An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. But not all of an individual's debts are discharged in chapter 7. 6.
Court May Revoke
The court may revoke a chapter 7 discharge: (i) on the request of the trustee, a creditor, (ii) if the U.S. trustee if the discharge was obtained through fraud by the debtor, (iii) if the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee, (iv) if the debtor (without a satisfactory explanation) makes a material misstatement or (v) fails to provide documents or other information in connection with an audit of the debtor's case. 11 U.S.C. ยง 727(d). J.
Non-dischargeability of Certain Debts
1. Congress has determined that even if the individual debtor obtains a discharge pursuant to section 727 in a chapter 7 case, creditors with certain types of claims are more deserving of protection and should be able to recover what is owed even from property acquired after bankruptcy. a. Section 523(a) contains a list of such claims, called non-dischargeable claims including: (i) debts for alimony and child support, certain taxes, (ii) debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, (iii) debts for willful and malicious injury by the debtor to another entity or to the property of another entity, (iv) debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders, and (v) certain taxes. b. The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 7 case. c. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 2. Certain fraud claims, domestic support obligations, claims for willful and malicious injury, unscheduled debts, educational loans and debts related to violations of federal or state securities laws are examples of those that are excepted from the discharge. 3. Debtors must be forewarned to file complete schedules of liabilities and not to omit any creditors for whatever reason. a. First, the schedules may thus contain a false oath, which is both a criminal offense and a complete bar to a discharge; b. Second, at the very least, it could result in the omitted debt being held non-dischargeable. 4. Under the Code, creditors have a right to know of the pendency of the bankruptcy case in time to take action for filing claims and objecting to discharge. A failure to schedule a debt can deprive that creditor of these rights resulting in rather dire consequences. 12