Creditors who get their debts discharged by the courts can breathe easily that the worst is over. Their path to financial recovery seems sure.
But could that relief be short-lived? Can bankruptcy courts ever revoke the discharge of debts that they granted?
Courts can and do revoke debt discharges
While it happens rarely, bankruptcy courts can indeed revoke debtors’ discharges. Scenarios where that might occur are if a creditor or the trustee alleges that the debtor:
- Violated portions of section 727(a)(6) of the U.S. Bankruptcy Code
- Engaged in fraudulent acts
- Did not truthfully disclose all assets
- Was uncooperative during audits
- Could not explain away misrepresentations found in audits
Basically, the courts look at any falsifications about your debts and assets that could nullify a discharge.
How long can the courts revoke a discharge?
Rest assured that this sword of Damocles will not hang over your bankruptcy discharge forever. The trustee or any creditors have a year from the date the court issued the discharge of debts to ask that the court revoke the discharge.
Facing bankruptcy?
People facing debts they can’t pay are under a great deal of pressure that can cause them distress in all aspects of their lives. But there is help available to you.
If you are facing consumer bankruptcy and filing under Chapters 7 or 13, or if you are a business owner who must file for Chapter 11, you deserve straight answers from bankruptcy professionals. Learning more now about your rights and responsibilities under the Bankruptcy Code can help you face the future with clarity and purpose.