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Why would a bankruptcy discharge be denied?
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Why would a bankruptcy discharge be denied?

On Behalf of | Sep 30, 2022 | Bankruptcy |

Those filing for bankruptcy typically seek a discharge from the court. With a discharge order, the debtor no longer has obligations for certain debts. However, there might be instances where the court denies the discharge.

Refusals to discharge a bankruptcy

There must be a compelling legal reason when the court refuses to discharge a bankruptcy. Often, improprieties committed by the debtor may lead to the court denying the discharge. Hiding assets or lying to the court reflects two serious reasons. Anyone attempting these actions might face serious legal troubles.

Others might face problems when they don’t communicate with the bankruptcy trustee. Someone who misses mandatory Chapter 13 payments without explanation could experience issues over the discharge.

Statutory reasons may contribute to the denial. For example, specific years must pass between particular bankruptcy filings. If the timeframe does not expire, the debtor could be ineligible to file again.

Any attempts to deny a discharge involve the debtor receiving a 30-day notice. Some may answer the notice in ways that work in their favor. For example, the debtor might provide proof that counters any claims they hid assets. Other situations could involve the debtor filing a motion to dismiss on legal grounds.

Issues with bankruptcy and discharges

The 30-day notice usually precedes a lawsuit. The party filing the lawsuit commonly intends to prove the debtor did something that makes them ineligible for bankruptcy, such as making false statements.

Those who succeed in countering legal claims might proceed with their original plans. Some may choose Chapter 7 bankruptcy due to their challenging financial position, while others may enter Chapter 13.

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