Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 7–LIQUIDATION

Sub Chapter II – Collection, Liquidation and Distribution of the Estate

Sec. 727. Discharge

  (a) The court shall grant the debtor a discharge, unless--
        (1) the debtor is not an individual;
        (2) the debtor, with intent to hinder, delay, or defraud a 
    creditor or an officer of the estate charged with custody of 
    property under this title, has transferred, removed, destroyed, 
    mutilated, or concealed, or has permitted to be transferred, 
    removed, destroyed, mutilated, or concealed--
            (A) property of the debtor, within one year before the date 
        of the filing of the petition; or
            (B) property of the estate, after the date of the filing of 
        the petition;

        (3) the debtor has concealed, destroyed, mutilated, falsified, 
    or failed to keep or preserve any recorded information, including 
    books, documents, records, and papers, from which the debtor's 
    financial condition or business transactions might be ascertained, 
    unless such act or failure to act was justified under all of the 
    circumstances of the case;
        (4) the debtor knowingly and fraudulently, in or in connection 
    with the case--
            (A) made a false oath or account;
            (B) presented or used a false claim;
            (C) gave, offered, received, or attempted to obtain money, 
        property, or advantage, or a promise of money, property, or 
        advantage, for acting or forbearing to act; or
            (D) withheld from an officer of the estate entitled to 
        possession under this title, any recorded information, including 
        books, documents, records, and papers, relating to the debtor's 
        property or financial affairs;

        (5) the debtor has failed to explain satisfactorily, before 
    determination of denial of discharge under this paragraph, any loss 
    of assets or deficiency of assets to meet the debtor's liabilities;
        (6) the debtor has refused, in the case--
            (A) to obey any lawful order of the court, other than an 
        order to respond to a material question or to testify;
            (B) on the ground of privilege against self-incrimination, 
        to respond to a material question approved by the court or to 
        testify, after the debtor has been granted immunity with respect 
        to the matter concerning which such privilege was invoked; or
            (C) on a ground other than the properly invoked privilege 
        against self-incrimination, to respond to a material question 
        approved by the court or to testify;

        (7) the debtor has committed any act specified in paragraph (2), 
    (3), (4), (5), or (6) of this subsection, on or within one year 
    before the date of the filing of the petition, or during the case, 
    in connection with another case, under this title or under the 
    Bankruptcy Act, concerning an insider;
        (8) the debtor has been granted a discharge under this section, 
    under section 1141 of this title, or under section 14, 371, or 476 
    of the Bankruptcy Act, in a case commenced within six years before 
    the date of the filing of the petition;
        (9) the debtor has been granted a discharge under section 1228 
    or 1328 of this title, or under section 660 or 661 of the Bankruptcy 
    Act, in a case commenced within six years before the date of the 
    filing of the petition, unless payments under the plan in such case 
    totaled at least--
            (A) 100 percent of the allowed unsecured claims in such 
        case; or
            (B)(i) 70 percent of such claims; and
            (ii) the plan was proposed by the debtor in good faith, and 
        was the debtor's best effort; or

        (10) the court approves a written waiver of discharge executed 
    by the debtor after the order for relief under this chapter.

    (b) Except as provided in section 523 of this title, a discharge 
under subsection (a) of this section discharges the debtor from all 
debts that arose before the date of the order for relief under this 
chapter, and any liability on a claim that is determined under section 
502 of this title as if such claim had arisen before the commencement of 
the case, whether or not a proof of claim based on any such debt or 
liability is filed under section 501 of this title, and whether or not a 
claim based on any such debt or liability is allowed under section 502 
of this title.
    (c)(1) The trustee, a creditor, or the United States trustee may 
object to the granting of a discharge under subsection (a) of this 
section.
    (2) On request of a party in interest, the court may order the 
trustee to examine the acts and conduct of the debtor to determine 
whether a ground exists for denial of discharge.
    (d) On request of the trustee, a creditor, or the United States 
trustee, and after notice and a hearing, the court shall revoke a 
discharge granted under subsection (a) of this section if--
        (1) such discharge was obtained through the fraud of the debtor, 
    and the requesting party did not know of such fraud until after the 
    granting of such discharge;
        (2) the debtor acquired property that is property of the estate, 
    or became entitled to acquire property that would be property of the 
    estate, and knowingly and fraudulently failed to report the 
    acquisition of or entitlement to such property, or to deliver or 
    surrender such property to the trustee; or
        (3) the debtor committed an act specified in subsection (a)(6) 
    of this section.

