Image Alt Text

What Is a Certificate of Discharge?

Bankruptcy is obviously not a fun process, but sometimes it can be the best course of action for your ongoing business. The good news is, if you are at a stage where a certificate of discharge is necessary, then you are seeing the light at the end of the tunnel, and it is probably not an oncoming train.

When you file for bankruptcy, whether personally or for a company, you need to use the services of a licensed trustee. The trustee will go over your assets and liabilities and together you will decide if bankruptcy is the best solution for your financial problems. As part of the bankruptcy, both you and the trustee will undertake to do a certain number of things. For example, preferred creditors may be paid off, assets may be sold, and debts may be collected.

Once you and the trustee have done everything that you promised to, it is time to go back before the courts and provide detailed explanations as to what the final result of the bankruptcy process is. Creditors can also chime in if they feel something has gone wrong. Eventually, the bankruptcy will be declared complete by the court, and this is when a certificate of discharge is issued.

In other words, once you have a certificate of discharge, the bankruptcy process is complete, your old debts no longer legally exist, and your relationship with the trustee ends.

The date of the certificate of discharge is very important because it serves as the start of your new financial life. It is the reset button for your business.

Related Articles

Looking for something else?

Get QuickBooks

Smart features made for your business. We've got you covered.

Firm of the Future

Expert advice and resources for today’s accounting professionals.

QuickBooks Support

Get help with QuickBooks. Find articles, video tutorials, and more.