Chapter 18-7 Discharge and Dischargeability

18-7 Discharge and Dischargeability

With few exceptions, a bankruptcy discharge operates to relieve the mortgagor from any personal liability for his mortgage debt.⁵⁷ Discharge under Sections 727, 1141 and 1328 of the Bankruptcy Code, and the dischargeability of a particular debt under Section 523 of the Bankruptcy Code operate very differently. A mortgagee may file an action to prevent the mortgagor from receiving a general discharge of all the mortgagor's debts under Sections 727, 1141 or 1328 of the Bankruptcy Code, as applicable. Alternatively, in a bankruptcy case pending under any chapter, the mortgagee may file an action to prevent discharge of the mortgagee's particular debt under Section 523 of the Bankruptcy Code.⁵⁸ The standards for discharge and dischargeability are set forth in the respective sections of the Bankruptcy Code.⁵⁹

In general, in a Chapter 7 case where the debtor is an individual, the mortgagor receives a discharge of all debts under Section 727, 60 days from the date of the first scheduled meeting of creditors under Section 341 of the Bankruptcy Code (the "341 Meeting") unless a creditor files an objection to the mortgagor's discharge, or the deadline to object is extended.⁶⁰ In contrast to a mortgagor in a Chapter 7 bankruptcy case, a mortgagor in a Chapter 13 case receives a discharge of all debts upon completion of a repayment plan⁶¹ and in a Chapter 11 case, upon completion of a reorganization plan in a case where the debtor is an individual, so long as there is no pending objection to the mortgagor's discharge.⁶²

The deadline to object to the mortgagor's discharge in cases under Chapters 7 and 13 is 60 days from the date of the first scheduled 341 Meeting. The deadline to object to the mortgagor's discharge in cases under Chapter 11 is no later than the first date set for the confirmation of the plan of reorganization hearing.⁶³ The deadline to file a complaint to determine dischargeability is also 60 days from the date of the first scheduled 341 Meeting in a case under any chapter of the Code.⁶⁴

Any deadline to object to discharge or file a complaint to determine dischargeability may be extended by filing a motion and showing "cause."⁶⁵ Any such motion must be filed prior to the expiration of the initial deadline or any court-approved extended deadline.⁶⁶ Any motion to extend the deadline to file an objection to discharge under Sections 727, 1141 and 1328 or dischargeability under Section 523 should be separately stated...