    (e) The trustee, a creditor, or the United States trustee may 
request a revocation of a discharge--
        (1) under subsection (d)(1) of this section within one year 
    after such discharge is granted; or
        (2) under subsection (d)(2) or (d)(3) of this section before the 
    later of--
            (A) one year after the granting of such discharge; and
            (B) the date the case is closed.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2609; Pub. L. 98-353, title III, 
Sec. 480, July 10, 1984, 98 Stat. 382; Pub. L. 99-554, title II, 
Secs. 220, 257(s), Oct. 27, 1986, 100 Stat. 3101, 3116.)


                      Historical and Revision Notes

                         legislative statements

    Sections 727(a) (8) and (9) of the House amendment represent a 
compromise between provisions contained in section 727(a)(8) of the 
House bill and Senate amendment. Section 727(a)(8) of the House 
amendment adopts section 727(a)(8) of the House bill. However, section 
727(a)(9) of the House amendment contains a compromise based on section 
727(a)(8) of the Senate amendment with respect to the circumstances 
under which a plan by way of composition under Chapter XIII of the 
Bankruptcy Act [chapter 13 of former title 11] should be a bar to 
discharge in a subsequent proceeding under title 11. The paragraph 
provides that a discharge under section 660 or 661 of the Bankruptcy Act 
[section 1060 or 1061 of former title 11] or section 1328 of title 11 in 
a case commenced within 6 years before the date of the filing of the 
petition in a subsequent case, operates as a bar to discharge unless, 
first, payments under the plan totaled at least 100 percent of the 
allowed unsecured claims in the case; or second, payments under the plan 
totaled at least 70 percent of the allowed unsecured claims in the case 
and the plan was proposed by the debtor in good faith and was the 
debtor's best effort.
    It is expected that the Rules of Bankruptcy Procedure will contain a 
provision permitting the debtor to request a determination of whether a 
plan is the debtor's ``best effort'' prior to confirmation of a plan in 
a case under chapter 13 of title 11. In determining whether a plan is 
the debtor's ``best effort'' the court will evaluate several factors. 
Different facts and circumstances in cases under chapter 13 operate to 
make any rule of thumb of limited usefulness. The court should balance 
the debtor's assets, including family income, health insurance, 
retirement benefits, and other wealth, a sum which is generally 
determinable, against the foreseeable necessary living expenses of the 
debtor and the debtor's dependents, which unfortunately is rarely 
quantifiable. In determining the expenses of the debtor and the debtor's 
dependents, the court should consider the stability of the debtor's 
employment, if any, the age of the debtor, the number of the debtor's 
dependents and their ages, the condition of equipment and tools 
necessary to the debtor's employment or to the operation of his 
business, and other foreseeable expenses that the debtor will be 
required to pay during the period of the plan, other than payments to be 
made to creditors under the plan.
    Section 727(a)(10) of the House amendment clarifies a provision 
contained in section 727(a)(9) of the House bill and Senate amendment 
indicating that a discharge may be barred if the court approves a waiver 
of discharge executed in writing by the debtor after the order for 
relief under chapter 7.
    Section 727(b) of the House amendment adopts a similar provision 
contained in the Senate amendment modifying the effect of discharge. The 
provision makes clear that the debtor is discharged from all debts that 
arose before the date of the order for relief under chapter 7 in 
addition to any debt which is determined under section 502 as if it were 
a prepetition claim. Thus, if a case is converted from chapter 11 or 
chapter 13 to a case under chapter 7, all debts prior to the time of 
conversion are discharged, in addition to debts determined after the 
date of conversion of a kind specified in section 502, that are to be 
determined as prepetition claims. This modification is particularly 
important with respect to an individual debtor who files a petition 
under chapter 11 or chapter 13 of title 11 if the case is converted to 
chapter 7. The logical result of the House amendment is to equate the 
result that obtains whether the case is converted from another chapter 
to chapter 7, or whether the other chapter proceeding is dismissed and a 
new case is commenced by filing a petition under chapter 7.


