When you file bankruptcy, your main goal is discharging your debt, which is a permanent court order that completely wipes out your debts, like credit card charges and medical bills. Creditors, the people and businesses to whom you owe money, can't try to collect discharged debts, and you don't have to pay them.
A discharge is granted almost automatically in most Chapter 7 cases. Being honest with your attorney and the bankruptcy court about your finances and assets makes the bankruptcy process easier. If you lie or take certain actions, a discharge could be denied.
Objections to Discharge
A bankruptcy court trustee controls your case after you filed for bankrtupcy. The trustee or creditor might object to you getting a discharge if you commit certain dishonest acts or fail to follow the court's requirements.
An objection to a discharge triggers a trial-like proceeding. The person objecting must prove you aren't entitled to a discharge.
If the court finds the objection is valid, you may be denied a discharge. Some reasons for denying discharge include:
- Hiding property
- Destroying financial books or records
- Failing to turn over tax records
- Making false statements, orally or in writing, about your assets, earnings and debts
- Not explaining or accounting for the loss of property or money
- Failing to complete a required credit counseling or financial management course
- Violating a court order
- Failing to tell the court about a prior bankruptcy case
- Getting a Chapter 7 bankruptcy discharge within the past 8 years
- Getting a Chapter 13 discharge within the past 6 years
Honesty Is the Best Policy
A discharge denial doesn't stop your bankruptcy case. The trustee may continue to sell your nonexempt assets to pay off your creditors. You lose your nonexempt property as well as your chance to discharge your debts. Even worse, if you lie to the trustee or creditors, fines or jail time are possible for fraud.
It's extremely important to be honest and accurate when filling out your bankruptcy forms. Don't risk losing your right to a discharge and the fresh financial start bankruptcy law provides.
Questions for Your Attorney
- I was denied a discharge in my bankruptcy case. Can I file for bankruptcy again? Do I need to wait a certain amount of time?
- I forgot to list some of my assets on my bankruptcy forms. Will this prevent the court from granting a discharge in my case?
- I filed for bankruptcy nine years ago. Are there any timing issues that could prevent discharge if I file again?