Factors That Could Deny Your Discharge

For many debtors, a successful bankruptcy filing results in the removal of crushing debt and a fresh start for their personal and financial lives. However, there is no guarantee that debtors who seek bankruptcy protection will receive their discharge. In fact, there are several reasons courts may deny your bankruptcy discharge.

Bankruptcy laws have strict procedural rules for debtors and their attorneys to follow. Failure to follow any one of those rules can cause a denial or dismissal of bankruptcy petitions. A denial means that you are found ineligible for bankruptcy discharge due to any of the following unlawful actions:

• Destroying or hiding financial records
• Failing to provide documents requested by the court or trustee
• Making false statements (in writing or testimony) regarding assets, debts and financial transactions
• Hiding assets
• Fraudulently transferring property to friends or relatives

The Court and the Trustee expect complete and accurate disclosures of debts and assets throughout the bankruptcy process. Failure to provide accurate information to the Court may cause denial of the debtor's discharge and, in some limited cases, criminal prosecution.

A creditor or Trustee who believes the debtor is being untruthful or withholding relevant information can also file a complaint against the debtor, which results in litigation and the Court will ultimately hold a trial to resolve the dispute.

Dismissal vs. Denial

A denial can also occur if a debtor has been granted a discharge in the past. For instance, if a debtor files a Chapter 7 bankruptcy, and they previously filed under Chapter 7 within the previous eight (8) years, the new filing may be denied.

Unlike a denial, a dismissal of a bankruptcy petition is usually a temporary rejection. For example, the debtor must attend credit counseling sessions before you file a bankruptcy petition. Failure to attend the counseling sessions can lead to the dismissal of the debtor's petition at a very early stage. Since these are procedural dismissals, the Court may provide you the chance to cure the rule violations and continue with the proceeding.