In a recent Chapter 7 bankruptcy in Texas, a creditor attempted to have a debtor’s bankruptcy discharge denied because they allegedly made a false oath.
The bankruptcy code describes the parameters for which a debtor’s discharge can be denied as the following:
Denial of Discharge Under §727(a)(4)(A): False Oaths.
Section 727(a)(4)(A) provides that:
(a) The court shall grant the debtor a discharge, unless –
(4) the debtor knowingly and fraudulently, in or in connection with the case-
(A) made a false oath or account . . . .
If a debtor makes a false statement, oath or account on their bankruptcy schedules and statement of financial affairs the debtors could face a denial of their bankruptcy discharge.
False oaths sufficient to justify denial of discharge include (1) a false statement or omission in the debtor’s schedules or statement of financial affairs, or (2) a false statement by the debtor at an examination during the course of the bankruptcy proceedings.” Buckeye Retirement Co., LLC v. Bullough (In re Bullough).
In this bankruptcy case the creditor accused the debtor of failing to list the sale of business equipment, omitting the fact that she owned stock and other small omissions from her bankruptcy petition. However, because the creditor failed to prove that the debtor had made an actually “false oath,” that the bankruptcy court could not deny the bankruptcy discharge. However, not every misstatement or omission in the bankruptcy schedules constitutes a false oath. Even if a debtor makes several mistakes on their bankruptcy petition those errors are not sufficient enough to deny a discharge without evidence that the omissions were intentional and were intended to defraud the creditor.