- Personal Finance
Bankruptcy Gone Wrong: Denial of Discharge
When you file for bankruptcy you are, essentially, asking the court system to give you a clean start. Everyone, especially today, goes through rough patches in life. You deserve, despite your mistakes, to have the opportunity to make yourself whole again. When filing for bankruptcy your debts are “discharged,” or eliminated in a way that makes it illegal for your debtors to force you to pay, and you can then move on to rebuild your credit or do whatever else is appropriate to improve your individual financial situation.
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What is a Denial of Discharge?
What most people don’t realize, however, is that it is possible for the courts to deny your request for discharge. While the denial of discharge is not a very common occurrence, a judge may determine that you have acted in a dishonest or fraudulent manner and, as such, do not deserve to have your debts wiped clean.
This decision may have one of two results. Either your entire bankruptcy case may be thrown out of court or one or more of your creditors may be excluded from the case while the rest are discharged. Neither option allows you to rebuild your financial history from scratch.
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Reasons for a Denial of Discharge
A judge will not enter a denial of discharge on a whim. The offending petitioner must have committed one of a long list of infractions before or during the bankruptcy proceedings. These include:
- Knowingly removing, destroying, concealing, or mutilating property that should have otherwise been turned over to an estate officer or creditor. The debt may be discharged if this occurs anytime within the year before filing the bankruptcy petition or at any time after the filing.
- The debtor destroys, hides, or falsifies financial documentation that might give the courts a clearer picture of his financial history and condition.
- The individual filing for bankruptcy files a false claim or lies under oath.
- The debtor can not, for any reason, satisfactorily explain to the court where his assets have gone (if they were not turned over to the courts).
- The individual filing for bankruptcy refuses to follow court orders, refuses to answer material questions during hearings because he feels he may incriminate himself even after being granted immunity.
- The individual has previously been granted a discharge of debts within the six years prior to filing the current case.
- The court can prove that the debtor knowingly created debt without the intent to pay it off (ie. using a credit card before filing the bankruptcy petition).
The judge reviewing your case will work closely with you and your lawyer to determine whether or not a denial of discharge is in order. Rest assured, the average judge will not take a denial of discharge lightly. If you have been open, honest, and cooperative throughout your proceedings it is very unlikely you will find yourself in this type of situation.
Make sure you contact your bankruptcy lawyer if you have any questions regarding the type of debt that can be legally included in your bankruptcy petition to begin with. He or she will be able to guide you through the difficult process of filing for bankruptcy.