Some of our previous posts in the series stated certain acts or behavior of a debtor that may cause a person to file an objection to a chapter 7 discharge, which could possibly result in the denial of a discharge. A general description of these acts or behavior include the debtor’s failure to cooperate with the bankruptcy process and the debtor’s fraudulent intent regarding the bankruptcy petition information, such as assets, income, etc.
The debtor may also be barred from a chapter 7 discharge, if they committed any of the above referenced wrongful acts, during their case, or during the one year prior to the filing of their case, in connection with a separate bankruptcy case, that involves an insider’s bankruptcy case. An insider is a person, corporation, or entity, that has a special relationship with the debtor, such as the following: relative; partner; partnerships and corporations, of which the debtor is the director, officer or person controlling the business. For example, a father is the insider of his son, the debtor, who filed for bankruptcy. If a corporation filed for bankruptcy, the director of the corporation would be considered an insider.
Although this section may be applied to a personal consumer debtor, the main reason for the section is to prevent an individual to benefit from his wrongful acts related to a separate bankruptcy case, involving his bankrupt business. For example, if the director of bankrupt corporation commits fraud, in connection with that bankruptcy case, he may not file subsequent bankruptcy case and obtain a chapter 7 discharge.
Robert Manchel, a bankruptcy attorney in New Jersey, can be contacted at 1 (866) 503-5655 to discuss your situation and how filing for bankruptcy protection may benefit you personally.