Bankruptcy Basics: Why Would The Judge Deny My Discharge?

25 Sep Bankruptcy Basics: Why Would The Judge Deny My Discharge?

Well, you did it. You did all the paperwork by yourself and turned it all in on time. You went to the Meeting of Creditors and faced the Chapter trustee’s questions and answered them all (the answers that the trustee was looking for). Now, just when you thought your case was over, a notice from the Bankruptcy Court has appeared in your mailbox saying that the Judge is setting a hearing on why you should be denied a discharge? Why?

One of the reasons that the judge would deny a discharge is that you filed a Chapter 7 case within 8 years of filing an earlier Chapter 7 case. The rule is now 8 years between filings, period. No judicial discretion (meaning, you can write a nice letter to the judge but it makes absolutely no difference, the judge has no choice under the new rules).

Another reason that the judge would deny a discharge is that you filed a Chapter 13 case immediately after finishing up a Chapter 7 case (these are sometimes called “Chapter 20’s”). A discharge in a Chapter 13 cannot be entered if it has been less than six years since a Chapter 7 discharge unless 100% of the debts are paid or maybe 70% if all your best efforts are put into paying that 70%.

Another reason that the judge might deny a discharge is because the United States Trustee has asked the court to deny discharge under 11 U.S.C. section 727–basically, the United States Trustee has told the court that you committed fraud in your filing of the schedules and that ALL of your debts should not be dischargeable. This is very very serious.

Another reason might be that the Judge has brought his own motion (this is called a “sua sponte” motion–a Latin term for because the judge thinks so) based on either testimony presented during a hearing or his observations of your schedules combined with testimony. Again, very serious consequences for the debtor.

There are other reasons why a discharge might be denied but you can see how important it is to fill out your paperwork correctly, honestly and accurately and to be brutally honest with the trustee, the court, and the schedules you file with the court. The consequences of not seeking legal advice on these issues can be long-lasting and financially devastating.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.

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