While not typical, a creditor can object to having a debt discharged in Chapter 7 bankruptcy. One reason why a creditor might object is if you misled it when you applied for credit by, for example, misstating your income. Another potential objection is if you used your credit cards for luxury (non-essential) item within 90 days before filing or took a large cash advance within 70 days before filing. Those debts are presumed non-dischargeable but a creditor has to file a motion to object to them being eliminated.
Under Federal Rule of Bankruptcy Procedure 4004(a), a creditor must object to the debtor’s discharge no later than 60 days after the first date set for the meeting of creditor. Generally, if the creditor doesn’t file its objection within 60 days from the meeting of creditors it may be barred from objecting. However, it can ask the court for an extension to file an objection.
Our job is to anticipate any objections creditors might make and advise you on how we should respond. Usually, before a creditor files a motion with the court it will contact us to let us know that it is considering objecting to your discharge. They’ll also likely offer to settle with you for far less than what they believe you owe, since settling will save them time and legal fees. We’ll analyze the grounds for their objection and give you a call to get your side of the story. At that point, we have a few options. If we think their objection is legitimate and they seem serious about prosecuting it we might advise you to settle and we’ll suggest a counteroffer. If we don’t think they have a basis for their objection, we’ll probably respond by asking them for more evidence, such as billing statements. If their claim is small they might not want to put in the effort to pursue their claim.
Keep in mind that your bankruptcy attorney might ask for additional legal fees as well as court costs to defend a motion objecting to your discharge. In that case, you’ll have to weigh the difference between settling their complaint and defending against it at a hearing in front of the court.
If you have questions about whether your debts will or won’t be eliminate in bankruptcy, we hope you’ll come in for a free, no-obligation consultation with an experienced bankruptcy lawyer. You can make an appointment using our online scheduling system, or you can call 303.331.3403 to set up a time that’s convenient for you.