Can You Appeal a Denied Bankruptcy Discharge in Pennsylvania?

Every individual has a right to file for bankruptcy and obtaining relief from overwhelming debt. Depending on the specifics of their situation, they could find that relief in either Chapter 7 or Chapter 13. While the right to petition for bankruptcy exists, there is not an absolute right to a discharge. A debtor must comply with the provisions of the Bankruptcy Code and present an honest and accurate accounting of their financial circumstances and assets. Additionally, in Chapter 13, a debtor has to make timely monthly payments to a court-appointed trustee for three to five years.

Sometimes, bankruptcy cases are dismissed before a discharge order is entered or a debtor is denied a discharge due to their actions or omissions. If your case has been dismissed, or your discharge has been denied, it is vital to immediately contact our experienced Philadelphia bankruptcy attorneys. At Young, Marr, Mallis & Associates, we understand the challenges and hardships associated with completing a bankruptcy proceeding and have assisted many debtors in getting their cases back on track. Call (215) 701-6519 for a free consultation if your bankruptcy case has been dismissed.

Common Reasons for Dismissals of Bankruptcy Cases in Pennsylvania

Before filing for any bankruptcy, a debtor must complete a “credit counseling course” with a certified counseling agency. When a bankruptcy case is initiated, a certificate of credit counseling, dated prior to the filing of date, must be submitted with the original petition. The court will immediately dismiss a bankruptcy case if a debtor fails to comply with this requirement.

Bankruptcy cases are dismissed if all of the required documents and schedules are not filed in a timely manner. A bankruptcy begins when the “voluntary petition” is filed. Along with the petition, a debtor must fully complete and file multiple schedules. If the complete filing is not submitted with the original petition, the debtor will have 14 days to file the remaining schedules. If a debtor fails to comply with this timeline, their case could be dismissed without a hearing.

A court-appointed trustee manages bankruptcies for the court. Their duty is to ensure that debtors comply with all provisions of the Bankruptcy Code, including listing all of their assets and income in the schedules. If a debtor fails to provide the required documents, or if the filed schedules are incomplete, the trustee will file a motion to dismiss the case. Additionally, a trustee will move to have a case dismissed if there is evidence that a debtor has lied about their income, assets, or debts.

Chapter 13 bankruptcy requires more work and commitment from a debtor than Chapter 7. In addition to providing all of the initial documentation and information, a Chapter 13 debtor must make monthly trustee payments according to the terms of their bankruptcy plan. Because of the complexity and length of a Chapter 13 bankruptcy, debtors’ cases are frequently dismissed before a discharge order is entered.

When an individual files a Chapter 13 bankruptcy, they are required to file a bankruptcy plan proposing payments to some or all of their creditors. Creditors will file a “proof of claim” in the bankruptcy case that lists the type of debt, the amount owed, and documentation proving that the debtor is legally obligated to pay the debt.

Both creditors and the trustee have the authority to object to plans that do not address the claims filed or that fail to comply with the Bankruptcy Code. Generally, the trustee will review the plan to ensure that unsecured creditors are paid appropriately and that it complies with all required rules and regulations. Secured creditors, such as mortgage lenders, and priority creditors, such as taxing authorities, will file their objections if their proof of claim is not addressed. If objections are not withdrawn or settled, a bankruptcy case could be dismissed.

The most common reason a Chapter 13 bankruptcy case is dismissed is for not making trustee payments. Debtors are generally in a difficult financial situation before opting for bankruptcy, and the monthly trustee payment can be hard to make consistently. The trustee will file a motion to dismiss a debtor’s case if they have fallen behind in their monthly payments.

Appealing Dismissals of Bankruptcies in Pennsylvania

When a bankruptcy case is dismissed, a debtor will not receive a discharge. In many instances, a debtor could appeal the dismissal through a motion to vacate or set aside the dismissal and reinstate the bankruptcy case. This motion must be filed within 10 days of the dismissal order.

To be successful in having a dismissal order set aside, the debtor must resolve the issues that lead to the dismissal. For example, when a case is dismissed for failure to make trustee payments, the debtor must pay the money that they are behind on. Also, if the trustee moved to have the case dismissed for not providing certain documents, such as federal tax returns, the debtor must provide the documents along with a compelling reason as to why they were not submitted on time.

Certain situations are more challenging. For instance, if a debtor failed to complete the credit counseling course, the Bankruptcy Court is unlikely to vacate the dismissal without a significant and compelling reason why this requirement was not fulfilled.

When a case is dismissed for willful fraud, purposefully lying, or withholding information, the Bankruptcy Court will not set aside the dismissal order without significant proof that the debtor did not act fraudulently. In addition to the dismissal of their case and a discharge denial, a debtor guilty of bankruptcy fraud could be fined up to $250,000 and sentenced up to 20 years in prison.

Call Our Pennsylvania Bankruptcy Lawyers for a Free Consultation

If your bankruptcy case was dismissed, it is critical that you contact our Bucks County bankruptcy lawyers immediately. At Young, Marr, Mallis & Associates, our attorneys have over two decades of assisting debtors in navigating the difficult waters of bankruptcy. We understand the challenges that debtors face and that sometimes a bankruptcy case requires significant help. Call (215) 701-6519 to schedule a free, confidential consultation.