A Salt Lake City Bankruptcy Attorney Explains Discharge Objection

Bankruptcy Attorney Salt Lake City

At the end of your bankruptcy case, you’ll be released from the obligation of paying past-due medical bills, credit card balances and several other types of debts. Right?

For most Utah bankruptcy filers, that’s exactly what happens – but a favorable outcome isn’t guaranteed. An interested party could file an objection to discharge, disputing your right to wipe out a particular debt or arguing that your bankruptcy case should be dismissed. Read on to see what might cause this to occur and to learn about the legal consequences of a successful objection.

Creditor Objection to Discharge

Creditors bring the vast majority of objections to discharge. Their reasons for doing so generally revolve around fraud or intentional wrongdoing on the part of the debtor shortly before the bankruptcy case.

Common creditor objections include:

  • False statements on a credit card application
  • Recent charges for luxury items or services
  • A large cash advance shortly before the bankruptcy

Bankruptcy Trustee Objection to Discharge

A bankruptcy trustee may object to the discharge of a particular debt or the discharge of all debts. This type of objection typically occurs when the trustee suspects that a debtor has committed fraud during the course of the case, rather than before filing the petition.

Examples of what might prompt a trustee objection include:

  • False information on the bankruptcy forms
  • A transfer of property prior to filing for bankruptcy
  • Lies told during the meeting of creditors or other court hearings
  • Failing to obey an order of the Utah bankruptcy court

Objections to Discharge Following an Audit

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 mandates that a certain percentage of bankruptcy cases be audited by an independent accounting firm. The likelihood of an audit is slim, and as of right now, random audits have been indefinitely suspended. However, if auditing resumes and the accuracy of the information provided by a bankruptcy filer is in question, it can result in an objection to discharge.

What Happens When an Objection to Discharge Is Filed?

After a complaint is filed with the Utah bankruptcy court, the case goes through the discovery process. Both parties will then have the opportunity to present evidence and argue their case before a judge.

If the judge decides to grant an objection filed by a creditor, the particular debt will not be discharged at the end of the bankruptcy case – but the remaining qualifying debts can still be wiped away. In the event of an objection due to fraud or failure to comply with all applicable bankruptcy laws, the judge may dismiss the case. And, if a debtor’s conduct is determined to be egregious, they could even face criminal charges.

Can a Bankruptcy Discharge Be Revoked?

Many Utah bankruptcy filers assume that once they get their discharge order, they can put aside their worries about being in debt – and that’s usually true. But when a creditor or the bankruptcy trustee files a complaint, the court can revoke the discharge.

This situation may arise if a filer:

  • Uses fraudulent means to obtain a discharge
  • Refuses to obey any court orders
  • Fails to surrender an asset to the trustee
  • Cannot produce the necessary documents in an audit

In a Chapter 7 case, the complaint must be filed within a year of the discharge or the date the case is closed. For Chapter 13 bankruptcy cases, the interested party must file their complaint no more than a year after the discharge has been granted.

When the Utah court receives a request to revoke a bankruptcy discharge, both sides are given an opportunity to present evidence and arguments. After the hearing, a decision is made – and if the discharge order is revoked, the filer is once again responsible for their debts. If fraud is involved, the filer may also face criminal prosecution.

Is a Discharge Order the End of Your Bankruptcy Case?

Receiving a discharge order from the Utah bankruptcy court is a major milestone, but the document doesn’t signify the end of a case. Until the court enters an order to close a bankruptcy, the case remains open.

Chapter 7 Bankruptcy

Many Chapter 7 bankruptcies are no-asset cases, which leaves the trustee with little to do after discharge. After they file a report, the court enters an order to close the case. If the trustee has assets to administer, however, a case can drag on for several months or longer – the court will only close the bankruptcy when the trustee has distributed all of the funds acquired from the liquidation of the filer’s assets.

Chapter 13 Bankruptcy

Chapter 13 filers make monthly payments to the bankruptcy trustee over the course of a three- to five-year period. The trustee uses the funds to pay creditors – and once the repayment plan is complete, they file a final report with the Utah bankruptcy court. At that point, the court issues an order to discharge any remaining dischargeable debts, and the case is closed.

Schedule a Bankruptcy Attorney Consultation Today

An objection to discharge in bankruptcy is a serious matter, and you don’t want to suffer the legal consequences of a successful complaint. If you’re in this situation and want expert assistance – or if you want advice on how to avoid this outcome – the Law Office of Davis & Jones, P.C., is here to help. For a free consultation with an experienced Utah bankruptcy attorney, contact our Salt Lake City office today.