If a Bankruptcy Discharge is Revoked

A bankruptcy discharge of debt can be revoked if a trustee, creditor, or U.S. trustee discovers that a debtor acted fraudulently or committed acts of impropriety under the Bankruptcy Code. A discharge can also be revoked if a debtor failed to disclose acquired property that would have been part of the bankruptcy estate. Additionally, revocation can be requested if a debtor fails to comply with audit requests. A request for revocation of a discharge must be filed within one year of the discharge.

Bankruptcy Code - Section 727(d) - Revocation

Section 727(d) of the Bankruptcy Code states that a trustee, creditor, or U.S. trustee can request that a discharge be revoked under the following circumstances:

(1) the discharged was obtained through the debtor's fraud and the requesting party did not know of the fraud until after the discharge was granted;

(2) the debtor acquired or became entitled to acquire and knowingly and fraudulently failed to report the acquisition of or entitlement to such property, or to deliver or surrender such property to the trustee;

(3) the debtor committed an act specified in subsection (a)(6) of this section; or

(4) the debtor failed to explain satisfactorily—

(A) a material misstatement in an audit

(B) a failure to make available for inspection all necessary accounts, papers, documents, financial records, files, and all other papers, things, or property belonging to the debtor that are requested for an audit

The request must be made one year from the date the discharge was granted.

Fraud

A plaintiff challenging a discharge on the basis of fraud must prove:

• that the fraud was on the debtor's part and
• that the debtor would not have received a discharge but for the fraudulent act.

The fraud must have been discovered after the discharge was granted, not before.

Unreported Estate Property

Concealed estate property is grounds for a revocation. All unexempt property must be disclosed or the debtor risks revocation. This property includes assets yet to be acquired including court awards and settlements. Courts have ruled for revocation in cases involving an unreported workers compensation award and a personal injury settlement.

Section 727(a)(6)

One of the revocation triggers occurs when a debtor violates provisions under Section 727(a)(6). These provisions state:

(a) The court shall grant the debtor a discharge, unless—

(6) the debtor has refused, in the case—

(A) to obey any lawful order of the court, other than an order to respond to a material question or to testify;

(B) on the ground of privilege against self-incrimination, to respond to a material question approved by the court or to testify, after the debtor has been granted immunity with respect to the matter concerning which such privilege was invoked; or

(C) on a ground other than the properly invoked privilege against self-incrimination, to respond to a material question approved by the court or to testify

Failure to Provide Requested Items for Audit

A revocation can be requested if a debtor does not co-operate with an audit. However, A trustee's request for information during an audit must be formal. If the debtor does not possess the items, the debtor is not required to provide them. Additionally, the court must find that the unprovided items were essential to the audit.

Find an Attorney

If your discharge is revoked, your debts stand as they were before the bankruptcy proceedings. Creditors can again pursue your assets. Talk with a bankruptcy attorney to discuss your rights in the case of possible revocation.