This article will discuss the discharge order, which is the order given at the end of insolvency proceedings (bankruptcy).
The order is usually given after the individual (the debtor) has fulfilled all obligations in accordance with the economic recovery order, however sometimes it is given earlier as part of an immediate discharge.
The discharge is actually the order that erases whatever remains of the debts after insolvency proceedings, whether the proceedings took place at the Enforcement Bureau or in Court. The discharge then needs to be submitted to the Enforcement Bureau in order to close all files that remain open.
The discharge order prevents creditors from continuing proceedings against the individual after the discharge is given, and legally the debts are erased and the files closed, allowing the individual to restart his financial life without debts.
The order applies to all debts created up until the date insolvency proceedings commenced, meaning: all debts created up until the date the order to commence proceedings was given.
The discharge does not apply to certain types of debts. It does not apply to punitive payments – for example traffic fines or punitive compensation a court ruled the individual must pay following criminal proceedings against him. It also does not apply to child support debts – neither when the creditor is a private individual nor child support owed to National Insurance.
In extremely exceptional cases, the court can apply the discharge also to these debts, but these are the exceptions of exceptions. Usually these are cases where the individual is very old, his children grew up, he has no assets or earning capacity and there is no expectation he will be able to repay the child support debt in the future. In such cases, in accordance with Supreme Court precedent in case 5628/14 Sliman v Sliman, sometimes the individual receives a discharge from child support debts as well.
However it is important to know that even in less exceptional cases, the court sometimes allows offsetting the child support debt partially from benefits owed to the individual in order to balance the individual’s right to subsist with dignity versus the child support debt, as well as actually reducing the child support debt.
For further advice regarding discharge orders and insolvency proceedings, you can contact our firm.