Many people think their bankruptcy journey ends once they receive their discharge papers. Unfortunately, that's not always the case. Sometimes the court will move to revoke a petitioner's discharge over claims the person committed fraud, hid assets, or engaged in some other prohibited act. Here's what can happen if the court successfully cancels a debtor's bankruptcy discharge.
All Bills Become Due Again
The most devastating outcome of having a discharge revoked is you lose the protection from creditor collection action it provides. A successfully completed bankruptcy removes your responsibility to pay the non-exempt debts included in your schedules, meaning the creditors can't ever attempt to collect the money you owe them. Some debts — such as student loans and child support — are immune, but for the most part, you'll be free from the burden of repayment.
However, a discharge revocation sets you back to the same, or possibly an even worse, position you were in before you filed for bankruptcy. Without that protection, creditors can sue you for payment and repossess property you were able to keep as a result of your case. As you can imagine, this can create absolute chaos with your current finances.
Your options for dealing with this situation depend on why your discharge was revoked. Oftentimes, you'll be allowed to file bankruptcy again, but you may have to wait a while to do so or the court may suspend the automatic stay in your case, meaning creditors can still continue collection action up until you receive another discharge.
There may be other legal actions you can take to prevent creditors from destroying your financial life, so it's a good idea to connect with a bankruptcy attorney who can offer sound advice on what to do.
You May Be Held Criminally Liable
Another problem that may come up as a result of your bankruptcy discharge is you could face criminal charges. This is only likely if the court successfully proves you committed fraud or abused the bankruptcy system in your case, though. For instance, you use your credit cards to purchase luxury items and then file bankruptcy to eliminate the debt. You could be charged with a crime and sentenced to jail time and/or fines depending on the amount of money involved.
In a lot of cases, the "fraud" committed wasn't intentional but rather an oversight on the part of the debtor. A bankruptcy attorney can help you develop a viable defense to the accusation that may let you avoid a criminal case.
For more information about filing bankruptcy or for help with your petition, contact a local bankruptcy lawyer.