11 U.S.C. § 727(a)(2), (4), (5) and (6).In Hughes v. Wells (In re Wells), 426 B.R. 579, 588–89 (Bankr.N.D.Tex.2006), the Honorable Barbara J. Houser, a bankruptcy judge for the Northern District of Texas, provides a clear and thoughtful discussion of the same four subsections of § 727(a) under which A & M seeks to have the Debtors' discharge denied. Instead of reinventing the wheel, the Court will quote extensively from Judge Houser's well-reasoned opinion in addressing each of the subsections separately below:
" Reed, 426 B.R. 227, 240 (Bankr. N.D. Tex. 2010); see also McNally, 374 B.R. at 600 ("A Chapter 7 debtor's right to obtain a discharge is absolutely and unconditionally dependent upon an honest and complete disclosure of all assets and the tendering of all non-exempt assets to the trustee for administration."); Hughes v. Wells (In re Wells), 426 B.R. 579, 598 (Bankr. N.D. Tex. 2006) ("Discharge is a privilege, not a right, and it should only be provided 'to those debtors who put forth a good faith effort in producing an entire picture of their financial affairs.'") (quoting J.P. Morgan Chase Bank v. Hobbs (In re Hobbs), 333 B.R. 751, 755 (Bankr. N.D. Tex. 2005)).
15. To deny a discharge under § 727(a)(5), a creditor has the initial burden of showing that assets the debtor once had are no longer available for creditors. Hughes v. Wells (In re Wells), 426 B.R. 579, 606 (Bankr. N.D. Tex. 2006); Fiandola v. Moore (In e Moore), 619 Fed. Appx. 951, 954 (11th Cir. 2015)(explaining that a creditor has the burden under § 727(a)(5) to prove that the debtor "at one time owned the assets which are no longer available for creditors"). Once a creditor has introduced sufficient evidence "substantiating the disappearance of substantial assets of the debtor, 'the burden shifts to the [d]ebtor to explain satisfactorily the losses or deficiencies.'" In re Wells, 426 B.R. at 606.
First, the Debtor omitted the Contract for Deed on his Schedule G. [Finding of Fact No. 29]. In Texas, land sale contracts are construed as executory contracts, and debtors who file for bankruptcy in Texas must disclose such contracts on their Schedule G. Rancho Chamberino, Inc. v. B.F.W. Enters., Inc. (In re Rancho Chamberino, Inc.), 89 B.R. 597, 600 (W.D. Tex. 1987); In re Wells, 426 B.R. 579, 603 (Bankr. N.D. Tex. 2006) (noting that the debtor was required to disclose the executory contract on Schedule G, but he failed to do so); In re Hendrickson, No. 04-81261-BJH-13, 2005 WL 3670876, at *2 (Bankr. N.D. Tex. May 24, 2005); In re Waldron, 65 B.R. 169, 172 (Bankr. N.D. Tex. 1986); Turoff v. Sheet (In re Sheets), 277 B.R. 298, 303 (Bankr. N.D. Tex. 2002); In re Finley, 138 B.R. 181, 182 (Bankr. E.D. Tex. 1992) ("[A]fter a review of relevant Texas law, this Court can come to no other conclusion but that a contract for deed is an executory contract under Texas law.").
Material, intentional misstatements on the schedules or Statement of Financial Affairs are false oaths. A debtor in chapter 7 bankruptcy has a continuing, affirmative duty to provide complete, accurate schedules and a Statement of Financial Affairs. Hughes v. Wells (In re Wells), 426 B.R. 579, 599 (Bankr. N.D. Tex. 2006). "A debtor has a paramount duty to carefully consider all questions posed on his schedules and statement of affairs and see that each question is answered completely in all respects."
Accordingly, the party objecting to the grant of a chapter 7 discharge bears the burden of proving all of the elements of an exception to the discharge under section 727(a).See 11 U.S.C. § 727(a) ("The court shall grant the debtor a discharge, unless [one or more of twelve different bases for the denial of a discharge applies]") (emphasis added); see also Judgment Factors, LLC v. Packer (In re Packer), 816 F.3d 87, 91 (5th Cir. 2016); Hughes v. Wells (In re Wells), 426 B.R. 579, 587 (Bankr. N.D. Tex. 2006). Packer, 816 F.3d at 91 (quoting Hudson v. Raggio & Raggio, Inc. (In re Hudson), 107 F.3d 355, 356 (5th Cir. 1997)); see also Benchmark Bank v. Crumley (In re Crumley), 428 B.R. 349, 356 (Bankr. N.D. Tex. 2010).
Neary v. Guillet (In re Guillet), 398 B.R. 869, 888 (Bankr. E.D. Tex. 2008) (citations and internal quotations omitted). See also, Hughes v. Wells (In re Wells), 426 B.R. 579, 594 (Bankr. N.D. Tex. 2006) (finding that, though an impeccable system of bookkeeping is not required, "creditors should not be required to speculate about the financial condition of the debtor or hunt for the debtor's financial information."); Stapelton v. Yanni (In re Yanni), 354 B.R. 708, 712 (Bankr. E.D. Pa .2006) (noting that §727(a)(3) "ensures that creditors are supplied with dependable information on which they can rely in tracing a debtor's financial history.").
Neary v. Guillet (In re Guillet), 398 B.R. 869, 888 (Bankr. E.D. Tex. 2008) (citations and internal quotations omitted). See also, Hughes v. Wells (In re Wells), 426 B.R. 579, 594 (Bankr. N.D. Tex. 2006) [finding that, though an impeccable system of bookkeeping is not required, "creditors should not be required to speculate about the financial condition of the debtor or hunt for the debtor's financial information."]; Stapelton v. Yanni (In re Yanni), 354 B.R. 708, 712 (Bankr. E.D. Pa. 2006) [noting that §727(a)(3) "ensures that creditors are supplied with dependable information on which they can rely in tracing a debtor's financial history."].
The objecting party— the Trustee in this case—carries the burden to demonstrate that, by a preponderance of the evidence, "(1) the Court issued an order directed at the debtor; (2) the order was lawful; (3) the order was not one requiring a response to a material question or to testify; and (4) the debtor refused to obey that order." In re Wells, 426 B.R. 579, 608-09 (Bankr. N.D. Tex. 2006) (internal quotation marks omitted). A showing that the Debtor simply failed to comply with the court order is not sufficient to deny discharge.
Neary v. Guillet (In re Guillet), 398 B.R. 869, 888 (Bankr. E.D. Tex. 2008) (citations and internal quotations omitted). See also, Hughes v. Wells (In re Wells), 426 B.R. 579, 594 (Bankr. N.D. Tex. 2006) [finding that though an impeccable system of bookkeeping is not required, "creditors should not be required to speculate about the financial condition of the debtor or hunt for the debtor's financial information"]; Stapelton v. Yanni (In re Yanni), 354 B.R. 708, 712 (Bankr. E.D. Pa. 2006) [noting that §727(a)(3) "ensures that creditors are supplied with dependable information on which they can rely in tracing a debtor's financial history"]. Under §727(a)(3), a plaintiff must prove that a debtor: (1) failed to keep and preserve financial records; and (2) that this failure prevented the plaintiff from ascertaining the debtor's financial condition.