Bankruptcy Crimes

The chapter 7 bankruptcy discharge is a special order that a court issues to both the debtor and the creditor to indicate that the property in question belongs to either of them. In this way, the debtor has no personal responsibility towards the debt and at the same time the creditor has no responsibility in the collection of the debt.

The bankruptcy court however has the right to deny the individual who has applied for this a discharge. This may be due to several factors including a lie on the debtors’ part concerning a financial crime committed in the past. They could also deny the chapter 7 discharge in case in case the debtor fails to produce valid financial records of the past business transactions among other reasons. However some secured creditors are allowed to recoup the property of the debtor in special cases. Secured creditors are those individuals who have claim on a charge on the debtor’s property.

In some cases, a debtor may want to keep some of the property. In such a case a reaffirmation statement is drawn and the two parties involved sign up an agreement. The debtor therefore remains liable towards the debt with an agreement that he will not recoup the reaffirmed property as long as the debtor is willing to pay the debt attached to it.    

Reaffirmation of property by the debtor is only valid if done so before the bankruptcy discharge has been applied for. It is important to note that it is not always that the debtor’s property may be affirmed. In case the court does not grant the debtor this privilege, he continues to pay for the debts attached to them.