Chapter7February 15, 2016

Facts:

  • Debtor filed for Chapter 7 and received a Discharge
  • Shortly after, Trustee filed motion seeking turnover of income tax refund.
  • Court Ordered the non-exempt portion of the refunds be paid in lump sum to Trustee
  • Debtor made partial payments but did not make all the payments
  • Trustee filed Order to Revoke Debtor’s Chapter 7 Discharge since the debtor did not abide by Court Ordered Turnover Order.
  • Debtor then paid the remainder of payments to the Trustee

Court Findings:

  • In order to revoke a debtor’s discharge, the failure to surrender property must be knowing and fraudulent.
  • Trustee must present evidence that the Debtor knowingly intended to defraud the Trustee or engaged in such reckless behavior as to justify the finding.
  • Court ruled that the Trustee accepted payments rather than lump sum amount and failed to amend the Order requiring a lump sum payment.
  • Debtor’s Discharge was not revoked – Debtor prevailed. No evidence of fraudulent activity.

Court Orders must be following strictly by Trustees and Debtor alike.