Whether you are a business or individual your bankruptcy case becomes much more difficult if, and when, you have an aggressive creditor. Many creditors accept the fact that when you file bankruptcy, you are doing so for good reasons and not for fraud or misrepresentation. Taken this fact, they do not usually challenge your discharge, i.e object to your discharge.
Having said that, some creditors object to a debtor’s bankruptcy case because of personal or emotional reasons, such as an ex-spouse or former business partner.
Other creditors, credit card companies or third party lenders, may believe that they have legal grounds to object and preclude their debt from being discharged. Typically this involves fraud, misrepresentation, theft, drunk driving or any other listed among those in Section 523 of the Bankruptcy Code. Contact our Bankruptcy Attorney in Riverside or Orange County to discuss any concerns you have where a creditor may challenge your discharge.
Creditors Can File an Adversary Proceeding to Object to Your Bankruptcy Discharge
In most cases, creditors have 60 days from your 341A Meeting of Creditors to object to your discharge by initiating an Adversary Proceeding and filing a formal complaint with the bankruptcy court. This begins a “mini-law suit” where creditors have the burden to prove your debt should be excluded from discharge. Some arguments have included falsifying a credit application, no intent to repay the debts, incurring debt prior to filing bankruptcy, and more.
Answer the Complaint to Avoid A Default Judgment
When a creditor files a complaint, you have a very limited time to file a responsive pleading to the complaint. If you fail to file a timely responsive pleading, typically the Answer, this results typically in a default judgment against. The debt is then not discharged, and in some cases, creditors will object to the discharge of all of your debts in bankruptcy.
Avoiding Trial Through Settlement
Upon filing your responsive pleading, there is a period for “discovery” that allows the exchange of information, documents, depositions and other requests. Motions can be filed and ultimately a trial before the bankruptcy judge. Few cases go all the way to trial however it can depend on the motivation and intent of the creditor. Most times a settlement can be achieved because the cost of trial may outweigh the likelihood of recovery.
Although rare, an objection to your bankruptcy discharge, i.e. filing of an adversarial proceeding, can have serious consequences. Contact our Bankruptcy Attorney in Riverside or Orange County for a free consultation regarding your questions. We also help debtors file bankruptcies in San Bernardino and Los Angeles County too.
