Chapter 7 Order of Discharge: What It Wipes Out and What Survives

An order of discharge in a Chapter 7 bankruptcy is a court document, signed by a bankruptcy judge, that permanently erases your personal legal obligation to repay most of your debts and bars the creditors on those debts from ever trying to collect from you again.¹ For most people who file, receiving that order is the whole reason they filed.

What the Order Actually Does

Before the order is entered, a creditor can sue you, garnish your wages, or hand the debt to collections. After it’s entered, that same creditor is permanently prohibited from taking any of those steps on any debt covered by the discharge. The order operates as a court-enforced injunction, not a request.¹

One thing surprises people: the order does not list your discharged debts one by one. It describes the categories of debt that are excluded by law and treats everything else as covered.² So when you’re trying to figure out whether a specific debt is gone, you’re really asking whether it falls into one of the excluded categories.

When You Get the Order

The discharge is typically entered about three to four months after you file your petition. Under the federal rules, the court grants it once the deadline for creditors to object has passed and no motion to dismiss is still pending.³ If everything is in order, no hearing is needed. The order simply arrives.

Two things trip filers up more often than they should:

You must complete an approved personal financial management course after filing. This is separate from the credit counseling you took before filing. Skip it and the court will not enter your discharge. The courses are usually available online for around $20.⁴
Your filing fee has to be paid in full (or waived). Any unpaid balance holds up the order.³

Debts the Order Wipes Out

Most unsecured debts incurred before your filing date are gone. That includes credit card balances, medical bills, personal loans, overdue utility bills, and old rent owed to a former landlord. Deficiency balances left over after a car repossession are also covered.²

Civil court judgments against you can be discharged too, though the judgment record itself stays on file. The creditor can no longer collect it as a personal debt against you. If the judgment created a lien on property you owned at the time of filing, that lien is a separate issue and may survive. Government benefit overpayments, including Social Security overpayments, are generally dischargeable unless the agency can show you obtained the payments through fraud.

Debts That Survive the Order

Federal law carves out specific categories the Chapter 7 discharge cannot touch.⁵ The ones that matter to most filers:

Child support and alimony. Any domestic support obligation survives entirely.
Most student loans. Government-backed and qualified private education loans are not discharged unless you can prove that repaying them would impose an undue hardship on you and your dependents. That’s a notoriously difficult standard, though courts have grown somewhat more open to it in recent years.
Certain tax debts. Income taxes are non-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 aren’t wiped out. Luxury purchases over $900 from a single creditor made within 90 days of filing, and cash advances over $1,250 taken within 70 days of filing, are presumed fraudulent.⁶
Government fines and penalties, including criminal fines and traffic tickets.
Debts for death or personal injury caused by operating a vehicle while intoxicated.

Some of these apply automatically. Child support and most tax debts, for example, just aren’t covered, and no one has to do anything to make that so. For others, particularly fraud-based objections, a creditor who wants a specific debt declared non-dischargeable has to file an adversary proceeding within the bankruptcy case and prove its point.

What the Order Means for Your House or Car

The discharge kills your personal liability, but it does not remove a lien from your property. A mortgage on your home or a lien on your car survives even though the debt behind it no longer binds you personally.⁷ The lender cannot sue you for the balance, but it can still foreclose on the house or repossess the car if the payments stop.

To keep secured property, you generally have two paths. You can keep paying and hope the lender doesn’t move to enforce the lien. Or you can sign a reaffirmation agreement, a new contract in which you voluntarily put yourself back on the hook for the debt. That agreement has to be signed before the discharge is entered, and you 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 negotiations, the court has to approve the agreement and find that it doesn’t create an undue hardship.

Reaffirmation carries real risk. If you reaffirm a car loan and then can’t keep up, the lender can repossess and still come after you for the deficiency, exactly as if you’d never filed. Think hard before signing one, especially on a depreciating asset where the balance exceeds what the property is worth.

Enforcing the Order If a Creditor Keeps Contacting You

Any creditor who tries to collect a discharged debt after the order is entered is in contempt of court.¹ That covers collection letters, phone calls, lawsuits, and even informal demands for payment.

If a creditor keeps at it, you can file a motion for contempt in the bankruptcy court. The standard is objective: a creditor is in contempt if there was no reasonable basis to doubt its actions violated the injunction. Its own belief that it was in the right won’t save it if that belief was unreasonable. Available remedies include your attorney’s fees for bringing the motion, compensatory damages for the harm you suffered, and in egregious cases, punitive sanctions.

Taxes and Your Credit Report After the Order

Normally, forgiven debt counts as taxable income. If a credit card company writes off $20,000 you owe outside of bankruptcy, the IRS treats that $20,000 as income to you. Debts discharged in bankruptcy are explicitly excluded from that rule, so you owe no federal income tax on amounts wiped out by your Chapter 7 order.⁸ The discharged amount can, however, reduce certain tax attributes you’d otherwise carry forward, such as net operating losses.⁹

The Chapter 7 filing stays on your credit report for 10 years from the date the case was filed. Federal law caps it there, and credit reporting agencies cannot report it beyond that window.¹⁰ Individual accounts included in the bankruptcy typically drop off sooner, since most negative account entries fall off after seven years. The credit hit is heaviest in the first two to three years and eases from there, particularly if you begin rebuilding with secured credit cards or small installment loans.

When the Court Can Deny or Revoke the Order

The discharge is not guaranteed. If the court denies it, you remain liable for all your debts and the entire filing was for nothing. The most common grounds for denial:⁴

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

Even after an order is entered, the trustee, a creditor, or the U.S. Trustee can request revocation if the discharge was obtained through fraud that came to light later, or if you hid assets from the estate. A request based on fraud must be filed within one year of the discharge.

The Eight-Year Wait Before You Can Do It Again

You cannot receive a second Chapter 7 discharge if your previous Chapter 7 case was filed within the past eight years.⁴ The clock runs from the filing date of the earlier case, not the date the earlier discharge was granted. You can technically file a new Chapter 7 before eight years have passed, but the court will deny the discharge, which makes the filing pointless as debt relief. If you’re inside the eight-year window and facing new financial trouble, a Chapter 13 repayment plan may still be available under a different set of rules.

1
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge
2
United States Courts. Discharge in Bankruptcy
3
GovInfo. Federal Rules of Bankruptcy Procedure – Rule 4004
4
Office of the Law Revision Counsel. 11 USC 727 – Discharge
5
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
6
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
7
United States Courts. Chapter 7 Bankruptcy Basics
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