Can a Bankruptcy Discharge be Denied?

Bankruptcies are complicated legal actions. Consequently, people tend to have many questions. Can a bankruptcy help my financial situation? How much does a bankruptcy cost? How long will it stay on my credit report? If I file, will the court deny my request?

The ultimate goal for many is to have their debt discharged. In exchange for this relief, the law requires a person to give up “non-essential assets”, which could include things like a vacation home, luxury vehicles, or jewelry. The funds from the sale of these items are distributed to one’s creditors. However, consider the idea of selling off your favorite items and then losing your bankruptcy case. It is likely one of the most unpleasant financial situations a person can experience.

There are ways one can be denied a bankruptcy discharge. The courts require your full and complete cooperation. So, if you fail to be completely forthright on the bankruptcy paperwork, or completely honest with the court, you may have your bankruptcy discharge denied. The best course of action is to always follow the rules and requirements. Here are several ways you bankruptcy discharge could be denied:

1. Attempt to Defraud: Within the year prior to filing, anything perceived as trying to transfer, hide, or conceal assets is grounds for denial. The idea here is the court does not want you giving away your stuff before filing.

2. Hiding or Destroying Information: If you hide or destroy information, or even fail to keep financial records, this could be grounds for denying a bankruptcy discharge. You must have a way to back up the claims made in your bankruptcy paperwork.

3. Lying: Providing false or misleading statements can be grounds for denial. When filing for bankruptcy, you state under penalty of perjury everything included in the filing is true, complete, and accurate to the best of your knowledge.

4. Lost Assets: If you cannot satisfactorily explain lost assets to the court, you also risk a denial.

5. Refusing an Order of the Court: One would think this is a given. Nevertheless, if you refuse to comply with a lawful order of the court, you could find yourself in trouble. Ultimately, the key to a successful bankruptcy discharge is to be honest with your attorney and cooperative with the court. If you are considering bankruptcy, please contact us before making any decisions.

Harris Ammerman
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