When an individual chooses to exercise his or her right to bankruptcy under Chapter 7, it results in immediate financial relief on several fronts in return for restrictions on that person’s financial behavior for a set period of time and forfeiture of some forms of personal property. Depending on the nature of that individual’s need, they may discharge a significant of personal debt against the wishes of creditors.
However, under Chapter 7, the debtor does not enjoy absolute rights to discharge all of their eligible debts. Creditors do have the opportunity to object to certain discharges, provided that they abide by the guidelines of the bankruptcy process.
What Happens if a Creditor Objects to Discharge?
If a creditor chooses to object to bankruptcy, it must file an official objection in court, called an adversary proceeding. In order to halt the discharge, the creditor objects to specific discharges on a limited set of legal grounds. If the court grants the objection, you’ll remain responsible for paying the debt.
In broad strokes, creditors usually object to a discharge on technical or fraudulent bases. For instance, the creditor may object to the discharge successfully if the debtor did not follow proper procedures when providing tax documentation or did not undergo required personal financial training as part of the bankruptcy. Similarly, the creditor may succeed if it can prove that the debtor acted fraudulently toward the creditor, beyond simply failing to pay the debt itself.
If Chapter 7 bankruptcy is a good fit for your needs, be sure to consider how you can avoid such complications through careful preparation. Bankruptcy may offer the relief you need to get back on your feet and out from under crushing debt, but it is not useful if you do not properly abide by the strict process outlined in the law.
An experienced bankruptcy attorney can offer individual guidance through the bankruptcy process, ensuring that you do not miss important opportunities and benefits as you regain control of your finances.
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