When you file for Chapter 7 and make it through the meeting of creditors, it's usually safe to assume that your bankruptcy discharge is right around the corner. However, this isn't always the case. A creditor or bankruptcy trustee still has time to object to your bankruptcy discharge after the meeting of creditors, and they may choose to do so if they believe they have the grounds to succeed.
What happens if a creditor objects to discharge?
Objections happen for a reason, and your creditors or trustee will need to have a strong case if they choose to object to your discharge. Learn more about why a creditor or discharge might object to your discharge:
What is a bankruptcy discharge?
A discharge is your final goal when you file for bankruptcy. Getting a bankruptcy discharge means that your personal liability on your debt is wiped out and creditors can no longer try to collect the money from you. After you receive a discharge, creditors are not allowed to call you, sue you, garnish your wages or continue on with any other collection efforts on the debts that have been discharged.
Are All Debts Discharged in Bankruptcy?
Not all debts can be discharged in bankruptcy. Debts such as student loans, certain taxes, child support, and alimony cannot be discharged when you file for bankruptcy. These creditors usually don't file objections with the court because the law makes it clear that these types of debts cannot be discharged. However, some debts that are normally dischargeable, such as credit cards and personal loans, may be non-dischargeable in certain situations. If your creditor feels that its debt should not get discharged, they can file an adversary proceeding seeking to have the debt owed to them declared non-dischargeable.
What Is an Objection to the Bankruptcy Discharge?
A creditor or the bankruptcy trustee can challenge whether a particular debt should be discharged or they can challenge the entire bankruptcy discharge. These challenges are either called objections to discharge or non-dischargeability proceedings depending upon which type of relief is being sought. If a party in your bankruptcy doesn't believe that a debt should be discharged, they may file an adversary proceeding with the bankruptcy court and request that the debt not be discharged. Trustees will usually object if they believe that you were dishonest in your bankruptcy papers or if you failed to qualify for a discharge under the bankruptcy code. When a creditor objects, it's usually due to a specific debt based on when or how you took out that debt. The deadline to file an objection to the discharge is sixty (60) days after the meeting of creditors.
Common Objections to Discharge
In a Chapter 7 bankruptcy, a creditor or trustee can either object to the discharge of a particular debt or they can object to the discharge of all of your debts. If a creditor objects to a specific debt, it will not affect any of the other debts in your case. If the creditor wins, the debt will not be discharged, and you'll be required to repay the debt. When a creditor or trustee objects to all of your debts, it's usually based on alleged fraud committed by the debtor. You may be committing fraud if you make false representations to a creditor or to the Court.
Here are several common reasons that you wouldn't receive a bankruptcy discharge:
- You received a Chapter 7 bankruptcy discharge within the past eight years
- The debt is a priority debt and cannot be discharged. Alimony, child support, court costs, student loans and fines owed to the government can never be discharged
- You intentionally filed a tax return with false information
- You recently spent more than $650 on luxury items within 90 days of filing or took out a cash advance of $925 or more within 70 days of filing
Although it's unlikely that you'll receive an objection to your bankruptcy, it's important to know that it's a possibility. If you're honest throughout your bankruptcy and in your paperwork, you shouldn't have any problems receiving a bankruptcy discharge. An experienced bankruptcy attorney will be able to go over your case with you and help you determine if there are any reasons why you wouldn't be able to receive a bankruptcy discharge.