Trustee Blog

Revocation of Discharge

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In yesterday’s Blog post we talked about the Debtor having a claim or lawsuit that he does not tell the trustee about. Below is a case in which Trustee Lynda Bui where the Trustee encountered that situation.

The “Debtor” filed a voluntary Chapter 7 petition on January 5, 20xx. Lynda T. Bui (“Trustee”) was appointed interim Chapter 7 trustee in the case.

On August 19, 20xx the Trustee concluded a 341(a) meeting of creditors. Six days later Debtor filed a civil complaint where Debtor listed assets of $45,000 that were not included in his Schedules.

Debtor received a discharge on November 30, 20xx. On January 30, 20xx, the Court approved an application of the Trustee to employ the Goodrich Law Corporation as counsel. On this date the Firm began providing professional services to the estate.

The Firm provided a number of legal services including securing a default judgment against the Debtor to have the discharge revoked and negotiating a deal to sell the estate’s interest in pending litigation in State Court. In total, the Firm has performed 16.80 hours of legal service for the estate.

The trustee had to sue the debtor under 11 U.S.C. 727 (d)(1) to revoke his discharge, because he failed to disclose his interest in an asset. In the original petition, the schedules said the asset was worth $2000 and then in the lawsuit in State Court, he said the asset was worth over $40,000.00. The Trustee won her lawsuit against the debtor and then settled the civil lawsuit with the defendant, which brought money into the bankruptcy estate.

The legal services for the above  for employing Mr. Goodrich was between $4000 and $7000 charged to the estate, in addition to having the discharge revoked and the sale of the estate’s interest in the litigation and the trustee’s fees that will have to be paid.

If the debtor had disclosed the above, it would have been easier  and cheaper for the debtor.



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