The fifth reason for an objection to a chapter 7 discharge is the failure to explain the loss or the deficiency of an asset.
This objection is very similar to the prior objections relating to the debtor’s intentions and veracity. Typically, this objection concerns a debtor who previous owned valuable assets, included cash, which have either substantially dissipated in value, or are no longer owned by the debtor. If a creditor established that the debtor owned certain assets, the debtor should provide a reasonable explanation as to the reduction in the value or the transfer of the asset.
Although the objecting party may include this as an additional ground for the denial of a discharge, typically the objecting party will not focus on this issue. Also, in deciding such issues, the court is hesitant to withhold a discharge, based on the debtor’s poor judgment.
Attorney Robert Manchel, a New Jersey bankruptcy practitioner, may be contacted at 1 (866) 503-5655.