circumstances beyond the
debtor’s control. The scope of a chapter 13
“hardship discharge” is similar to that in a
chapter 7 case with regard to the types of
debts that are excepted from the discharge. A
hardship discharge also is available in chapter
12 if the failure to complete plan payments is
due to “circumstances for which the debtor
should not justly be held accountable.”

DOES THE DEBTOR HAVE THE RIGHT
TO A DISCHARGE OR CAN
CREDITORS OBJECT TO THE
DISCHARGE?

In chapter 7 cases, the debtor does not have an
absolute right to a discharge. An objection to
the debtor’s discharge may be filed by a
creditor, by the trustee in the case, or by the
U.S. trustee. Creditors receive a notice shortly
after the case is filed that sets forth much
important information, including the deadline
for objecting to the discharge. To object to the
debtor’s discharge, a creditor must file a
complaint in the bankruptcy court before the
deadline set out in the notice. Filing a
complaint starts a lawsuit referred to in
bankruptcy as an “adversary proceeding.”
The court may deny a chapter 7 discharge for
any of the reasons described in section 727(a)
of the Bankruptcy Code, including failure to
provide requested tax documents; failure to
complete a course on personal financial
management; transfer or concealment of
property with intent to hinder, delay, or
defraud creditors; destruction or concealment
of books or records; perjury and other
fraudulent acts; failure to account for the loss
of assets; violation of a court order or an
earlier discharge in an earlier case commenced
within certain time frames (discussed below)
before the date the petition was filed. If the
issue of the debtor’s right to a discharge goes
to trial, the objecting party has the burden of
proving all the facts essential to the objection.
In chapter 12 and chapter 13 cases, the debtor
is usually entitled to a discharge upon
completion of all payments under the plan. As
in chapter 7, however, discharge may not
occur in chapter 13 if the debtor fails to
complete a required course on personal
financial management. A debtor is also
ineligible for a discharge in chapter 13 if he or
she received a prior discharge in another case
commenced within time frames discussed the
next paragraph. Unlike chapter 7, creditors do
not have standing to object to the discharge of
a chapter 12 or chapter 13 debtor. Creditors
can object to confirmation of the repayment
plan, but cannot object to the discharge if the
debtor has completed making plan payments.
CAN A DEBTOR RECEIVE A SECOND
DISCHARGE IN A LATER CHAPTER 7
CASE?

The court will deny a discharge in a later
chapter 7 case if the debtor received a
discharge under chapter 7 or chapter 11 in a
case filed within eight years before the second
petition is filed. The court will also deny a
chapter 7 discharge if the debtor previously
received a discharge in a chapter 12 or chapter
13 case filed within six years before the date
of the filing of the second case unless (1) the
debtor paid all “allowed unsecured” claims in
the earlier case in full, or (2) the debtor made
payments under the plan in the earlier case
totaling at least 70 percent of the allowed
unsecured claims and the debtor’s plan was
proposed in good faith and the payments
represented the debtor’s best effort. A debtor
is ineligible for discharge under chapter 13 if
he or she received a prior discharge in a
chapter 7, 11, or 12 case filed four years
before the current case or in a chapter 13 case
filed two years before the current case.

CAN THE DISCHARGE BE REVOKED?
The court may revoke a discharge under
certain circumstances. For example, a trustee,
creditor, or the U.S. trustee may request that
the court revoke the debtor’s discharge in a
chapter 7 case based on allegations that the
debtor: obtained the discharge fraudulently;
failed to disclose the fact that he or she
acquired or became entitled to acquire
property that would constitute property of the
bankruptcy estate; committed one of several
acts of impropriety described in section
727(a)(6) of the Bankruptcy Code; or failed to
explain any misstatements discovered in an
audit of the case or fails to provide documents
or information requested in an audit of the
case. Typically, a request to revoke the
debtor’s discharge must be filed within one
year of the discharge or, in some cases, before
the date that the case is closed. The court will
decide whether such allegations are true and,
if so, whether to revoke the discharge.
In a chapter 11, 12 and 13 cases, if
confirmation of a plan or the discharge is
obtained through fraud, the court can revoke
the order of confirmation or discharge.

