Discharge forms an important aspect of bankruptcy. A bankruptcy without discharge practically makes so sense as it is not relieving the debtor from any of the debts and the same must be settled maybe with some alterations in the future. The benefit of starting with a clean slate is lost if the bankruptcy does not provide for any discharge. Ultimately a bankruptcy without discharge ends up just an attempt to buy time and stabilize the financial condition, which can be literally of no benefit. To know more about bankruptcy advantages and drawbacks, log on to https://www.recoverylawgroup.com/bankruptcy/.
Reasons for not receiving a bankruptcy discharge
As per the above discussion, a bankruptcy without discharge is a futile pursuit and can lead to no benefit at all but a lot of downsides. Credit score, ability to get credit again, ability to safeguard assets, etc., can be a few downsides of bankruptcy without discharge. However, what can be the reasons for denying a discharge. These can be listed as follows-
1. If the requisites of bankruptcy proceedings are not completed –
The bankruptcy process has many procedural requirements. Just like any other legal benefit or scheme, the same should be accorded properly to avail the bankruptcy discharge. For instance, completion of financial management course is mandatory before availing of the discharge. Also, credit counseling is mandatory almost immediately after filing for bankruptcy. If these are not completed in the stipulated timeline, the discharge even though approved might be declined for these reasons.
2. Being up to date with non-dischargeable payments –
Some payments must be current no matter what and the bankruptcy court is strict about them. These may include child support, alimony, or any other domestic obligation payments as directed by the court in previous orders. If a bankruptcy filer is not current with the mandatory obligations, the discharge can be declined.
3. Filing Income tax returns
This applies to both individuals as well as businesses. Filing income tax returns accurately and on a consistent basis is essential as the bankruptcy court uses the income tax return to verify some of the details indicated in the bankruptcy statements. If you aren’t current with your income tax your bankruptcy case might be outrightly dismissed.
4. Attempt to manipulate bankruptcy court
Any attempt to misdirect the bankruptcy court with misleading or incorrect information can have serious repercussions. The discharge in these situations can be revoked even after the court has issued a discharge order as the facts pertaining to the judgment were not true. These can include-
- Hiding of assets, attempting to transfer or sell assets before the bankruptcy filing, attempting to buy luxurious stuff which can’t be liquidated or spending loan money on holidays or not recoupable ways purposefully to avoid debt settlement
- Attempt to destroy any records or financial information
- Not facilitating documents or satisfactory detail as insisted by the bankruptcy trustee
- Providing false vocal or written statements that could lead to perjury or penalties in the bankruptcy schedules and statements or even a false testimony
- Not disclosing details of previous bankruptcy cases
- Any violation of the bankruptcy court order like not turning over non-exempt assets, not cooperating with the bankruptcy trustee to liquidate the asset at the right price, or non-submission of any document requested by the bankruptcy court
- You were entitled to receive an asset or any income like inheritance, income tax refund, or such gains within 3-6 months of availing the discharge but you did not inform the trustee. Such information can also lead to revocation of the approved discharge.
5. Previous bankruptcy history
Bankruptcy history can have a significant impact on bankruptcy discharge. The first and foremost responsibility of the filer is to inform through bankruptcy schedules and statements the bankruptcy court about historic bankruptcy. If the filer fails to do so, he or she might not be entitled to any discharge. Also, depending on the type of chapter used to file bankruptcy, there could be a cool-off period of 6 years (chapter 13) and 8 years (chapter 7) to avail discharge again. There is no limit to filing for bankruptcy however the discharge can be availed after the cool-off period only.
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