Committed fraud in obtaining the discharge, and the fraud was not discovered until after grant of the discharge; Knowingly and fraudulently hid or did not disclose or deliver assets that were property of the bankruptcy estate; Did not comply with a court order; orLocation: South Fourth Street |, Minneapolis, , Minnesota. Bankruptcy trustees take fraud very seriously. If the bankruptcy trustee suspects fraud, the trustee can gather evidence in a Rule Examination, file a lawsuit called an adversary proceeding, and possibly refer the matter for criminal karacto.xyzg: discharge care. Dec 16, · Discovery of Fraud after Bankruptcy Discharge December 16th, by Questions If it discovered after a person was discharged from Bankruptcy that they lied with regards to their income, their sources of employment, and assets transferred from them in to their parent’s name.
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A Chapter 7 bankruptcy remains open until the trustee files a no-asset report with the court. Trustees do this when they've sold everything there is to sell and abandoned any remaining property.
Until you receive a copy of this report, the trustee can come back and take assets, but only if you owned them at the time you filed. Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years.
She specializes in family law and estate law and has mediated family custody issues. Reviewed by: Michelle Seidel, B. What Happens if the Trustee Abandoned an Asset? About the Author. Photo Credits. There are many different circumstances that can constitute the type of fraud that will support a petition for revocation of a discharge.
A petition to revoke a discharge is an adversary proceeding in which both parties will be permitted to produce testimony and documentary evidence at a hearing. Since the case will be decided based on the evidence presented at the hearing, it is always the best interest of both parties to be represented by legal counsel experienced in bankruptcy litigation.
If a discharge is revoked, debts are reinstated as if the bankruptcy case had never occurred. The situation is actually even worse than if the bankruptcy was never filed: The bankruptcy trustee still administers the debtor's assets. Those assets cannot be used by the debtor to pay for a defense or settle claims. The debtor loses non-exempt property, which is liquidated to pay creditors.
The debtor is still responsible for paying any unpaid debts. Creditors can pursue state law claims to collect those unpaid claims. For all these reasons, losing a discharge case — which means having a discharge revoked — is sometimes described as "bankruptcy hell.
Only an interested party can file a revocation petition with the bankruptcy court. That means the petition can be filed by the bankruptcy trustee, a creditor, or the United States Trustee. There are time limits within which a revocation petition must be filed.
For a Chapter 7 bankruptcy, the petition must be filed within a year after the discharge is granted or the case is closed, whichever is later. For a Chapter 13 bankruptcy, a revocation petition must be filed within a year after the discharge is granted. A case upheld on appeal by the United States Court of Appeals for the Eighth Circuit provides an excellent example of a case involving revocation of a bankruptcy discharge.
In reviewing the case, the Bankruptcy Appellate Panel for the Eighth Circuit reiterated the Bankruptcy Code provision relating to failure to turn over assets of the bankruptcy estate. That provision requires the failure to be done both knowingly and fraudulently.
First, the court reviewed the evidence in the case and determined that the failure was done knowingly based on the facts in the record. In addressing the question of whether the failure to deliver was also fraudulent, the court relied on standards from a prior case stating that fraudulent intent can be established in many different ways, including:. In any bankruptcy proceeding where dishonesty or fraud by the debtor occurs, even if it is not discovered until after the discharge is granted, the possibility of a revocation proceeding after discharge exists.
In any petition for revocation of a bankruptcy discharge, both parties should be represented by legal counsel experienced in bankruptcy adversary proceedings. Alleging and demonstrating a case for revocation or defending against a revocation petition requires bankruptcy litigation experience, skill, and knowledge. Bankruptcy litigation is a significant part of my practice at the Dave Burns Law Office.