Can a Bankruptcy Discharge Be Revoked?

Under certain circumstances, the bankruptcy court can revoke your discharge.

Upon the request of a party in interest, a bankruptcy court has the power to revoke a discharge that has already been granted. If the  bankruptcy trustee, United States trustee, or your creditors discover that you committed bankruptcy fraud, they can ask the court to revoke your discharge. This means that if you hide assets or otherwise lie on your bankruptcy papers, you risk losing your bankruptcy discharge even after your case has been closed. Read on to learn more about why a Chapter 7 or Chapter 13 bankruptcy discharge may be revoked.

Reasons a Chapter 7 Bankruptcy Discharge May Be Revoked

In Chapter 7 bankruptcy, the trustee, United States trustee, or your creditors can request that your discharge be revoked if you:

  • obtained your discharge through fraud and the party requesting the revocation did not discover the fraud until after the discharge was granted
  • acquired or became entitled to any asset that would be considered property of the bankruptcy estate but failed to disclose it to the court or surrender it to the trustee
  • refused to obey court orders, or
  • failed to explain a material misstatement or produce the required documents in a bankruptcy audit.

In general, a request for revocation based on fraud must be made within one year after the discharge was granted. If an interested party wants to revoke your discharge because you failed to disclose or surrender assets or obey court orders, it must do so within a year of your discharge or the date your case is closed, whichever is later.

Revocation of Discharge in Chapter 13 Bankruptcy

Within one year after your Chapter 13 bankruptcy discharge is granted, a party in interest can ask the court to revoke your discharge if you:

  • obtained your discharge through fraud, and
  • such fraud was not discovered until after the discharge has already been granted.

In most cases, fraud in Chapter 13 bankruptcy involves lying on your bankruptcy petition, hiding assets, or failing disclose all sources of income. In addition to losing your discharge, committing bankruptcy fraud can result in forfeiture of your assets or even criminal prosecution. As a result, make sure to complete your bankruptcy papers accurately, disclose all assets, and be honest throughout the entire bankruptcy process.

What Happens If a Party Wants to Revoke Your Discharge?

If the trustee or a creditor wants your discharge revoked, he or she must file a complaint with the court and prove that there is cause for revoking your discharge. When the request is filed with the court, you will receive notice and have an opportunity to oppose it. The court will hold a hearing where both sides can present evidence and arguments as to why the discharge should or should not be revoked.

Based on the evidence presented, the court will determine whether there is cause (such as fraud) to revoke your discharge. If your discharge is revoked, you will be on the hook for paying back any debts that were included in the discharge and creditors will be free to pursue you once again to collect those debts.

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