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Can I get my bankruptcy discharge revoked or withdraw my bankruptcy petition?

Rochester, NY |

I filed bankruptcy in the past six months.
I had my trustee meeting.
Two months later I got my discharge.
Three months after that my bankruptcy is still open.

I inadvertently left assets off my schedules and I am now having the schedules amended to include them.

However, I believe I never would have filed bankruptcy had I known about these assets at the time of filing.

Can I ask the trustee to revoke my discharge or can I withdraw my bankruptcy petition since it is still open?

Or will the trustee revoke my discharge because of my new assets?

The assets include a lawsuit (already filed, thus the assets) which could possible be worth $150,000 and the debts were half only one quarter of that. If the bankruptcy is not discharged I will lose my right to sue and the bankruptcy trustee may settle with the defendant. Had I known about these assets I would never have filed bankruptcy. I would pay back the debts if I won my already filed lawsuit. Scenarios?

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Attorney answers 7

Posted

Unlike a Chapter 13, in a Chapter 7 bankruptcy the debtor dos not have an automatic right to dismiss the case.
If assets are discovered, the Trustee can object to the dismissal so that he can administer the assets.
Now that you have been discharged, there is no good reason why the discharge should be vacated and you be allowed to dismiss the case.
If your assets exceed your bills, you will get to keep the extra.
Look at it this way, when you filed you wanted to get rid of your bills. Now that assets have been found, creditors shouldn't have to chase you down to get paid.

Asker

Posted

Does the trustee get to settle possible claims of $200K plus for one-fifth (or less) of that amount with the defendant in my lawsuit in order administer assets? Can I make a deal with the trustee to pay back a percentage of the settlement (or the full amount) if I win the pending lawsuit, which there is a good possibility?

Matthew Scott Berkus

Matthew Scott Berkus

Posted

Can trustee settle: Yes. Can yo make a deal with trustee to pay back a portion, NO (the trustee is under an obligation to your creditors and gets paid a percentage of the amount recovered, so there is absolutely no incentive for such a resolution).

Asker

Posted

So the defendants attorney could call the trustee to settle (or vice versa) as the settlement with the trustee would be less than what I'd settle for if I was able to pursue the case and I'd get nothing. What if I asked the court to withdraw my case without prejudice?

Asker

Posted

Since the bankruptcy is not closed but is discharged, can I have it converted to Chapter 13 now that assets have been discovered and I never would have filed Chapter 7 had I known about the assets?

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

A Ch. 13 must pay creditors as much as they would get in a Ch. 7. IF the recovery in the suit pays everyone (noting that virtually everyone thinks they are going to win the case), the CH. 7 can liquidate and pay everyone in full when the case is closed. Creditors (and the Trustee, UST and Judge ) may believe this is a much better option than a 13. You have a lawyer - that is who can best answer your questions and who should be answering. We know only the minimal details you choose to share.

Matthew Scott Berkus

Matthew Scott Berkus

Posted

We have deviated well into the realm of the hypothetical. You are spending a lot of energy here and testing the kindness of the "volunteer" lawyers on this forum when you really should be having this discussion with your lawyer. Here is the summary as best as I can tell. 1. Your bankruptcy is not closed 2. This lawsuit is 100% in control of the bankruptcy trustee at this point. The trustee can settle it, you can't withdraw it. 3. There is no way for a debtor to revoke their own discharge (at least, not in this type of situation). 4. Would have, could have, should have...doesn't matter at this point. Beyond that, everything else is specific to your case and must be discussed with your lawyers. Although, based on some of your other information, you may want to consider "upgrading" to a different bankruptcy attorney. Sounds like you know you had a "claim", just not sure of the particulars at the time of filing...the claim gets listed (that is bankruptcy 101).

Posted

Facts are important. That starts with the specific assets at issue, and the reason you left them off or didn't know about them. As pointed out, there is no right to dismiss. It is usually difficult to get it dismissed when there are assets but, again, you left out the important parts of the story.

Asker

Posted

The reason they were left off was that my bankruptcy attorney and I didn't realize there was a lawsuit at the time and what the specific claims were. I made it clear to my bankruptcy attorney that I didn't want to lose the right to sue but she didn't list the possible claims or assets properly.

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

You need to discuss your questions with your bankruptcy lawyer and the lawyer in the lawsuit.

Jayson Lutzky

Jayson Lutzky

Posted

How did you not know that you had a potential lawsuit?

Asker

Posted

I knew there was a lawsuit but my bankruptcy attorney didn't list it (even though I requested him to do so in writing) nor did he properly list my interests in real property which I didn't know I had (as I am not on the title).

Jayson Lutzky

Jayson Lutzky

Posted

Possible malpractice claim. Consult with a local lawyer.

