Filing for bankruptcy has many benefits, including relieving you of all eligible debt through the bankruptcy discharge. However, it may be beneficial for you to waive your right to a discharge if you would like to keep certain property after the completion of your case. Be aware, however, that waiving the discharge makes the debts still legally enforceable following the conclusion of the bankruptcy case.
At the end of a bankruptcy case, you ordinarily will receive a discharge. The discharge eliminates all debts that were included in the bankruptcy case, making them no longer legally enforceable by your creditors. A discharge essentially erases the debt and you will have no further obligation to repay it. However, some types of debt, such as child support obligations or student loans, cannot be discharged in a bankruptcy case.
If the bankruptcy trustee can prove fraud or bad faith is present in your case, waiving your right to a discharge may prevent the court from dismissing your case. Keeping your bankruptcy case open is important if you would like to enter into a reaffirmation agreement for one of your debts, such as a car loan. A reaffirmation agreement is an agreement between you and a creditor that creates a new obligation to repay a debt in exchange for your continued possession of the property. When signing a reaffirmation agreement, you waive your right to discharge the debt that is the subject of the agreement.
Several requirements must be met before the court will accept a waiver. First, the waiver must be in writing and you must sign the written waiver. Typically, the waiver is filed after you file the original bankruptcy petition. Once the waiver is submitted, the court will review the waiver and determine whether to approve it. The bankruptcy court may hold a hearing to ensure that you understand the legal consequences of the waiver. If a reaffirmation agreement is present, the court will consider whether to uphold the agreement if a valid waiver has been signed.
Regardless of whether you choose to waive your bankruptcy discharge, filing for bankruptcy has several consequences. For example, your credit rating will be affected by filing for bankruptcy and it may be harder to obtain new credit. In addition, if you file for Chapter 7 bankruptcy, the bankruptcy trustee must liquidate all non-exempt property. Additionally, everything you file with the court is accessible by the public, so if you are concerned about others viewing your financial situation, you may want to reconsider filing for bankruptcy.