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What could endanger a Chapter 7 debt discharge?

Generally, when a person files for a Chapter 7 bankruptcy and meets the qualification requirements for this type of bankruptcy, one of the things they will receive in the bankruptcy is a discharge of debt. Now, this discharge may not apply to all of a person’s debts, as there are certain debts which generally are unable to be discharged in a bankruptcy. Also, there are certain things that could jeopardize a person’s ability to receive a discharge altogether. In today’s post, we will cover some of the things that could lead to a bankruptcy court deciding to not grant a person a debt discharge in a Chapter 7 case.

One is if the person is found to have committed wrongful conduct, such as lying to the court during bankruptcy proceedings, fraudulently destroying or concealing assets  or committing a fraudulent asset transfer. Thus, during bankruptcy proceedings and when preparing for such proceedings, it can be incredibly important for a person to not engage in conduct that could be considered deceptive or fraudulent.  

Another thing that can lead to a discharge denial is if the person doesn’t comply with an order the bankruptcy court issued. Thus, taking great care to follow all the terms of the court orders issued in their case can be vital for Chapter 7 filers. 

Another is if the person makes mistakes during bankruptcy proceedings, such as failing to give adequate explanations for asset losses or failing to produce adequate financial records. Thus, getting things right during bankruptcy proceedings can be of very high importance.

As these points illustrate, missteps during Chapter 7 bankruptcy proceedings can be costly, sometimes leading to a person missing out on getting a debt discharge. This is why having proper guidance can be such a big deal in a Chapter 7 bankruptcy. Bankruptcy lawyers can inform individuals entering Chapter 7 bankruptcy of what potential pitfalls are out there for bankruptcy filers and can give them advice for avoiding such pitfalls. 

Source: FindLaw, “Chapter 7: Debt Discharge,” Accessed March 2, 2015

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