4 Steps to Executing a Waiver of Discharge

Most people who file Las Vegas bankruptcy are looking to discharge debts, especially if they are filing in chapter 7. There are circumstances, however, when discharge isn’t the debtor’s ultimate goal—or at least discharge of all debts. For example, many people who file chapter 7 also sign reaffirmation agreements with the lender who holds the loan on their cars. The benefit is that debtors can keep their vehicles. There is another, similar option debtors can use to preserve a debt: the written waiver of discharge, which appears in section 727(a)(10) of the Bankruptcy Code. Here’s what’s necessary to obtain one of these.

  1. The waiver must be in writing. Oral agreements are not enforceable waivers. They will not be honored.
  2. Similarly, the waiver must also be signed by the debtor. Bankruptcy courts will not approve waivers without some kind of written assent by the debtor that creditors can point to in case the bankruptcy case is appealed.
  3. The debtor must file bankruptcy. This sounds superficial, but it’s actually crucially important. A waiver that the debtor submits to the bankruptcy court before filing, such is in a prepetition adversary proceeding, is not valid. Even reaffirmation agreements signed after the waiver are invalid.
  4. The bankruptcy court must approve the waiver. Often the bankruptcy court will require a hearing to ensure the debtor is serious about the consequences of waiving his or her discharge rights. The court will grant the waiver if it believes waiver is in the debtor’s best interest and the debtor understands the consequences of the waiver.

But why would a debtor seek a written waiver of a discharge? The most common situation is when the debtor knows that he or she will be unable to discharge the debts in question, or when the trustee has alleged that the debtor is trying to fraudulently discharge the debt or is filing bankruptcy in bad faith. The benefit of the waiver is that the bankruptcy court will not dismiss the case, which will allow the trustee to proceed with liquidating the estate nonetheless to the debtor’s advantage.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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