Most debtors file for bankruptcy to eliminate their debts and obtain a fresh financial start. Your bankruptcy discharge wipes out your liability for most types of debt. But if you're not completely honest in your bankruptcy papers or fail to follow all the rules, the court can revoke your discharge even after closing your case. Read on to learn more about what happens if the court revokes your bankruptcy discharge.
(For more information on how a bankruptcy discharge affects particular types of debt, see Debt Management: The Bankruptcy Discharge.)
In general, only an interested party—someone who has a stake in the outcome—can ask the bankruptcy court to revoke your discharge. In most cases, the revocation request will come from:
The grounds an interested party can use to request a revocation will depend on whether you filed for Chapter 7 or Chapter 13 bankruptcy.
If you filed for Chapter 7 bankruptcy, the bankruptcy trustee, United States trustee, or your creditors could ask the court to revoke your discharge if you:
In Chapter 13 bankruptcy, an interested party can request the court to revoke your discharge if you:
(For more information, read When the Bankruptcy Trustee Suspects Fraud.)
In Chapter 7 bankruptcy, an interested party must request a revocation based on fraud within one year after the court grants the discharge, or, if the debtor failed to report assets that were property of the estate or disobeyed court orders, within one year of the closing of the case, whichever is later. (Although a discharge is usually received early in the case, the matter might remain open for a considerable time to allow for the selling of assets.)
In Chapter 13 bankruptcy, an interested party must request a discharge revocation within one year after the court grants the discharge.
If the court revokes your bankruptcy discharge, you'll remain liable for any previously discharged debts. Also, if you committed fraud or otherwise abused the bankruptcy system, you might have to pay fines, forfeit assets, or face criminal prosecution.