Certain acts are grounds for denial of a discharge; and, even if a discharge is obtained, certain conduct as to a particular creditor may make a particular claim or specific debt nondischargeable. For example, a discharge will be denied if it is shown the debtor transferred, removed, destroyed, mutilated or concealed property (or permitted such acts) “with intent to hinder, delay or defraud” any creditor or the trustee.
Creditors must file complaints objecting to the debtor’s discharge within statutorily-prescribed time limits (e.g., in Chapter 7 cases, within 60 days after first date set for creditors’ meeting).
By statute, certain debts are rendered nondischargeable as a matter of law. The following debts usually may not be discharged:
•certain taxes
•debts obtained through fraud or debts obtained by submitting fraudulent financial statements
•debts owed to creditors who were not notified of the Bankruptcy filing or not scheduled in time for creditors to file a proof of claim
•debts incurred by fraud while acting as an executor or Trustee, or by embezzlement or larceny
•debts to a spouse, former spouse, or child, for alimony, maintenance, support, or for liability under a separation agreement
•debts for willful and malicious injury to another person or property - libel, slander, assault, battery, or property destruction
•educational loans guaranteed or insured by governmental agencies or nonprofit institutions
•debts incurred as a result of a judgment against the debtor for operation of a motor vehicle while intoxicated.
•debts incurred for luxury goods and services owed to a single creditor in excess of the statutory amount incurred within 90 days of filing and cash advances in excess of the statutory amount made within 70 days of filing are presumed nondischargeable.
Before filing for a denial of discharge or a determination that a debt is nondischargeable, the Bank must consider the following:
•Costs to file the objection and prove the violations may be high.
•It may be difficult to collect on the debt, especially if the debtor is unemployed.
•The debtor may try to prove that the creditor was not “substantially justified” in filing an objection. If the court agrees, the debtor can collect legal fees from the creditor.
•Proceeds received from a denial of discharge will be distributed pro rata to all creditors.