The Chapter 7 bankruptcy of a debtor was dismissed after he who admitted wanting to use the bankruptcy as leverage against creditors and failed to disclose material facts in his petition.
The Bankruptcy Code Section 727(a) provides that:
(a) The court shall grant the debtor a discharge, unless-
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed-
(A) property of the debtor, within one year before the date of the filing of the petition; or
(B) property of the estate, after the date of the filing of the petition;
(4) the debtor knowingly and fraudulently, in or in connection with the case-
(A) made a false oath or account;
(5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor’s liabilities[.]
In this Chapter 7 bankruptcy, the debtor made six major omissions which included failing to disclose on his petition the sale of assets. While the debtor argued that such omissions were honest mistakes the bankruptcy court found that they were in fact purposeful attempts on the part of the debtor to deceive the court and creditors. The bankruptcy court dismissed the case.
It’s important to note that this case involved a debtor who admittedly used the bankruptcy process to “buy time” in his negotiations with creditors. Debtors are only allowed to file bankruptcy if they have a genuine need for debt relief. Needing more time to negotiate with creditors is not the equivalent of needing debt relief.