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A Bankruptcy Court Can Rescind Your Approved Discharge

Law Office of Ronald V. De Caprio Dec. 22, 2015

The goal of almost any bankruptcy proceeding is to have the filer’s debts discharged. When a debt is discharged it is either approved to be paid off under a repayment plan or satisfied through repayment based on a debtor’s asset liquidation. Depending upon the type of bankruptcy that a New York resident pursues, a debt discharge may look different than those of others going through the bankruptcy process.

In simple terms, a discharge makes debts go away. Individuals who are struggling to find financial freedom need their debt loads to be lessened in order to get back on their feet. Unfortunately, however, in some cases a person may see a bankruptcy discharge revoked. One of the main reasons that a discharge may be revoked is if it is procured through fraud.

Fraud involves deceit and dishonesty. If a person lies about assets or wealth during the bankruptcy proceeding in order to have debts discharged, and it is later discovered that the filer had the financial ability to pay the loans off without the bankruptcy court’s protections, the filer may be found to have acted fraudulently. The timeline for how long an allegation of deceit or fraud must be made after a bankruptcy court issues a discharge can vary depending upon the format of bankruptcy utilized.

Some individuals choose to act dishonestly and receive bankruptcy discharges when they otherwise would not be eligible to do so. Others may find themselves facing accusations of fraud even though they were honest in their dealings with the bankruptcy court. Having a discharge revoked can be detrimental to the financial future of a debtor. Those who are facing this unique bankruptcy challenge may need to get more information on how to proceed.