Chapter 7 bankruptcy can be a good option if you own little or no property and want to get rid of unsecured debts, like credit card charges or medical bills. Your bankruptcy goal is to have these debts eliminated through a court order called a discharge.

Once your debts are erased in a bankruptcy discharge, you don't have to pay them. Creditors can't call you or try to collect on the debts. The debts are gone! 

Revoking Bankruptcy Discharge

Don't get too excited. You must be open and honest with the court, otherwise laws allow the discharge to be revoked or reversed if the discharge was obtained through fraud or dishonesty.

This means the discharge is undone and the debts become your responsibility again.

Avoid Bankruptcy Fraud

This could unravel your bankruptcy plans and you risk not only having to pay your debts, but fines and imprisonment.

Here are some examples of actions that can cause your discharge to be revoked:

  • Hiding assets. Giving cash, jewelry, vehicles or other property to friends or family members to hold for you during the bankruptcy
  • Selling property to a friend with the understanding that you'll buy it back after your bankruptcy. These are call "sham transactions." 
  • Making false statements. Lying about your income, business losses or the property you own
  • Undervaluing assets. Telling the court your property is worth less than its appraised value
  • Failing to tell the court about prior bankruptcies
  • Failing to tell the court about property you receive after you file for bankruptcy
  • Failing to follow court orders
  • Refusing to answer the court's questions
  • Failing to provide documents requested by the court

Give your lawyer an accurate list of your property, earnings and debts. There may be tolerance if you honestly missed something, but to actively hide assets or mislead the court in any way will cause trouble with your case.

Level with Your Attorney

The best way to avoid having your bankruptcy discharge revoked is to level with your bankruptcy attorney. There may be exemptions that allow you to keep your property. Remember, your attorney is on your side.

Questions for Your Attorney

  • Can my discharge be revoked if I receive property, such as an inheritance, after the discharge?
  • Is there a time limit to when a discharge can be revoked?
  • What happens after a discharge is revoked?