Grounds for the denial of discharge of Chapter 7 debts

There are many reasons why a Mississippi resident may consider Chapter 7 bankruptcy. The individual may be struggling with debt that cannot feasibly be repaid in a timely manner; the debtor may also be seeking a way to stop creditor harassment and wage garnishment. Another reason why Chapter 7 bankruptcy is very compelling for individuals is the ability to get many debts discharged. For a person struggling with massive debt, this aspect of Chapter 7 is crucial.

It may be the case that not every single debt can be discharged under Chapter 7; for instance, child support obligations cannot be discharged through bankruptcy. Still, filers often find that most, if not all, of their outstanding debts can be discharged via Chapter 7. However, every once in a while, under certain circumstances, a denial of discharge occurs. While this situation isn't common, it's helpful for filers to know how this could happen.

According to the Internal Revenue Service, there are specific grounds for such a denial. These include deceit on the part of the debtor, such as falsification of financial records, intentional concealment of property, making false claims or failing to fully explain one's inability to meet one's liabilities. Another ground for denial of bankruptcy discharge includes a filer's failure to complete the necessary personal finance class, unless either the bankruptcy trustee or the court determines the individual is not required to do so. The IRS also specifies that discharge may be denied if a debtor has had a previous Chapter 7 denial of discharge within the past eight years or a prior Chapter 13 denial within the previous six years, with some exceptions.

While not exhaustive, this list offers some of the more basic reasons why the attempts to get debts discharged may not succeed. Using an experienced bankruptcy attorney can help avoid these types of situations and help ensure that discharges occur and debt relief follows.

Source: Internal Revenue Service, "Chapter 7 bankruptcy: Liquidation," accessed Feb. 8, 2015

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