MAY THE DEBTOR PAY A
DISCHARGED DEBT AFTER THE
BANKRUPTCY CASE HAS BEEN
CONCLUDED?

A debtor who has received a discharge may
voluntarily repay any discharged debt. A
debtor may repay a discharged debt even
though it can no longer be legally enforced.
Sometimes a debtor agrees to repay a debt
because it is owed to a family member or
because it represents an obligation to an
individual for whom the debtor’s reputation is
important, such as a family doctor.


WHAT CAN THE DEBTOR DO IF A
CREDITOR ATTEMPTS TO COLLECT
A DISCHARGED DEBT AFTER THE
CASE IS CONCLUDED?

If a creditor attempts collection efforts on a
discharged debt, the debtor can file a motion
with the court, reporting the action and asking
that the case be reopened to address the
matter. The bankruptcy court will often do so
to ensure that the discharge is not violated.
The discharge constitutes a permanent
statutory injunction prohibiting creditors from
taking any action, including the filing of a
lawsuit, designed to collect a discharged debt.
A creditor can be sanctioned by the court for
violating the discharge injunction. The normal
sanction for violating the discharge injunction
is civil contempt, which is often punishable by
a fine.

CAN AN EMPLOYER TERMINATE A
DEBTOR’S EMPLOYMENT SOLELY
BECAUSE THE PERSON WAS A
DEBTOR OR FAILED TO PAY A
DISCHARGED DEBT?

The law provides express prohibitions against
discriminatory treatment of debtors by both
governmental units and private employers. A
governmental unit or private employer may
not discriminate against a person solely
because the person was a debtor, was
insolvent before or during the case, or has not
paid a debt that was discharged in the case.
The law prohibits the following forms of
governmental discrimination: terminating an
employee; discriminating with respect to
hiring; or denying, revoking, suspending, or
declining to renew a license, franchise, or
similar privilege. A private employer may not
discriminate with respect to employment if the
discrimination is based solely upon the
bankruptcy filing.

Michigan Bankruptcy Court Directory (Detroit) 

            

To determine or confirm the location of a specific meeting or hearing please contact the court directly.

Eastern District of Michigan Bankruptcy Court (313) 234-0051

Michigan Bankruptcy Attorneys


Michigan Eastern Bankruptcy Court
Court Locations: Bay City, Detroit, Flint
Counties of Jurisdiction: Alcona, Alpena, Arenac, Bay, Cheboygan, Clare, Crawford, Genesee , Gladwin, Gratiot, Huron, Iosco, Isabella, Jackson, Lapeer, Lenawee, Livingston, Macomb, Midland, Monroe, Montgomery, Oakland, Ogemaw, Oscoda, Otsego, Presque Isle, Roscommon, Saginaw, Saint Clair, Sanilac, Shiawassee, Tuscola, Washtenaw, Wayne
 

Clerks:
Sheila M. Tighe
Clerk of the Court
U.S. Bankruptcy Court
211 W. Fort St., 21 st. Floor
21st Floor Detroit, MI 48226
(313) 234-0068

Sheila M. Tighe
Bankruptcy ClerkBankruptcy Clerk
U.S. Bankruptcy Court
111 1st., P.O. Box 911
Bay City, MI 48707
(517) 894-8840

Sheila M. Tighe
Bankruptcy Clerk Bankruptcy Clerk 
U.S. Bankruptcy Clerk
226 West 2nd. St.
Flint, MI 48502
(313) 766-5050

 

 

 

 

Detroit Map & Directions

Detroit
211 West Fort Street
Detroit, Michigan 48226
(313)234-0065
9:00 a.m. to 4:00 p.m. (M-F)
Directions:
From the East

I-94 west to I-75 south to I-375 downtown. Exit I-375 at Jefferson East and turn right on Congress Street. Continue on Congress Street until you reach Washington Boulevard (three blocks past Woodward Avenue) and then turn right. The court is one block up on the right side of the street.

