However, In the bankruptcy chapter 7 case of In Re Nathan Pigg, Southern District of Illinois Case Number 05-43560 and Adversary Case Number 11-4017, the court did not revoke the debtor’s discharge.
In this chapter 7 bankruptcy case the Debtor filed bankruptcy on October 14, 2005 and was granted a discharge of debts on March 7, 2006. Mr. Pigg’s former wife, Ms. Rennaker, alleged that from October 2005 through December 15, 2010 Mr. Piggs owed back child support in the amount of $8,547.41.
When the Debtor filed his bankruptcy petition, he was pursuing a claim for wrongful discharge against his former employer. The chapter 7 trustee employed an attorney to prosecute the wrongful discharge and the case was settled for $50,000.00. Rennaker then filed a proof of claim in debtor’s chapter 7 case so that she would be paid on the child support arrrearage claim.
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In 2008 the state court abated the amount of child support obligation of Mr. Pigg until another hearing could be held; and debtor’s former wife filed a motion to intercept any payments from the wrongful discharge discharge so that Debtor would not receive and spend the money. The state court then issued an order that the funds were to be sent to Debtor’s attorney to be held in the attorney’s trust account.
After the state court entered the order the Trustee objected to the claim indicating it had been superceded by the December 4, 2008 state court order. The Trustee then filed her final report and noted that any child support and alimony funds due to Debtor would be delivered to the Debtor’s attorney. After payment of all claims in the case there was a surplus of $13,307.23 and a check in that amount was mailed directly from the Trustee’ office to the Debtor.
Mr. Piggs subsequently cashed the check and spent the funds. As a consequence, Ms. Rennaker filed an adversary complaint pursuant to 11 U.S.C. 727(d)(1) and (2) seeking to revoke Debtor’s discharge. As it existed at the time Debtor’s case was originally filed, 11 U.S.C 727(d) provided that a trustee, creditor, or the United States Trustee after hearing and notice could revoke a discharge under subsection (a)(1) and (2) if the discharge was obtained by fraud of the debtor and the requesting party did not know of the fraud until after the granting of the discharge and also in the instance where the debtor acquired property of the estate or became entitled to acquire property of the estate and the debtor knowingly failed to report receiving the property of the estate and failed to deliver the property to the trustee.
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The court denied Ms. Rennaker’s claim which was brought on February 22, 2011 pursuant to 11 U.S.C. 727(d)(1) because it had not been brought within one year after the discharge was entered on March 7, 2006. However, the court noted that claim was not barred under 11 727(d)(2) because the case had not been closed. The code section governing this was 11 U.S.C. 727(e)(2). However, the court dismissed Ms. Rennaker’s claim because, according to court, her claim did not state a cause of action.
In sum, although the Debtor’s discharge was not revoked in this case, be aware that this can happen in certain circumstances. If you have questions about chapter 13 bankruptcy or chapter 7 bankruptcy Illinois, please visit our state pages.