There are several outcomes to a bankruptcy case. We’re familiar with the two most common, which are:
Discharged – A favorable outcome was reached for the debtor Dismissed – A non-favorable outcome was reached for the debtor
So what does it mean when a bankruptcy case is revoked?
When a debtor has been granted a favorable discharge, and something happens (e.g., the debtor does not follow trustee instructions), the favorable discharge can be revoked, allowing creditors to pursue the debtor again, as if the debtor had not filed bankruptcy.
We ran into a case like this week, where a debtor had received a favorable Chapter 7 discharge, then didn’t follow the trustee’s instructions to surrender her $3,200 income tax refund to the trustee, and the trustee responded by revoking the favorable discharge.
This occurred six-and-a-half years ago, and the debtor was wondering what her options are now.
From the research we did in talking to various trustees and attorneys, there are a few possibilities:
1. The debtor can go ahead and file a new Chapter 7, but if the discharge revocation was due to an adversarial proceeding, the debtor likely wouldn’t get an automatic stay for the creditor involved in the proceeding…this was not the issue in our case
2. The debtor could wait another year-and-a-half, so that 8 years time will have elapsed since the last filing, in order to get an automatic stay for all creditors..this would resolve problems with the above situation
3. The revocation might possibly be reversed, by working with the trustee’s office to see about making this happen. In our case, this could require the debtor to meet the trustee’s original request to surrender $3,200.
Ready to start earning income drafting bankruptcy petitions from home? See our online bankruptcy petition training courses at www.713training.com. You can also join our online community at www.navba.org.