Your Bankruptcy Discharge Can Be Denied If It Can Be Proven That A Debtor Intended To Defraud Creditors!
Obtaining a discharge once you file bankruptcy is not a guarantee or a right. When a bankruptcy petition is filed with the court, a bankruptcy estate, which includes all of a debtor's legal and equitable interests in property in existence at the time of the bankruptcy filing, is formed. Upon the formation of this estate, all rights to the property belong to the estate and not the debtor. The 2nd Circuit Court of Appeals on February 4, 2011, ruled that a debtor was not entitled to a discharge because the debtor sold assets belonging to the bankruptcy estate with intent to defraud creditors.
Section 727(a)(2)(B) of the Bankruptcy Code provides, in pertinent part, that the court shall grant the debtor a discharge, unless . . . the debtor, with intent to hinder, delay, or defraud a creditor . . ., has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed . . . . property of the estate, after the date of the filing of the petition[.]
To prevail under Section 727, the creditor objecting to the discharge must demonstrate that (1) the debtor (2) transferred or concealed (3) property of the bankruptcy estate (4) with the intent to hinder, delay, or defraud the creditor (5) after the filing of the bankruptcy petition. These five elements must be established by a preponderance of the evidence.