Bankruptcy law allows you to discharge (write off) most or all of your debts, but you must be candid and accurate in the documents you file with the court and with what you tell the bankruptcy trustee.
Through Bankruptcy You Can Usually Discharge Most of Your Debts
If you file a Chapter 7 “straight bankruptcy” case, the Bankruptcy Code says that the bankruptcy “court shall grant the debtor a discharge” with only certain limited exceptions. See Section 727(a). If you file a Chapter 13 case, the Code states that “the court shall grant the debtor a discharge of all debts,” again with only certain limited exceptions. See Section 1328(a). As long as those exceptions don’t apply to your debts, they will be discharged and you’ll have a fresh start.
There are two sets of exceptions. The first set applies to specific debts. For example, some debts aren’t discharged because of the nature of the debt; child support and some income taxes are examples. On the other hand, some debts may not be discharged because of the debtor’s inappropriate behavior related to the debt, such as the embezzlement of funds or fraudulently incurred loans. But both of these kinds of exceptions apply on a debt-by-debt basis and are not the topic of today’s blog.
The Risk of Not Discharging ANY of Your Debts
The second set of exceptions doesn’t just relate to a specific debt or two, but rather to the debtor’s ability to receive a discharge of ANY debts. This exception is based on the simple rationale that for a person to receive the benefits of bankruptcy, he or she must be honest in going about it.
The type of dishonesty that would risk you losing your right to an overall discharge usually involves either property or financial records. Here are the kinds of behavior that can potentially result in you not being able to discharge your debts:
- Hiding or destroying your assets within a year before filing for bankruptcy
- Hiding or destroying assets that are under the legal right of the bankruptcy case after the bankruptcy case is filed
- Hiding, destroying, falsifying or failing to keep records about your financial condition
- Failing to satisfactorily explain a loss of assets before the filing of bankruptcy
- Making a false oath
Bankruptcy is an unfamiliar and potentially uncomfortable process to go through without some experienced guidance. The written and oral questions that you’re asked can be very confusing. Even assuming you are completely honest, it’s easy to wonder if your answers are going to cause problems. If you live in the Dallas-Fort Worth metroplex, the attorneys at Fuller & Eason can help you discharge your debts. Please call us for a free, no-obligation, confidential consultation at 214-516-6187. Or you can reach us here. Thank you for visiting our website and blog.