Section 727(a)(3) states that the court shall grant the
debtor a discharge unless 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 the failure to act was justified under
all of the circumstances of the case.
The purpose of §727(a)(3) is to give a creditor and the
court complete and accurate information concerning the
status of the debtor’s financial affairs and to test the
completeness of the disclosure requisite of a discharge. The
policy served by debtor’s disclosure obligations is to give
unsecured and undersecured creditors the ability to trace a
debtor’s financial history to determine whether they are
being treated fairly.
The elements of a §727(a)(3) claim that must be proved by a
preponderance of the evidence are as follow: (1) the
creditor must prove that the debtor failed to keep or
preserve records; and (2) such failure was not reasonably
under the circumstances and this failure makes it impossible
to ascertain the debtor’s true financial condition or
business transactions. All records that are necessary to
understand a debtor’s financial condition are within the
scope of this section. All books and materials which shed
light on what was done with a debtor’s bankruptcy estate and
the factors which led to the filing for relief are material
to a §727(a)(3) analysis.
In a personal bankruptcy case, the quintessential documents
that must be preserved and kept are debtor’s pay stubs and
tax returns. The debtor’s failure to provide bank and credit
card statements can also form the basis for denying a
discharge under §727(a)(3) since those documents form the
core of what is necessary to ascertain the debtor’s
financial condition, primarily debtor’s use of case assets.
The determination of whether a debtor has maintained
adequate records is particularly fact intensive and must be
determined on a case by case basis. Considerations relevant
to this determination include debtor’s occupation, financial
structure, education, experience, and sophistication.
Your Bankruptcy Advisor
Blog By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm Click for Bankruptcy Lawyer Job Opportunities. You are invited to contact Attorney Schaller at 630-655-1233 or visit his website at Discharging Student Loans to learn about how the bankruptcy laws can help you.
Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys. For information about Chapter 7 bankruptcy Click Here
For information about Chapter 13 bankruptcy Click Here NOTE: Robert Schaller looks forward to the opportunity to talk with you about your legal issues. But please remember that all information on this blog is for advertising and general informational purposes only. Please read Bob's disclaimer. I recommend that you review a few other blogs that may be of interest to you. These blogs are identified in the right column and are set forth below: bankruptcy issues blog; bankruptcy and family law issues blog; bankruptcy and employment issues blog; adversary defense blog; and bankruptcy and student loan issues blog.
Wednesday, May 19, 2010
Subscribe to: Post Comments (Atom)
Post a Comment