Have You Had a Bankruptcy Discharge Revoked?
So you've got your bankruptcy discharge and you're on your way to creating a successful life after bankruptcy; but wait ...you receive notification that your bankruptcy discharge may be revoked. What went wrong? Revoking a bankruptcy discharge is not as common as you would think; but they happen. In most cases some type of fraud on the part of the debtor has occurred if the bankruptcy court has gone through the trouble to reopening a long closed bankruptcy case and revoking the discharge.
Reasons Why a Bankruptcy Discharge is Revoked
Below are the most common reasons why a bankruptcy discharge could be revoked:
- The bankruptcy debtor has hid assets which are not discovered until after the bankruptcy discharge has been granted. For example, if a debtor "sold" a home to a friend or family member before bankruptcy and then had that property immediately sold back to them right after the bankruptcy, that might raise a red flag and prompt the bankruptcy court to reopen the case and revoke the bankruptcy discharge if they found wrongdoing.
- The bankruptcy court found a material misstatement after the bankruptcy discharge was granted and the debtor is unwilling or unable to offer a satisfactory explanation for why this incorrect information was given to the bankruptcy court. For example, if the debtor said that they earned only $50,000 a year when it fact they earned $60,000 year that could be a reason for revoking a bankruptcy discharge if the debtor is unable to explain why they misstated the facts.
- The bankruptcy court discovers that the debtor used fraud, deception or manipulation to win the bankruptcy discharge. For example, if the debtor had filed a previous Chapter 7 bankruptcy only a few years before filing second one and failed to disclose this fact, their bankruptcy discharge could be revoked.