In every bankruptcy filing, certain debts will be very difficult or impossible to discharge, such as child support payments and student loans; however, in certain cases, an entire discharge may be denied. This is a very serious situation. When this happens, you remain liable for all of your debts without any recourse for debt relief.
Because this is a serious consequence for any person in dire enough financial straits to apply for bankruptcy in the first place, a denial of a discharge only happens for very serious reasons. The following six situations can lead to a denial of your discharge entirely.
- Any Attempt at Fraud – According to the bankruptcy code, any person who intends to hinder, delay, or defraud a creditor or an officer of the estate by transferring, removing, or concealing property within a year of filing for bankruptcy (or after filing) commits bankruptcy fraud. Essentially, this means that you can’t give away (or sell at a very low price) valuable assets right before filing for bankruptcy in an attempt to save that asset from being sold off by the trustee. Even if your intent was not such, this is based on the facts of the case, so you need to disclose every transfer of property in the year proceeding the bankruptcy proceedings. Otherwise, you risk a denial and potential criminal proceedings. Remember, this includes cases where you cannot satisfactorily explain a loss of assets or deficiency in assets (such as a missing piece of expensive jewelry you are known to have).
- Missing or Misleading Information – If you conceal, destroy, or falsify books and records related to your financial condition, you have committed another type of fraud. A common example of this might be if you own and operate a business, but fail to produce or alter its books to make it seem less profitable. When your financial records intentionally mislead the trustee, you can be denied a discharge.
- False Statements – When you go through a bankruptcy, you are make statements about your financial situation under oath. Any lies, false statements, or omissions are considered perjury. If everything in your filing is not true and accurate, a creditor or your trustee can challenge the discharge.
- Abuse of Bankruptcy Proceedings – If you have filed for a bankruptcy recently or you have a pattern of using bankruptcies to get out of debt, your discharge will be denied.
- Refusal to Comply with Any Court Order – If you refuse to follow any lawful order by the court, your discharge will be denied.
- Failure to Complete a Financial Management Course – Since some debtors in bankruptcy have managed their money poorly, it is now a requirement for all people filing for bankruptcy to complete a personal financial management course. Here in Ohio, there are many approved courses, most of which can now be taken online. You must also have received credit counseling before filing for your bankruptcy, which your Ohio bankruptcy attorney should have done before ever filing the paperwork in court.
If any of these situations occur, you may lose any chance at acquiring a bankruptcy. In addition, a discharge denial because of fraud allows the trustee to still administer non-exempt assets of your estate. Essentially, you lose your property to the trustee that you may have lost in bankruptcy, but without the associated debt relief. As you can imagine, this has serious financial consequences.
Luckily, you can avoid these consequences by following the rules of the court and simply being open and honest about your financial situation. While some honest mistakes could seem like fraud in a bankruptcy filing, you can get professional help during the filing to ensure that you present your best face to the court. You will be best equipped to do so with the aid of an Ohio bankruptcy attorney. If you are considering filing for bankruptcy, make sure you prime yourself for success with the help of an Ohio bankruptcy lawyer. Call Cleveland Bankruptcy Attorneys today at (216) 586-6600 to find out how we can make the elimination of your debt easier.