                        senate report no. 95-989

    This section is the heart of the fresh start provisions of the 
bankruptcy law. Subsection (a) requires the court to grant a debtor a 
discharge unless one of nine conditions is met. The first condition is 
that the debtor is not an individual. This is a change from present law, 
under which corporations and partnerships may be discharged in 
liquidation cases, though they rarely are. The change in policy will 
avoid trafficking in corporate shells and in bankrupt partnerships. 
``Individual'' includes a deceased individual, so that if the debtor 
dies during the bankruptcy case, he will nevertheless be released from 
his debts, and his estate will not be liable for them. Creditors will be 
entitled to only one satisfaction--from the bankruptcy estate and not 
from the probate estate.
    The next three grounds for denial of discharge center on the 
debtor's wrongdoing in or in connection with the bankruptcy case. They 
are derived from Bankruptcy Act Sec. 14c [section 32(c) of former title 
11]. If the debtor, with intent to hinder, delay, or defraud his 
creditors or an officer of the estate, has transferred, removed, 
destroyed, mutilated, or concealed, or has permitted any such action 
with respect to, property of the debtor within the year preceding the 
case, or property of the estate after the commencement of the case, then 
the debtor is denied discharge. The debtor is also denied discharge if 
he has concealed, destroyed, mutilated, falsified, or failed to keep or 
preserve any books and records from which his financial condition might 
be ascertained, unless the act or failure to act was justified under all 
the circumstances of the case. The fourth ground for denial of discharge 
is the commission of a bankruptcy crime, although the standard of proof 
is preponderance of the evidence rather than proof beyond a reasonable 
doubt. These crimes include the making of a false oath or account, the 
use or presentation of a false claim, the giving or receiving of money 
for acting or forbearing to act, and the withholding from an officer of 
the estate entitled to possession of books and records relating to the 
debtor's financial affairs.
    The fifth ground for denial of discharge is the failure of the 
debtor to explain satisfactorily any loss of assets or deficiency of 
assets to meet the debtor's liabilities. The sixth ground concerns 
refusal to testify. It is a change from present law, under which the 
debtor may be denied discharge for legitimately exercising his right 
against self-incrimination. Under this provision, the debtor may be 
denied discharge if he refuses to obey any lawful order of the court, or 
if he refuses to testify after having been granted immunity or after 
improperly invoking the constitutional privilege against self-
incrimination.
    The seventh ground for denial of discharge is the commission of an 
act specified in grounds two through six during the year before the 
debtor's case in connection with another bankruptcy case concerning an 
insider.
    The eighth ground for denial of discharge is derived from 
Sec. 14c(5) of the Bankruptcy Act [section 32(c)(5) of former title 11]. 
If the debtor has been granted a discharge in a case commenced within 6 
years preceding the present bankruptcy case, he is denied discharge. 
This provision, which is no change from current law with respect to 
straight bankruptcy, is the 6-year bar to discharge. Discharge under 
chapter 11 will bar a discharge for 6 years. As under current law, 
confirmation of a composition wage earner plan under chapter 13 is a 
basis for invoking the 6-year bar.
    The ninth ground is approval by the court of a waiver of discharge.
    Subsection (b) specifies that the discharge granted under this 
section discharges the debtor from all debts that arose before the date 
of the order for relief. It is irrelevant whether or not a proof of 
claim was filed with respect to the debt, and whether or not the claim 
based on the debt was allowed.
    Subsection (c) permits the trustee, or a creditor, to object to 
discharge. It also permits the court, on request of a party in interest, 
to order the trustee to examine the acts and conduct of the debtor to 
determine whether a ground for denial of discharge exists.
    Subsection (d) requires the court to revoke a discharge already 
granted in certain circumstances. If the debtor obtained the discharge 
through fraud, if he acquired and concealed property of the estate, or 
if he refused to obey a court order or to testify, the discharge is to 
be revoked.
    Subsection (e) permits the trustee or a creditor to request 
revocation of a discharge within 1 year after the discharge is granted, 
on the grounds of fraud, and within one year of discharge or the date of 
the closing of the case, whichever is later, on other grounds.

