An immediate discharge is a discharge order given in an insolvency proceeding in a shorter period than that provided by law, usually after the end of the interim period – which is the period between the issuance of the order to commence proceedings, which initiates the insolvency proceeding, and the date of the court hearing regarding the economic recovery order.
Immediate discharge is not given routinely. There are several criteria set out in the law that must exist in order to receive an immediate discharge:
- It is an individual whose earning capacity is no higher than his/her cost of living. This means that this is someone who cannot earn more money than what is needed to cover even his/her basic expenses, or who barely covers those expenses. It is important to understand that when considering a request for immediate discharge, the court looks at the person’s earning capacity and not their actual salary. Unless there are exceptional circumstances, in general, every person should be able to earn at least enough to cover their basic needs. Therefore, this usually refers to those with special circumstances – for example, those recognized by National Insurance as high percentage disabled, who have lost working capacity; single parents of young children who do not have an education that allows them to earn a high salary; or similar cases.
- The individual has met all the requirements detailed in the law for someone who is in insolvency proceedings: submitted the bi-monthly reports on time, cooperated with the trustee, paid the monthly payment during the interim period on time, acted in good faith, or the circumstances of the debts being incurred were honestly. If one of these is not met, the court may still approve immediate discharge under special circumstances.
An immediate discharge severely harms the creditors’ right to recover part of their debt, and therefore in order to be granted immediate discharge, there must be exceptional circumstances that really show that there is no point in setting a monthly payment and giving an economic recovery order. The various courts are strict with individuals in this regard. For example, even if an individual has medical certificates regarding a medical condition, but has not yet been recognized by National Insurance as having lost working capacity, the courts will not take into account the medical certificates and will not grant immediate discharge.
Therefore, it is very important to receive professional advice if you think you are eligible for immediate discharge, in order to fully realize your rights and arrive at the economic rehabilitation order hearing prepared and meet all the legal requirements.