How Durable Is My Bankruptcy Discharge?

You have done all the work and finally made it to the other side of the finish line. You have received your discharge and your bankruptcy is finally over, isn’t it?


My Bankruptcy Discharge Is Indestructible, Isn’t It?


Unfortunately, your bankruptcy is not indestructible. Most people who file for bankruptcy assume that once they receive their bankruptcy discharge, their case is over and they are permanently out of the woods. If only this were the case.


In reality, your bankruptcy discharge can be revoked, even after your bankruptcy is over.  The good news is, losing your discharge is extremely rare. But that doesn’t meant it can’t happen.


How Can My Bankruptcy Discharge Be Revoked?


Here’s how it works.


First, somebody approaches the bankruptcy court and asks the judge to revoke your discharge.


Second, the same person must prove that you used fraud to get your bankruptcy discharge and that person was not aware of the fraud until after you were given your discharge.


Third, it must be proven that the fraud was significant enough to affect the entire case, not just one debt.


Who Is Allowed to Contest My Discharge?


In order for someone to challenge your bankruptcy discharge, he or she must be an interested party. This is not a well defined concept, but essentially an interested party is somebody who has a stake in your bankruptcy. This can include your bankruptcy trustee, the bankruptcy court, your creditors, and current or former spouses. But because the concept is not defined legally, it is up to the court who can contest your case. So others could potentially be considered interested parties.


Luckily, there is a limit to when someone can attempt to revoke your discharge. A complaint must be made within a year after your discharge was originally granted. However,  a court can allow someone to complain after this time elapses if they feel there are special circumstances that warrant it.


What Happens When My Discharge Is Revoked?


Essentially, your bankruptcy is brought back to life when your discharge is revoked. You once again owe the debts that you thought were eliminated in bankruptcy before your discharge was successfully contested.


You now must fight the claim of fraud by the interested party. If you successfully fight the accusation, then your bankruptcy will once again be over and your debts eliminated.


If the interested party is able to prove that you committed fraud, you are now in trouble. Not only will you not be eliminating any debt through bankruptcy, but you will face the possibility of fines and even time in prison.