                       References in Text

    The Bankruptcy Act, referred to in subsec. (a)(7), is act July 1, 
1898, ch. 541, 30 Stat. 544, as amended, which was classified generally 
to former Title 11.
    Sections 14, 371, and 476 of the Bankruptcy Act, referred to in 
subsec. (a)(8), are section 14 of act July 1, 1898, ch. 541, 30 Stat. 
550, section 371 of act July 1, 1898, ch. 541, as added June 22, 1938, 
ch. 575, Sec. 1, 52 Stat. 912, and section 476 of act July 1, 1898, ch. 
541, as added June 22, 1938, ch. 575, Sec. 1, 52 Stat. 924, which were 
classified to sections 32, 771, and 876 of former Title 11.
    Sections 660 and 661 of the Bankruptcy Act, referred to in subsec. 
(a)(9), are sections 660 and 661 of act July 1, 1898, ch. 541, as added 
June 22, 1938, ch. 575, Sec. 1, 52 Stat. 935, 936, which were classified 
to sections 1060 and 1061 of former Title 11.


                               Amendments

    1986--Subsec. (a)(9). Pub. L. 99-554, Sec. 257(s), inserted 
reference to section 1228 of this title.
    Subsec. (c). Pub. L. 99-554, Sec. 220, amended subsec. (c) 
generally, substituting ``The trustee, a creditor, or the United States 
trustee may object'' for ``The trustee or a creditor may object'' in 
par. (1).
    Subsec. (d). Pub. L. 99-554, Sec. 220, amended subsec. (d) 
generally, substituting ``, a creditor, or the United States trustee,'' 
for ``or a creditor,'' in provisions preceding par. (1) and 
``acquisition of or entitlement to such property'' for ``acquisition of, 
or entitlement to, such property'' in par. (2).
    Subsec. (e). Pub. L. 99-554, Sec. 220, amended subsec. (e) 
generally, substituting ``The trustee, a creditor, or the United States 
trustee may'' for ``The trustee or a creditor may'' in provisions 
preceding par. (1), ``section within'' for ``section, within'' and 
``discharge is granted'' for ``discharge was granted'' in par. (1), 
``section before'' for ``section, before'' in provisions of par. (2) 
preceding subpar. (A), and ``discharge; and'' for ``discharge; or'' in 
par. (2)(A).
    1984--Subsec. (a)(6)(C). Pub. L. 98-353, Sec. 480(a)(1), substituted 
``properly'' for ``property''.
    Subsec. (a)(7). Pub. L. 98-353, Sec. 480(a)(2), inserted ``, under 
this title or under the Bankruptcy Act,'' after ``another case''.
    Subsec. (a)(8). Pub. L. 98-353, Sec. 480(a)(3), substituted ``371,'' 
for ``371''.
    Subsec. (c)(1). Pub. L. 98-353, Sec. 480(b), substituted ``to the 
granting of a discharge'' for ``to discharge''.
    Subsec. (e)(2)(A). Pub. L. 98-353, Sec. 480(c), substituted ``or'' 
for ``and''.


                    Effective Date of 1986 Amendment

    Amendment by section 257 of Pub. L. 99-554 effective 30 days after 
Oct. 27, 1986, but not applicable to cases commenced under this title 
before that date, see section 302(a), (c)(1) of Pub. L. 99-554, set out 
as a note under section 581 of Title 28, Judiciary and Judicial 
Procedure.
    Effective date and applicability of amendment by section 220 of Pub. 
L. 99-554 dependent upon the judicial district involved, see section 
302(d), (e) of Pub. L. 99-554.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 348, 523, 524, 1141 of this 
title; title 12 section 1715z-1a.



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