Can Your Discharge of Debt Be Revoked in Bankruptcy?

Can your discharge of debt be revoked in bankruptcy?

Many of our clients ask, “Can your discharge of Debt Be Revoked in Bankruptcy?”  If you do not comply with the rules of the bankruptcy court, your discharge could be revoked in bankruptcy.  This means that your bankruptcy will be reversed.  It would be as if you never filed bankruptcy at all.  Let’s discuss when your discharge could be revoked and what you need to do to make that not happen in your case.

Why Would My Bankruptcy Discharge Be Revoked?

The discharge in a Chapter 7 bankruptcy case is usually revoked approximately one year after filing if the debtor does not follow the requirements of the trustee or bankruptcy court.   This usually involves not turning over money or assets owed to the bankruptcy estate.  Refusing to turn over tax refund amounts is the most common cause for a discharge being revoked in Indiana bankruptcy.   In more rare situations, the debtor simply refuses to provide documentation requested by the trustee.  

What Do You Need to do to Make Sure That Your Discharge Cannot be Revoked on your Case?

To prevent the revoking of your discharge, it is extremely important to follow all of the guidance and requests of both your bankruptcy attorney in the trustee.   You can only have your discharge in bankruptcy if you were not obeying the “bankruptcy rules.”

Avoid the Common Mistake: Thinking Your Bankruptcy is Over Because You Have Already Received Your Discharge.

Just because you have already received your bankruptcy discharged in the mail does not mean that your bankruptcy is “over.”   You AUTOMATICALLY receive your discharge whether you are obeying the bankruptcy rules for your case or not.  

For example, a common mistake is to receive the discharge and then later receive your tax refund and spend it.  You did not follow the instructions of the trustee or the general instructions of your attorney.  You were supposed to provide the tax return and refund information to the trustee.  You now would owe money that you can no longer pay because it is not in your possession. In cases like this, the bankruptcy discharge can be revoked if repayment of the tax refund cannot be made.

Conclusion: Obey the Rules of the Bankruptcy Trustee and Court

If you are carefully obeying the rules of the bankruptcy trustee and court, it is very unlikely that you will have your discharge revoked in your bankruptcy.   Be sure to read the entirety of the literature your bankruptcy attorney gives you and ask questions about any process of the bankruptcy that you do not understand.

~Indianapolis Bankruptcy Attorney John Bymaster