Bankruptcy law presumes that a debtor will get a discharge in a properly filed case. The few reasons a discharge may be denied are spelled out in the Bankruptcy Code. The overwhelming number of Chapter 7 cases result in a discharge.
There are no subjective tests for getting a discharge; you don’t have to prove that you are worthy of debt relief. No one sits in judgment about how you got into debt, whether you were foolish or just unfortunate, or how you spent your money before filing bankruptcy. It is presumed that if you complete the required steps, you’ll get a discharge.
Any party who seeks to oppose the discharge bears the burden of raising the issue in writing and successfully arguing the case to the judge. If no one objects, the judge never gets involved.
Here are some of the ways that a bankruptcy case can go off the rails.
Did you get an earlier discharge?
The Bankruptcy Code prescribes how often you can be absolved of your debts. The rule looks at what chapter of bankruptcy your previous discharge was under and how long ago that earlier case was filed. How discharge eligibility is calculated.
A prior discharge doesn’t prevent you from filing; it just says that at the end of the current case, you don’t get a discharge. This might apply in a Chapter 20, or in situations like this one of a homeowner unavailable to sell her house.
Did you follow all of the procedural steps?
The bankruptcy process is full of procedural steps. None of them are difficult, simply required. The steps include
- Pre filing credit counseling
- Filing official schedules disclosing assets, debts, income, and financial history
- Appearing at the first meeting of creditors with proof of identity
- Cooperating with any trustee requests
- Taking a debtor education class
Skip any of these steps and the trustee can ask the judge to dismiss your case without a discharge.
Did you hide assets or treat creditors fraudulently?
In a nutshell, if you treat your creditors as a whole dishonestly before filing, your discharge can be denied. Those situations involve hiding assets, failing to account for where your money went, lying on your bankruptcy schedules, and the like. You can also lose your discharge if you deliberately frustrate the trustee’s efforts to do his job.
Actions to deny the debtor a discharge for bad behavior are rare. The burden of proof to deny a discharge falls to the party objecting to the discharge; it is presumed that you get a discharge if you are eligible.
Denial of discharge affects every one of your creditors: all of your debts survive the bankruptcy. That’s different from a claim that a particular debt should be held to be non-dischargeable because you committed some act of dishonesty affecting just that creditor.
Fresh start ahead
Almost assuredly, you will get a discharge in your bankruptcy case if you are eligible and jump through all of the hoops.
