Bankruptcy Process: Can a Creditor Prevent a Discharge?
There are a number of reasons that lead people to filing for personal bankruptcy. Among the top causes are accumulated debts from: medical expenses, loss of employment, separation or divorce, excessive use of credit and unexpected expenses. All of these situations can quickly spin out of control and leave you with little or no resources to pay off your debt. Bankruptcy can be an effective way to take control of your finances. The ultimate goal of bankruptcy is to discharge — wipe out —overwhelming debt and gain a financial fresh start.
People who qualify to file under Chapter 7 can wipe out most of the consumer debt. In contrast, people who file under Chapter 13 create and follow a repayment plan for their creditors and a portion of their debt can be discharged. In some instances, a discharge may not be guaranteed. A creditor may object to the discharge of a debt causing you to remain liable to pay the debt despite your bankruptcy filing.
Reasons a creditor can object to a discharge
Among others reasons, creditors (or the bankruptcy trustee) can base their objection to discharge on the following:
- Hidden assets
- Falsifying information
- Disregard of court order
- Violation of bankruptcy rules
The process of objecting to discharge
A creditor may file a petition objecting to a discharge within 60 days of the meeting of the creditors. This triggers an adversarial proceeding where a bankruptcy judge considers written arguments from all parties and then conducts a hearing. The party objecting to the discharge has the burden of proving the facts to support the claim. Quite often judges advocate that the parties negotiate a fair settlement between them which must be approved by the court.
A creditor may initiate an objection to a single debt listed on your petition or to your bankruptcy estate as a whole. In the case of a single objection, the other debts listed get discharged as without disruption. A Los Angeles bankruptcy attorney can represent your interests throughout the process. Contact the Law Offices of Michael Jay Berger.