You can lose your bankruptcy discharge even after the case is over.
Once you go through bankruptcy and get your discharge, you’re looking at a future free of debt.
If you weren’t totally honest before and during your bankruptcy case, however, you may not be in the clear.
That’s right – your bankruptcy discharge can be revoked, or taken away, if someone finds out about a problem.
Before you panic, here’s the full story.
Rule Of Bankruptcy Revocation
The Bankruptcy Code lets an “interested party” come to the bankruptcy court and ask the judge to revoke (take back) your bankruptcy discharge.
In order to revoke the discharge, it must be proven that you got your discharge by fraud that fraud was not known to the requesting party until after the discharge was granted.
It’s not enough to prove that fraud made one single debt nondischargable – it must have been a big enough fraud to impact the entire case.
Who Is An Interested Party?
Remember that only an interested party is allowed to bring a complaint for revocation of your bankruptcy discharge.
Unfortunately, the U.S. Bankruptcy Code doesn’t define the term “interested party.” Therefore, we’re led to go with common sense definitions.
Some examples of interested parties are as follows:
- you, the person filing for bankruptcy;
- your creditors;
- the trustee assigned to your case;
- the bankruptcy court;
- the Executive Office of the U.S. Trustee; and
- any partners, former partners, spouses, and former spouses.
That doesn’t mean other people are automatically considered to be outside of the definition of interested parties – it just means that we’d need to look at things on a case-by-case basis.
Limitation Of Time To Seek Revocation Of Discharge
The complaint seeking revocation of discharge must be filed within one year after the discharge was granted.
The court may allow additional time to file the case depending upon the reason for the revocation.
The same rule applies in a Chapter 7 as well as a Chapter 13 bankruptcy case.
Consequences Of Bankruptcy Discharge Revocation
If the discharge is revoked, you’re back in bankruptcy. You still officially owe the debts you wiped out, and the bankruptcy court still has power and authority over you.
If you did bad things, you’re likely going to look at criminal prosecution. That means you’re going to need a criminal lawyer and could be facing fines and jail time.
How Often Revocation Happens
If you’ve done bad things during your bankruptcy case, you’re breaking the law. You have the choice of either coming clean or risking the loss of your bankruptcy discharge. Even worse, you could be facing federal prosecution and jail time for bankruptcy fraud.
Definitely not the outcome your looking for, I’m guessing.
On the other hand, if you’ve been honest and accurate in your dealings with the bankruptcy court system then you shouldn’t need to worry about anyone looking to revoke your bankruptcy discharge.
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