1. By Gary Ray Fraley
Of Fraley & Fraley
California State Bar Certified
Bankruptcy Law Specialist
©2014 Gary Ray Fraley Esq

2. Denial of Discharge under 727
1 Section 727 provides that a Chapter 7 discharge shall
be granted unless a):
1) Debtor is not an individual - No discharge for
Corporations & Partnerships
2) Acts to hinder, delay or defraud creditors, including
transferring, concealing or
destroying assets within 1 year
before filing or property of the
estate within 1 year after filing
of the petition
©2014 Gary Ray Fraley Esq

3. 3) Acts to hinder, delay or
defraud creditors, including
transferring, concealing or
destroying records
4) False oath, claim, attempt
to obtain money or a promise
of advantage by acting or not acting.
Examples include: fraudulent transfer to 3rd party
who gives it to an insider who promises to give
control back to debtor or making promises like
agreeing to make payments to a creditor simply to
buy time before filing.
©2014 Gary Ray Fraley Esq

4. 5) Failing to explain
missing assets
6) Refused to obey an
order of the court or
testify or invoked debtor's
right against self
incrimination and refused
to testify after a grant of
immunity, or refused on
any other ground
©2014 Gary Ray Fraley Esq

5. 7) Committed an act in 2, 3, 4, 5, or 6 above within
1 year as to another case concerning an insider
8) Granted a Chapter 7 discharge in a case filed
less than 8 years ago
9) received a Chapter 13 discharge with less than
100% to unsecured creditors (or 70% + good faith)
in a case filed less than 6 years
10) as to 8 & 9 above, the bankruptcy court
approves a waiver of discharge
©2014 Gary Ray Fraley Esq

6. 11) failed to complete the financial management
course
12) potential felony criminal
acts
©2014 Gary Ray Fraley Esq

7. 727(c) Who Can Object to Discharge
1) trustee, a creditor,
or the United States
Trustee may object
to the granting of a
discharge
2) on request of any
party in interest, the
court can order the trustee to determine whether
grounds exist to deny discharge
©2014 Gary Ray Fraley Esq

8. 727(d) Grounds for Revocation of Discharge
1) revoke a discharge if it was obtained through fraud
requesting party did not know of the fraud
2) failure to disclose and/or
turn over a post-filing asset
of the bankruptcy estate that
is not disclosed as required
3) violated (a)(6) regarding
failing to testify.
4) failing to explain a material misstatement in an audit.
©2014 Gary Ray Fraley Esq

9. 727(e) Who Can Request Revocation
Of Discharge & Time Limits
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
©2014 Gary Ray Fraley Esq

10. (2) under subsection (d)(2) or (d)(3) [ Post filing
estate assets] of this section before the later of—
(A) one year after the granting of such
discharge; and
(B) the date the case is closed.
©2014 Gary Ray Fraley Esq

11. Notes re: 523 vs 727
A 523 action can be settled between the parties
with a stipulated agreement.
A 727 action must be served on the UST. You and
the creditor cannot settle it between yourselves
because the court and the UST can refuse to agree to
the settlement. A basis for dismissal is an issue as to
the integrity of the system so the Judge and the UST
have a vested interest in determining if a denial of
discharge is appropriate from their perspective.
©2014 Gary Ray Fraley Esq

12. Many creditor’s and debtor’s attorneys (and it seems, all
pro-se creditors) do not know the difference between a
727 and 523.
If you were representing a creditor the only time a 727
action makes sense for a creditor is if the creditor has no
basis for a 523 claim. Knowing this you may use it to
help your debtor client.
©2014 Gary Ray Fraley Esq

13. If you represent a debtor and a creditor’s attorney
threatens a 727 action, you may be able to convince
the creditor’s attorney that it would not be in his client’s
the best interest to pursue a 727 denial of discharge
action.
Maybe the attorney does not want to end up helping
all the other creditors by having their debts denied
discharge as well as their clients debt. After all, do
they want to be the only one at the dinner table or
invite the whole world?
©2014 Gary Ray Fraley Esq

14. Consider your client’s true risk of denial of discharge under
727. It might be wise to make a deal with the creditor in a
523 action with a stipulated settlement. Then you can
explain to your client how
lucky they are to have
hired you.
Do you know what
happens then?
You get to ride off into the
sunset like the old time hero in the Western movies with a
happy client (and a bit of extra cash jingling in your pocket.)
©2014 Gary Ray Fraley Esq