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

It is the Debtor's 100% responsibility to review the schedules in detail and sign under penalty of perjury they are true, correct and complete. The failure to do so is virtually never going to lead to a malpractice claim (and if it happened before filing, it would be property of the Ch.. 7 estate anyway). If it happened after filing, such as when the asset was allegedly "discovery," the debtor likely has no compensable damages as the filing of the Ch. 7 is water under the bridge.

Asker

Posted

What if the schedules were not reviewed by the debtor and were just electronically signed by the bankruptcy attorney and filed?

David John Hastings

David John Hastings

Posted

Then the debtor would have had to perjure himself at the 341 meeting.

Asker

Posted

The debtor didn't understand the possible claim and how to list it and told her attorney to to include all claims rather then lose them.

Posted

You inadvertently left off a law suit worth $150,000.00? You will probably still get your discharge but the trustee will hire the lawyer that is suing and settle the case and pay off your creditors. On the positive side, if there is anything left off after the settlement it will go to you. While you amend your schedules make sure to claim as much of the asset as exempt as possible.

Answers are provided for direction only; it is not a substitute for an office consultation.

Asker

Posted

It was inadvertently left off because I didn't realize I had a lawsuit. So the trustee will hire my attorney to settle the case? That's not so terrible as long as there is something left over. I'd rather have the discharge revoked and I payback the creditors but I guess the trustee wouldn't make any money then.

Michael Hal Schwartz

Michael Hal Schwartz

Posted

You got it! M.

Jayson Lutzky

Jayson Lutzky

Posted

Hard to forget a lawsuit potentially worth $150,000 and Mr. Schwartz is correct in his analysis.

Charles Ross Smith III

Charles Ross Smith III

Posted

Consider this: Your attorney should have asked you if you had any lawsuits pending when your petition was prepared. They should have given you a form to fill out that asked if you had any lawsuits pending. When you signed your petition in the part called "Statement Of Affairs" there definitely was a question that asked about lawsuits pending. And finally, at the first meeting of creditors, the Trustee swore you in and asked you if there were any lawsuits pending. You are lucky that the assets are working out to pay the creditors or the consequences would be much more severe. The denial of the discharge is bad enough, but did you read the part on your petition about that $500,000.00 fine and 5 years in jail? Bankruptcy Court is a high stakes game and there are no do-overs. I'm glad you got lucky but you are not out of the woods yet. Pay close attention to what your attorney says as you this plays out. Good luck.

Posted

The criteria a judge uses to determine whether to dismiss a bankruptcy is what is in the best interests of the creditors. If it is likely that the creditors will be paid a substantial portion of what is owed to them, the court is unlikely to dismiss. It is hard to justify giving you what you want when you failed to properly submit information required in the bankruptcy filing. You are required to show that you were diligent in your efforts to properly make full disclosure of your assets. Your actual knowledge isn't the criteria that will be persuasive to the court. That's why I say filing Chapter 7 is like jumping off of a cliff. Hope this perspective helps!

Michael Hal Schwartz

Michael Hal Schwartz

Posted

As usual, I agree with Ms. Bunce, but I would like to add that I personally am afraid of cliffs and am not afraid of bankruptcy so I am not too sure that analogy works. Of course, I don't live in Las Vegas and I believe that gambling is like throwing money in the garbage so I guess it all depends on one's perspective.

Dorothy G Bunce

Dorothy G Bunce

Posted

I guess I should have said that bankruptcy filing bankruptcy without out experienced representation is like jumping off a cliff. Gambling is simply a form of consumer fraud and delusion, IMHO.

Posted

Revoking the discharge would do no good even if you could...the bankruptcy is still filed and on your credit report. Think of the bankru[ptcy as holding creditors at bay while you litigate your rights. Also, you may not have to pay all of the debts as it is not uncommon for creditors to failt to file a "Proof of Claim" in an asset chapter 7, so you may make out better anyway with the filing.

Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

Posted

To build on the very goodresponses already given, once a bankruptcy case is filed your estate is under the control of the court. The trustee is highly unlikely to permit you to withdraw your petition. Failure alone to disclose such significant assests may be seen as fraud on the court. At best the trustee will settle your case, pay off those creditors who have file a prrof of claim, collect a fee for the work performed and return the balance to you.

Posted

You no longer have any control in a Chapter 7 once the case is filed. The trustee would object to the dismissal if an asset was left off if the Debtor tries to dismiss the case. The trustee now has the right to settle the case for the benefit of your creditors.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are answers to general legal questions and the receiver of such question should consult a local attorney for specific answers to questions.

Asker

Posted

This is not a personal injury case, it is a bit more complex than that, and there is not a guaranteed pay out. Do you think the trustee would allow my attorney to proceed if he were to give the amount owed to the creditors to the trustee? Can I try and get the civil case dismissed without prejudice before the trustee tries and settle it?

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