Almost all bankruptcy cases proceed without any problems and the debtor receives a discharge of his debt at the end of the case. But in some cases, a bankruptcy filing can be insufficient or the discharge of debt can be denied or revoked. Here are a few things that could cause a bankruptcy discharge to be denied by the courts.
One factor that can affect whether or not a bankruptcy discharge can be denied is one’s income. When your income is above median, that means it is higher than the average household income in your county, you have to fill out the means test in a chapter 7. If you income or the expenses are not properly calculated, and it turns out later during you bankruptcy case that you are not eligible for a chapter 7, the US Trustee’s office will file a motion to dismiss or convert to a chapter 13. The information you provide to your attorney must be accurate in order to calculate the means test and avoid problems later on.
In a chapter 13 are specific debt limits that cannot be exceeded. Often, a mortgage debt might be overlooked and not added to the combined secured debt. If a the debt exceeds the limit, the chapter 13 trustee will file a motion to dismiss or convert to a chapter 7 or chapter 11.
If the court suspects that the person has made an attempt to shield certain assets, a bankruptcy discharge can be denied. The trustee looks at any property transfers that occurred within a year’s time to friends or family members of the debtor, any property transferred other than in the ordinary course of business, and real estate transferred within 10 years before filing. If the court concludes that the property was transferred as a means to keep the property from being considered as a part of personal assets, the court can deny the bankruptcy discharge and charge debtor with fraud. This is why it is essential for one to be forthcoming about all assets during the early stages.
Concealing certain pieces of information puts a person at risk for having a bankruptcy discharge denied. The trustee does not want to uncover any hidden assets. The trustee does not like to review a person’s financial information submitted by the debtor and find it to be contrary to other information filed with the court. This is especially the case where the person’s earnings are concerned. The financial information on Schedule I should match the information on the means test, Statement of Financial Affairs and pay stubs. Often, these different sources of information do not match because a debtor changed jobs, lost his job, made more or less money. A problem occurs when the information don’t match because the information were incorrect. All of the income and asset information should be as accurate as possible to prevent the bankruptcy discharge from being denied.
Any false statement made under oath puts the case under intense scrutiny. The court wants to make sure that the individual has not made any false statement under oath during the bankruptcy proceeding. The petition is signed under the penalty of perjury and the trustee’s meeting is conducted under oath of the debtor. Honest mistakes are normally harmless and can be corrected, purposely concealing information and hide assets from creditors are problematic. Any misstatements made during the course of an audit or investigation can put the case at risk for not being discharged. False claims made within an application or under oath damages the credibility of the debtor.
A Bankruptcy discharge can be denied by the courts. Discrepancies in the paperwork, false claims made under oath, omissions, and other attempts made to conceal information about the person’s financial status put the case at risk for not being discharged. A bankruptcy discharge denial is possible if the courts feel certain attempts were made to intentionally keep the courts in the dark about a person’s finances.