Trustee Blog

727(a)(5) Objection to Discharge

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In continuing our discussion from November 29, 2103, Larry Simons is a Chapter 7 Trustee and from time to time must object to a discharge.  Here in a recent Judge Houle case, the debtor hid the auto and the creditor objected to the discharge under 11 U.S.C. 727(a)(5). Judge Houle discusses 727(a)(5)

Objection to Discharge under §727(a)(5)

A discharge may be denied if the debtor is unable to satisfactorily to explain any loss of property or deficiency of assets to meet the debtor’s liabilities. 11 U.S.C. 727(a)(5); In re Hong Minh Tran, 464 B.R. 885, 895 (Bankr. Cal. S.D.). Once it is shown that the debtor had a cognizable ownership interest in a specific identifiable property at a time not too far removed from the date of filing his petition, the burden is on the debtor to satisfactorily explain the loss of that particular asset, if at the time the petition is filed, the debtor claims he no longer has the particular property. Id. (citing In re Beausoleil, 142 B.R. 31, 37 (Bankr. R.I. 1992); In re Lane, 302 BR 75, 81 (Bankr. Id. 2003). “A debtor’s failure to offer a satisfactory explanation may be a sufficient ground for denial of discharge under section 727(a)(5).” In re Hong Minh Tran, 464 B.R. at 893 (citing Devers v. Bank of Sheridan (In re Devers), 759 F. 2d 751, 754 (9th Cir.1985).

Here, Plaintiffs alleges that Defendant has failed to explain the loss of his Vehicle that secures Creditor’s automobile loan to Defendant. Defendant did not disclose the existence of his Vehicle on his Schedule B or Schedule D. When Creditor’s representative appeared at Defendant’s Section 341(a) Meeting of Creditors and asked

Defendant about the subject vehicle, Defendant only made nonresponsive or nonsensical statements. See B. Declaration. Plaintiff alleges that to date, Defendant has not provided Creditor a satisfactory explanation regarding the loss of the Vehicle.

For the foregoing reasons, Plaintiff has established that Defendant should be denied discharge under 11 U.S.C. § 727(a)(5).

Moreover, pursuant to LBR 9013-1(h), Defendant’s failure to oppose the Motion is considered consent to the Court granting the Motion.

Practice Pointer:

727(a)(5) does not come up too often, but it is in the trustee’s arsenal and well as a creditor’s arsenal.

 

 

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