A discharge of debt is the primary reason people file for bankruptcy. But when filing for bankruptcy, there are many pieces to a complex legal puzzle. You must be honest about every financial asset and action leading up to your filing. Any mistake in the process can result in denial of your bankruptcy discharge.
Whether you file for Chapter 7 or Chapter 13 bankruptcy, being approved for a discharge requires giving up nonessential assets. These are distributed to your creditors, so your debts are considered paid. But even when you agree to this arrangement, a denial can still happen.
The Most Common Reasons a Bankruptcy Discharge Is Denied
There are many ways a denial can occur, leading you to seek a bankruptcy discharge settlement in court. A bankruptcy trustee or creditor may file an adversary complaint, or lawsuit, if any of the following situations apply:
You are defrauding a creditor if you hide property to avoid relinquishing it as part of a bankruptcy discharge. Fraudulent actions include transferring, destroying, or mutilating property within a year prior to the date of your filing. While the rule prohibits giving away assets just before bankruptcy, denial of discharge by a court is specific to each individual case. This is one reason to be completely honest when you consult a bankruptcy lawyer in Los Angeles.
All information about your financial situation must be intact. If you conceal, falsify, or destroy any records, then your discharge will be denied. It’s therefore imperative you disclose all property to your trustee and can back up all information you provide.
Examples of improper behavior include hiding bank accounts or stock portfolios. Any statement about your debts, assets, or earnings, in writing or verbal, must be true; any false statements will likely result in a denial of your Chapter 13 or Chapter 7 bankruptcy discharge, and possibly a penalty of perjury, which can result in fines and even imprisonment.
If you have lost property or money, be prepared to have an explanation ready for the court. Honesty is your best defense. Explaining your losses is better than being unable to provide details of lost assets. In a Chapter 7 filing, you’ll most likely keep your property anyway. Rather than being embarrassed about your losses, provide every detail to avoid being considered dishonest.
Failing to Complete a Financial Management Course
The U.S. Bankruptcy Code requires you to take a credit counseling course and financial management course. These courses cost money; how much depends on where you file for bankruptcy but is less than getting denied or refiling your claim. While these courses are part of an obligation to receive your bankruptcy discharge, they can help avoid going into debt and filing for bankruptcy again.
Court Order Violation
Violating a court order is enough to be denied a discharge. Any court will look upon you unfavorably if you ignore a simple, lawful order. Any request by the court should be taken seriously and compliance should be seen as part of your path to improving your financial future.
Chapter 7 Bankruptcy Discharge in the Past 8 Years
There’s no minimum time period you must wait to file for bankruptcy again. The law only applies time limits to discharges. If you’ve filed for Chapter 7 bankruptcy within the 8 years before filing again, your request for a discharge will be denied. There are rare situations in which filing for bankruptcy without a discharge makes sense, but doing so will most likely be a waste of time and money.
Chapter 13 Bankruptcy Discharge in the Past 6 Years
Although you may receive a second Chapter 13 discharge two years after filing for your first, you must wait six years to be approved for a Chapter 7 discharge. That is unless you paid unsecured creditors in full (or at least 70% of due amounts) as part of your Chapter 13 plan and your proposal represents sound efforts and good faith. If you were granted a discharge under Chapter 7, you won’t receive a Chapter 13 discharge unless you wait at least four years.
Contact OakTree Law
The OakTree Law group, led by bankruptcy attorney Julie J. Villalobos, consists of 15 well-established legal professionals. We provide a wide range of law services including help with Chapter 7 or Chapter 13 bankruptcy in Orange County, Los Angeles County, Riverside County, San Bernardino County, and San Diego County. Assisting with every step of the process, our team will ensure you’re seen as honest and compliant by the court. Call 888-348-2609 or request a free evaluation to start working with an affordable bankruptcy attorney who will look out for your best interests.