If and when you have an aggressive creditor, whether you are a business or an individual, your bankruptcy case becomes considerably more difficult. Many creditors understand that you are filing bankruptcy for valid reasons and not for the purpose of defrauding them. Given this, they rarely challenge, i.e. object to, your discharge.
However, some creditors, such as an ex-spouse or former business partner, oppose to a debtor’s bankruptcy case for personal or emotional reasons. Other creditors, such as credit card companies or third-party lenders, may believe they have legal reasons to object to the discharge of their debt. Fraud, misrepresentation, theft, drunk driving, or any other offense mentioned in Section 523 of the Bankruptcy Code are common examples.
Keep reading to learn more about this situation and what you can do. Then contact Law Offices of Terrence Fantauzzi at (909) 552-1238 for a free legal consultation with a bankruptcy attorney.
Creditors might challenge your bankruptcy discharge by filing an adversary proceeding
In most circumstances, creditors have 60 days following your 341A Meeting of Creditors to file an Adversary Proceeding and file a formal complaint with the bankruptcy court to object to your discharge. This starts a “mini-lawsuit” in which creditors must prove that your debt should not be discharged. Falsifying a credit application, not intending to repay the obligations, acquiring debt prior to filing bankruptcy, and other justifications have been made.
To avoid a default judgment, respond to the complaint
When a creditor lodges a complaint against you, you only have a limited amount of time to respond. If you fail to submit a timely responding pleading, usually the Answer, a default judgment will be entered against you. The debt is not discharged, and creditors may object to the discharge of all of your debts in bankruptcy in some situations.
Settlement as an alternative to trial
There is a period of “discovery” after you file your responsive pleading that allows you to exchange information, documents, depositions, and other demands. Motions can be filed, and a trial before a bankruptcy court is possible. Few instances go all the way to trial, although it depends on the creditor’s motivation and intent. Most of the time, a settlement can be reached since the cost of going to trial may outweigh the chances of winning.
Although uncommon, launching an adversary procedure to challenge your bankruptcy discharge can have substantial repercussions. For a free consultation on your questions, contact Law Offices of Terrence Fantauzzi at (909) 552-1238 right away.