“O” Is For Objections By Creditor

o48A creditor has a very small window of opportunity to object to the discharge of a debt in bankruptcy. When the bankruptcy case is filed, a notice is sent out which has the deadline date for a creditor or trustee to object to the discharge. In a Chapter 7, a creditor may file an objection to that creditor’s debt being discharged. In order to object, the creditor must file a complaint to determine the dischargeability of a debt. This complaint is called an adversary proceeding.

The court may deny a chapter 7 discharge for any of the reasons described in section 727(a) of the Bankruptcy Code, for things such as the debtor’s failure to provide requested tax documents; failure to complete a course on personal financial management; transfer or concealment of property with intent to hinder, delay, or defraud creditors; destruction or concealment of books or records; perjury or fraud; failure to account for the loss of assets;  or filing a bankruptcy petition to soon after a previous filing.

A creditor may also ask for a debt to be excepted from discharge under section 523 of the Bankruptcy Code for things such as fraud; incurring debt with the intention of not paying it back and discharging it in bankruptcy, fraud while acting in a fiduciary capacity, embezzlement, or larceny; or for willful and malicious injury by the debtor to another entity or to the property of another entity.

There is a significant difference between an objection to discharge versus the dischargeability of a debt. An objection to a discharge, if sustained, kicks the debtor out of bankruptcy and the debtor will not get a discharge of his listed debts. Ever. The debtor remains personally liable for all debt. An objection to the discharchability of a debt, if sustained, only relates to a single creditor’s debt, not all of the debts.

It sounds like a lot can go wrong but in reality very few creditors file objections. What is even better, the creditor has a very limited time to file these objections. If they fail to do so, any objection is barred forever.

“O” also stands for:

Chris McAvoy is a Taylor,  Michigan attorney and consumer bankruptcy lawyer who helps people file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info. We help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, and the Downriver, Michigan area.

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