\ Reasons why a Chapter 7 discharge may be denied | Law Office of Gordon Mosley

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Reasons why a Chapter 7 discharge may be denied

As we've mentioned previously on this blog, bankruptcy is not automatic. That is to say that the mere act of filing a bankruptcy petition is not enough to secure the fresh financial start that many petitioners seek. In fact, there may be some situations where a bankruptcy petition is contested, especially by creditors who seek to recoup their financial interests. While the vast majority of those who seek a Chapter 7 bankruptcy are either successfully discharged or have their bankruptcy converted to another form, there are still ways that bankruptcy discharge can be denied.

To start, it is worth noting that denials of Chapter 7 bankruptcy discharge are pretty rare. However, to avoid becoming an exception to the rule, Texans need to ensure that they understand how to avoid pitfalls that can lead to discharge denial. Probably one of the most common reasons for a denied discharge is improperly kept financial records. The courts will view this act as trying to hide assets to avoid the liquidation process, which therefore unfairly cheats creditors out of the funds to which they are entitled.

There are other reasons for discharge denial, though. Any suspicious gains or losses in one's financial records that aren't adequately explained can raise red flags and lead to a denial for similar reasons mentioned above. Also, making fraudulent misrepresentations, failing to abide by a bankruptcy court's orders, and concealing or destroying property that was supposed to become part of the bankruptcy estate can all cause an individual's discharge to be denied. Even failing to complete the court-mandated financial management course can deny an individual the fresh start he or she needs.

Bankruptcy can be a great debt relief option for some. Yet, the process needs to be strictly adhered to lest an individual find his or her petition or discharge denied. Texans who have been overwhelmed with debt need to pursue the process in the right way, which may mean securing the assistance of an experienced bankruptcy attorney who knows how to successfully navigate individuals through the various chapters of bankruptcy.

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