U.S. Trustee vs. Spivey, Adversary Proceeding No. 12-08002- Chapter 7 Discharge Denied

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

In this Chapter 7 bankruptcy case filed in the Galveston Division of the Southern District of Texas, the Bankruptcy Court found in its Memorandum Opinion that the debtors had failed to disclose that they sold two vehicles in the two years before they filed bankruptcy, and failed to disclose that they tithed to their church. They also failed to disclose payments to creditors, made frivolous purchases on their American Express cards, and paid some payments with money obtained from cash advances.

The Bankruptcy Court denied their discharge, finding that the debtors signed the documents under penalty of perjury, and under Section 727 of the Bankruptcy Code, their conduct in making false statements was cause for their discharge to be denied.

Also, the debtors tried to blame it on their counsel, by telling the Court that they had provided the information to their attorney. However, the Court found that they had reviewed and signed the documents, and that knowingly swearing to false information cannot be blamed on counsel's conduct.

So none of the debtors' debts will be discharged by the Chapter 7 case. Incidentally, it is also possible to be criminally prosecuted for perjury or bankruptcy fraud if you file bankruptcy, so be sure that all of your answers on the bankruptcy schedules and other documents are 100% correct and complete.