Is there any way to recover money owed after a debt has been discharged?

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Is there any way to recover money owed after a debt has been discharged?

I own an S corp. Last year, a sub-contractor, who owed my company $20,000, filed for bankruptcy and the debt was discharged by the court. Less than 1 year later, the sub-contractor has opened a new business, and is in the process of building a facility that would certainly be valued in excess of $20,000. I am certain the sub-contractor hid certain assets from the court, as well as cash, and I want to know if there is any way to seek restitution through the court?

Asked on July 31, 2011 Maine

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A discharge, such as through bankruptcy, eliminates the debt; it cannot thereafter be pursued, even if the debtor later has sufficient assets that he or she could pay the debt. IF it can be proven that a fraud was committed on the bankrutpcy court and process, that *may* be enough to open the discharge back up and seek payment of debts--but that would be a *very* high bar to get over. If you believe that this may have been the case, you should consult with a bankruptcy attorney to discuss the matter, including whether you could do this, what evidence might be required, the odds of success, and also, critically, the cost to pursue.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

A discharge, such as through bankruptcy, eliminates the debt; it cannot thereafter be pursued, even if the debtor later has sufficient assets that he or she could pay the debt. IF it can be proven that a fraud was committed on the bankrutpcy court and process, that *may* be enough to open the discharge back up and seek payment of debts--but that would be a *very* high bar to get over. If you believe that this may have been the case, you should consult with a bankruptcy attorney to discuss the matter, including whether you could do this, what evidence might be required, the odds of success, and also, critically, the cost to pursue.


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