From the West

I-94 east to Lodge Freeway south. Exit from the left lane at Larned Street and turn left at the traffic light, which is Washington Boulevard. The court is two blocks up on the right side.

From the North

I75 south to I-375 downtown. Exit I-375 at Jefferson East and turn right on Congress Street. Continue on Congress Street until you reach Washington Boulevard (three blocks past Woodward Avenue) and then turn right. The court is one block up on the right side.

From the South

I-75 north to Lodge Freeway south. Exit from the left lane at Larned Street and turn left at the traffic light which is Washington Boulevard. The court is two blocks up on the right side.

Parking:

Fort Washington Garage (On Washington Blvd. directly across from the court).

Internal Locations:

 

Intake/Records 21st Floor
Chief Judge Steven W. Rhodes 18th Floor
Judge Marci B. McIvor 18th Floor
Judge Walter Shapero 19th Floor
Judge Phillip J. Shefferly 19th Floor
Judge Thomas J. Tucker 19th Floor
 

First Meeting of Creditors/U.S. Trustee Location:
211 West Fort Street 
Suite 700
Detroit, MI 48226
Maps:

Detroit Map

Detroit Map 2

 

Judges:
Hon. Thomas J. Tucker
U.S. Bankruptcy Court
211 W. Fort St., 21st. Floor
Detroit, MI 48226
(313) 234-0033

Hon. Steven W. Rhodes
Chief Judge
U.S. Bankruptcy Court
211 W. Fort St., Ste. 1800
21st Floor Detroit, MI 48226
(313) 234-0020

Hon. Marci B. McIvor
211 W. Fort St. Suite 1850
Detroit MI 48226 Courtroom Deputy, Patti O'Hara (313) 234-0014

 


Hon.Phillip Shefferly U.S. Bankruptcy Court
211 W. Fort St., Ste. 1950
21st Floor Detroit, MI 48226
(Courtroom 1975
Courtroom Deputy, John Moses (313) 234-0043

 

 

Western District Court
Michigan Western Bankruptcy Court
Court Locations: Grand Rapids, Kalamazoo, Lansing, Marquette, Traverse City
Counties of Jurisdiction: Alger, Allegan, Antrim, Baraga, Barry, Benzie, Berrien, Branch, Calhoun, Cass, Charlevoix, Chippewa, Clinton, Delta, Dickinson, Eaton, Emmet, Gogebic, Grand Traverse, Hillsdale, Houghton, Ingham, Ionia, Iron, Kalamazoo, Kalkaska, Kent, Keweenaw, Lake, Leelanau, Luce, Mackinac, Manistee, Marquette, Mason, Mecosta, Menominee, Missaukee, Montcalm, Muskegon, Newaygo, Oceana, Ontonagon, Osceola, Ottawa, Saint Joseph, Schoolcraft, Van Buren, Wexford
 
Clerks:
Bankruptcy Clerk
Gerald Ford Federal Bldg.
110 Michigan St. NW
Grand Rapids, MI 49501
(616) 456-2693

Marquette Clerk's Office
202 W. Washington St., Rm. 314
Marquette, MI 49855
(906) 226-2117

 

Judges:
Hon. James D. Gregg
Gerald Ford Federal Bldg.
110 Michigan St. NW
Grand Rapids, MI 49501
(616) 456-2264

Hon. Jo Ann C. Stevenson
Gerald Ford Federal Bldg.
110 Michigan St. NW
Grand Rapids, MI 49501
(616) 456-2950

Hon. Jeffrey R. Hughes
Gerald Ford Federal Bldg.
110 Michigan St. NW
Grand Rapids, MI 49501
(616) 456-2233

 

 

   
  •   Driver's License or State ID & Social Security card
  •   Pay Stubs for the past 2 months
  •   Copies of all Bills, Summons or Judgments against you by creditors
  •    Divorce Judgments or Decrees
  •   Real Estate Documents, Deeds, Recorded Mortgages, mortgage balance statements
  •   Property Tax Bills (SEV)
  •   Bank Statements for 3 months
  •   Recorded Mortgage and Deed
  •   Car Titles
  •   Income Tax Returns & W2 forms
    for the last 2 years

  •