The personal bankruptcy discharge and creditor objections

On Behalf of | Nov 15, 2018 | personal bankruptcy |

Frankfort residents who are drowning in debt and do not know where to turn should consider the advantages of personal bankruptcy. Before moving forward with the process, however, it is vital to understand certain aspects of it and if it is a viable alternative. For many, there could be a misplaced belief that the filing will automatically result in the debts being discharged. That is not always the case. Creditors can object to the discharge. Knowing the facts about these issues is imperative to a successful filing or finding another way to get out of debt if personal bankruptcy is not possible.

When filing for Chapter 7 bankruptcy, the debtor is not automatically entitled to a discharge. A creditor, the trustee in the specific case or a U.S. trustee can all file an objection. After the case has been filed, the creditors will receive notice. In that notice will be a deadline for which an objection can be filed. To do so, a complaint must be filed in bankruptcy court. This is called an “adversary proceeding.” With Chapter 7, the objection can be due to not providing the necessary tax documents, not competing a financial management course, transferring or concealing property to commit fraud and more. The burden of proof is on the objecting party.

With Chapter 13 bankruptcy, when the payments under the plan have been completed, the debtor will generally be entitled to the discharge. Should the debtor not complete the financial management course, there might not be a discharge. In addition, a debtor cannot get a discharge in Chapter 13 if there was a previous discharge in another case under certain time parameters. With Chapter 13, the creditors cannot object to the discharge. They can object to the confirmation of the payment plan. Once the payments have been completed, there can be no objection to a discharge.

Bankruptcy is a perfectly legal and beneficial strategy to overcome overwhelming financial challenges. It is important to remember that there are requirements and laws that go along with it. People often make the mistake of thinking they are automatically going to get a discharge; however, if they do not adhere to the rules, it is possible that they will not get the discharge or there can be an objection. A law firm that specializes in helping those who are thinking about getting debt relief through bankruptcy can be of assistance. This not only helps address any questions and concerns but can also help you better protect your rights.