Can My Bankruptcy Discharge Be Denied or Revoked?

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Every year, there are thousands and thousands of bankruptcy filings.  In nearly every case, the end result is a court order discharging the Debtor from any debts that can be wiped out. This might be in a Chapter 7 liquidation or, sometimes, in a reorganization like Chapter 11, 12, or 13.

The discharge of debts is one of the biggest reasons to file for bankruptcy since it means either a fresh start or a successful re-working of debts. But can it be denied or revoked? The answer is yes, although this happens very rarely.

What are the reasons for which the Bankruptcy Court refuses to grant a Debtor a discharge?

There are a few administrative reasons for the Bankruptcy Court to refuse a discharge. Every Debtor (individual Debtor) has to complete a pre-filing credit counseling course as well as a post-filing Personal Financial Management Course. If the Debtor doesn’t file a certificate that says that this course was complete, the case closes without a discharge. There would then be a fee to reopen the case, file the certificate (once the course is complete), and obtain the discharge.

Another reason for the Bankruptcy Court to refuse to grant a discharge is failure to attend the 341 Meeting of Creditors (named after Section 341 of the Bankruptcy Code) and be examined under oath by a bankruptcy trustee (or, in Chapter 11 cases, the Office of the United States Trustee). Bankruptcy is more than simply filling out forms, and the purpose of the Meeting of Creditors is to give the Trustee and creditors a chance to ask questions under oath.  While very few creditors ever appear at these meetings, and while these meetings in our area are being conducted by phone, the meetings are built into the Code as a safeguard.

Assuming that our clients complete the credit counseling courses and attend their creditor’s meetings, the Chapter 7 clients and those who have completed their reorganization plans should receive a discharge unless there is some sort of bad act alleged. These bad acts would have to be so serious that the Court would have to lay out the very serious penalty of denying a discharge.

Most of these bad acts are found in Section 727(a) of the Bankruptcy Code.

Some examples of these bad acts that will deny a discharge are:

* Refusing to turn over records related to property or business records to a trustee or the government
* Making false statements on either the bankruptcy schedules or in the 341 Meeting of Creditors testimony
* Hiding assets or transferring them before filing with an intent to “hinder, delay, or defraud a creditor”

Even Debtors who have received discharges might lose those and have the discharge revoked for fraud, if the fraud was discovered post-discharge or for failing to report certain property of the bankruptcy estate (for example, a post-filing inheritance).

Nearly everyone who files is an “honest but unfortunate” Debtor, who needs relief as a result of a bad break – a job loss, an accident, a divorce, the death of a loved one, or a failed business. These folks will almost always get the relief they want and need, but in return, there are duties to disclose and cooperate with the court and its officers (including the US Trustee’s office and bankruptcy trustees).

We are sensitive to how humbling and even frustrating the bankruptcy process can be.  But the process will work for nearly everyone who goes through bankruptcy. In exchange for full honesty, disclosure, and some cooperation, we can get people and even farms and small businesses fresh starts or reorganizations and let everyone move forward in a better financial place.

Can Bankruptcy Discharge Be Denied or Revoked?

For more information or if you have any questions, feel free to contact WM Law for a free initial consultation with one of our experienced attorneys. Or visit our website at: At W M Law, we are Here to Help!

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Jeffrey L. Wagoner


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