Although some people file New York bankruptcy to halt a foreclosure with the automatic stay or strip a lien, in nearly all cases debtors seek a discharge. However, there are six situations in which a bankruptcy court can revoke a discharge order that’s already been entered. They’re listed in Section 727(d) of the Bankruptcy Code:
(1) The debtor obtained the discharge through fraud that wasn’t known until after the discharge was granted.
(2) The debtor acquired property that belonged to the bankruptcy estate and knowingly or fraudulently failed to report the acquisition of that property or give it to the trustee.
(3) The debtor refused to obey a lawful order of the bankruptcy court other than an order to respond to a material question or to testify. If the bankruptcy court does order the debtor to testify and his or her reason for refusing to do so is anything other than the right against self-incrimination, the discharge order can be revoked.
(4) If the debtor has been given immunity against self-incrimination and he or she still refuses to respond to a material question, the discharge can be revoked.
(5) The debtor failed to explain a material misstatement in a bankruptcy audit.
(6) The debtor failed to explain why he or she did not provide all necessary documents requested during a bankruptcy audit.
A request for a revocation of a discharge can be made by a creditor, the trustee, or the U.S. trustee. There will then be a notice and a hearing on the matter in which the debtor can defend against the request. Parties do not have an unlimited amount of time to request a revocation of a discharge. Section 727(e) states that they have at most only a year after the case is closed to do so, but sometimes it can be only a year after the discharge is entered. After that the discharge is permanent.
The common theme running through these situations in which discharge order can be revoked is fraud and failing to cooperate with the bankruptcy court and the other parties. The easiest way to ensure that a discharge is properly entered in your case is to hire an experienced New York bankruptcy lawyer and be completely candid about your financial situation.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced landlord rights in bankrutpcy Bruce Weiner for a free initial consultation.