02 Nov What if an Audit of My Chapter 7 Case Finds a Material Misstatement?
If you filed a Chapter 7 bankruptcy case and your case was audited, you face a variety of sanctions if the audit firm finds a material misstatement in a Chapter 7 case. The enforcement options by the United States Trustee’s Office include the following:
1) Objection to discharge pursuant to section 727(a).
2) Complaint to revoke discharge pursuant to section 727(d).
3) Motion to dismiss case pursuant to section 707(a) or (b)
4) Turnover action for return of estate property
5) Amendment to schedules, etc.
6) Actions related to attorney conduct.
BAPCPA added sections to the law (Section 727(d)(4)(A)) allowing the revocation of a Chapter 7 debtor’s discharge if they do not satisfactorily explain a material misstatement in an audit. It also added a section (Section 727(d)(4)(B)) allowing a revocation of discharge if the debtor does not satisfactorily explain the failure to make available for inspection all necessary documents or property belonging to the debtor required for the audit.
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