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Can a bankruptcy discharge be revoked?

On Behalf of | May 12, 2017 | Chapter 7 Bankruptcy

There is perhaps no better feeling for those who have made the decision to file for Chapter 7 or Chapter 13 bankruptcy than the day their discharge becomes official. Indeed, this means they are no longer under any legal obligation to pay the specified debts while their creditors are forbidden from taking any collection actions.

As liberating as the notion of securing a fresh financial start can be, it’s nevertheless important for individuals to understand that there are circumstances in which the discharge can actually be revoked. 

Under what circumstances can a request be made to revoke a bankruptcy discharge?

A revocation may be sought in a Chapter 7 case based on allegations that an individual:

  • Secured the discharge through fraud
  • Failed to divulge the acquisition of property or the entitlement to property that would have otherwise been considered part of the bankruptcy estate
  • Failed to clarify any misstatements uncovered in a case audit
  • Failed to provide information or documents requested in a case audit
  • Failed to comply with court orders

As for Chapter 13, a revocation may be sought based on allegations that the discharge was secured via fraud.

Who can request revocation of a bankruptcy discharge?

A creditor, trustee or U.S. trustee may all request that the bankruptcy court revoke an individual’s discharge.

Is there a deadline for requesting a revocation?

In both Chapter 7 and Chapter 13 cases, a creditor, trustee or U.S. trustee must generally file the request for a revocation within one year of the discharge.

What happens if a revocation of a bankruptcy discharge is granted?

As you probably guessed, the revocation of a bankruptcy discharge will mean that an individual is once again liable for their debts.

If fraud or abuse of the bankruptcy process is demonstrated, he or she may also be required to forfeit assets or pay fines. 

The purpose in sharing the foregoing information was not to cause alarm, but rather to impress upon people the importance of always being upfront throughout the entire bankruptcy process. Indeed, if you are honest, you have nothing to worry about.

If you have questions about this issue, or would like learn more about the fresh start provided by Chapter 7 or Chapter 13 bankruptcy, consider speaking with a skilled legal professional.

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