Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/fed/11usc_7b.ws

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/* We continue with Chapter 7, part two. */

SECTION 727 (11 U.S.C, 727)

727.  Discharge.

(a) The court shall grant the debtor a discharge, unless

(1) the debtor is not an individual;

/* This seemingly innocous section of the code results
corporations, limited partnership and other business entities
being incapable of receiving a discharge. In the best of lawyerly
tradition, of course, the section doesn't say, "corporations,
limited partnerships and limited liability companies are
ineligible for discharges. The point is that shells of bankruptcy
legal entities not be more attractive than starting new
companies. */

(2) the debtor, with intent to hinder, delay, or defraud a
creditor or an officer of the estate Charged with custody of
property under this title, has transferred, removed, destroyed,
mutilated, or concealed, or has permitted to be transferred,
removed, destroyed, mutilated, or concealed

(A) property of the debtor, within one year before the date of
the filing of the petition; or

/* And as a result, persons make legal transfers then lay low for
thirteen months. */

(B) property of the estate, after the date of the filing of the
petition;

(3) the debtor has concealed, destroyed, mutilated, falsified, or
failed to keep or preserve any recorded information, including
books, documents, records, and papers, from which the debtor's
financial condition or business transactions might be
ascertained, unless such act or failure to act was justified
under all of the circumstances of the case;

/* However, this section has been authoritatively construed as
meaning that a consumer bankrupt not need keep "books." */

(4) the debtor knowingly and fraudulently, in or in connection
with the case-

(A) made a false oath or account;

(B) presented or used a false claim;

(C) gave, offered, received, or attempted to obtain money,
property, or advantage, or a promise of money, property, or
advantage, for acting or forbearing to act; or
(D) withheld from an officer of the estate entitled to possession
under this title, any recorded information, including books,
documents, records, and papers, relating to the debtor's property
or financial affairs;

(5) the debtor has failed to explain satisfactorily, before
determination of denial of discharge under this paragraph, any
loss of assets or deficiency of assets to meet the debtor's
liabilities;

(6) the debtor has refused, in the case-

(A) to obey any lawful order of the court, other than an order to
respond to a material question or to testify;

(B) on the ground of privilege against self- incrimination, to
respond to a material question approved by the court or to
testify, after the debtor has been granted immunity with respect
to the matter concerning which such privilege was invoked; or

/* An important point. The debtor must be granted immunity first
before being required to testify. The U.S. Attorney must then be
contacted and receive permission from Washington to grant
immunity. As a practical matter if a debtor declines to answer a
question that is the end of the matter. */

(C) on a ground other than the properly invoked privilege against
self- incrimination, to respond to a material question approved
by the court or to testify;

(7) the debtor has committed any act specified in paragraph (2),
(3), (4), (5), or (6) of this subsection, on or within one year
before the date of the filing of the petition, or during the
case, in connection with another case, under this title or under
the Bankruptcy Act, concerning an insider;

(8) the debtor has been granted a discharge under this section,
under section 1141 of this title, or under sections 14, 371, or
476 of the Bankruptcy Act, in a case commenced within six years
before the date of the filing of the petition;

(9) the debtor has been granted a discharge under sections 1228
or 1328 of this title, or under sections 660 or 661 of the
Bankruptcy Act, in a case commenced within six years before the
date of the filing of the petition, unless payments under the
plan in such case totaled at least-

(A) 100 percent of the allowed unsecured claims in such case; or

(B)(i) 70 percent of such claims; and

(ii) the plan was proposed by the debtor in good faith, and was
the debtor's best effort; or
/* Therefore the general rule is that the debtor can only obtain
a discharge every six years. */

(10) the court approves a written waiver of discharge executed by
the debtor after the order for relief under this chapter.

(b) Except as provided in section 523 of this title, a discharge
under subsection (a) of this section discharges the debtor from
all debts that arose before the date of the order for relief
under this chapter, and any liability on a claim that is
determined under section 502 of this title as if such claim had
arisen before the commencement of the case, whether or not a
proof of claim based on any such debt or liability is filed under
section 501 of this title, and whether or not a claim based on
any such debt or liability is allowed under section 502 of this
title.

(c)(1) The trustee, a Creditor, or the United States trustee may
object to the granting of a discharge under subsection (a) of
this section.

/* This section is again of a complex one, although it appears
simple. Note that a "party in interest" may not object, just a
creditor, trustee or U.S. trustee. */

(2) On request of a party in interest, the court may order the
trustee to examine the acts and conduct of the debtor to
determine whether a ground exists for denial of discharge.

(d) On request of the trustee, a creditor, or the United States
trustee, and after notice and a hearing, the court shall revoke a
discharge granted under subsection (a) of this section if-

(1) such discharge was obtained through the fraud of the debtor,
and the requesting party did not know of such fraud until after
the granting of such discharge;

(2) the debtor acquired property that is property of the estate,
or became entitled to acquire property that would be property of
the estate, and knowingly and fraudulently failed to report the
acquisition of or entitlement to such property, or to deliver or
surrender such property to the trustee; or

/* Divorce, property settlement and inheritances received within
six months after the commencement of the case become property of
the estate, an exception to the general rule that the estate has
no interest in the post petition earnings or property of the
debtor. */

(3) the debtor committed an act specified in subsection (a)(6) of
this section.

(e) 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

(2) under subsection (d)(2) or (d)(3) of this section before the
later of-

(A) one year after the granting of such discharge; and

(B) the date the case is closed.

SECTION 728 (11 U.S.C.  728)

728.  Special tax provisions,

(a) For the purposes of any State or local law imposing a tax on
or measured by income, the taxable period of a debtor that is an
individual shall terminate on the date of the order for relief
under this chapter, unless the case was converted under section
1112 or 1208 of this title.

/* The principal that the estate is created when the case is
filed results in the taxable year of the debtor ending and an new
trust entity being created. */

(b) Notwithstanding any State or local law imposing a tax on or
measured by income, the trustee shall make tax returns of income
for the estate of an individual debtor in a case under this
chapter or for a debtor that is a corporation in a case under
this chapter only if such estate or Corporation has net taxable
income for the entire period after the order for relief under
this chapter during which the case is pending. If such entity has
such income, or if the debtor is a pa