Denial of debt discharge in chapter 7 bankruptcy

A much wanted discharge of debt that a debtor gets mostly after filing for chapter

7 bankruptcy acts as a great source of relaxation for an indebted borrower. It releases the debtor form personal liabilities for most of the debts and it also prevents the creditors from carrying on any further collection processes against the debtor. A debtor basically opts for bankruptcy chapter 7 as the last resort when he finds himself completely unable to pay even the reduced debt amount after debt settlement. The process of filing for bankruptcy chapter 7 is full of exceptions and complex formalities, which require an astute and competent Debt lawyers with his suggestions and advices. In almost 99 percent of chapter 7 bankruptcy cases, the debt gets discharged by the court of law within 60 to 90 days from the first meeting date with the creditors. At rare cases however, the court can deny discharge to debt and thus can nullify the whole petition made by the debtor. Though the grounds for denial of debt discharge are narrow, the other probable reasons that drive the court to deny discharge to debt are as follows:

1. In cases when a debtor fails to produce adequate proofs of income or financial records or he fails to pass the means and median test.

2. In cases when a debtor fails to satisfactorily explain any loss of assets.

3. In cases if the debtor has committed any bankruptcy crime such as perjury.

4. In cases of fraudulent transfer, concealment or destruction of the property of estates by the debtor or his side.

5. In cases of failure to complete an approved instructional course concerning financial management.

Apart from these, there are certain debts that do not fall under the jurisdiction of discharge by the court. However, most of the debtor's debts can be discharged by the chapter 7 bankruptcy petition after fulfilling the requirements and eligibility; some debts do not fall under these criteria which are:

Child support and alimony debt

Taxes of certain kinds

Education loans

Criminal restitution debts

Debts due to willful and malicious injury caused by the debtor to another person or property, or

Debts due to injury or harm caused with a motor vehicle by the debtor to another person or property under the effect of liquor or similar intoxication.

Under these above mentioned circumstances, the debtor will be liable to continue with the debt payment. However, the court is likely to discharge debt for these conditions until the creditors intrude with the law proceedings and prevails therein by producing proper witnesses and proofs against the debtor's illegitimacy or adulteration of case.

Moreover, the court can revoke a debt discharge made under chapter 7 bankruptcy, if a trustee, creditor or the U.S. trustee request it to do so, on the grounds of false pretences and fraudulence by the debtor, marital misstatement or failure of providing documents and other information regarding audit of the debtor's case.

Denial of debt discharge in chapter 7 bankruptcy

By: Stella

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