U.S. Bankruptcy Courts - Chapter 7 Discharge Hearings

Procedure in US Bankruptcy Courts - Chapter 7 Discharge Hearing Rules & Procedures

Receiving a discharge requires compliance with all orders of US bankruptcy courts. Trustees review petitions and schedules, evaluate compliance with the law and investigate suspicious activity. Ultimately, trustees report to US bankruptcy courts with recommendations for discharge, reset or denial. Denials and dismissals are not limited to circumstances based upon malicious intent, but include ordinary neglect and oversight committed by attorneys and debtors. For example, if circumstances beyond a debtor's control cause violation of a deadline, the case will be subject to dismissal. If a debtor intentionally misrepresents facts to US bankruptcy courts, the case will not only be dismissed, but the debtor is also subject to criminal fines and incarceration.

In routine matters US bankruptcy courts frequently do not require debtors or their attorneys to attend discharge hearings. The hearing occurs, yet it is an administrative approval. An order of US bankruptcy courts granting discharge is issued upon approval. Creditors, trustees or US bankruptcy courts upon their own motion may object to discharge.

Statutory basis for deny discharge in US bankruptcy courts

The provisions of 11 U.S.C. 727(a) sets forth reasons which prevents US bankruptcy courts from granting discharge. Any discharge may be denied for any of the following:

the debtor is not an individual (i.e. a corporation or partnership);
the debtor, with intent to hinder, defraud or delay, caused property of the estate to transferred, removed, destroyed, mutilated, or concealed from US bankruptcy courts, trustees, creditors, or parties in interest (during the one year preceding filing or while the case is pending);
Falsifying or destroying financial records;
A false oath made to US bankruptcy courts;
Presenting false claims;
Withholding information from US bankruptcy courts;
Refusal to obey a lawful order;
Refusal to respond to a material question ; and
Receiving a prior discharge from US bankruptcy courts within 6 years of filing the petition (technical rules apply to prior Chapter 13 discharge).