If you are too deep in debt and you cannot see being able to pay back all the creditors you owe, you might be considering filing bankruptcy. Or, if you have the means to repay your debt but need a way out of repossession threats or wage garnishment, you might want to consider bankruptcy. Bankruptcy discharge gives you a chance to a fresh start after a financial failure.
There are two main types of debt in bankruptcy: dischargeable and nondischargeable. Examples of nondischargeable debts are child support, alimony, student loan, and most taxes. But in rare cases, creditors may challenge a debt discharge even in common debts like medical bills and credit cards. The bankruptcy law gives them the right to file their objections within a specific period of time.
People filing bankruptcy are normally highly anxious and have been for a long time. Usually, it helps a lot for debtors to know that some of their worries are unnecessary, such as knowing whether their bankruptcy is going to be challenged by a creditor or not.
Whether you are filing a Chapter 7 or Chapter 13 case, creditors tend not to raise any objections to a bankruptcy case, they typically do not argue with your ability to discharge debts. Quite often they do not get involve in your case at all that is obvious to you after it you filed.
They can, however, raise two kinds of objections, although both very rare.
First, a creditor can challenge your bankruptcy case or the discharge of all debts. This is uncommon because it usually involves claims that you are concealing assets from the court, lying under oath, have secretly transferred assets, and other forms of fraud. So long as you are honest with your lawyer, and carry out every advice about disclosure of information as needed, this rarely happens.
Second, a creditor can file an objection on your ability to discharge a particular debt if the circumstances satisfy one of the exceptions to discharge. It may involve claims that you were deceitful or you defrauded the protesting creditor concerning the financial obligation that is at issue. These may involve bounced checks, over-limit credit cards, substantial credit card transfers or using credit card shortly before declaring bankruptcy, and receiving welfare like unemployment benefits by being untruthful about your history of employment.
In most cases, when you think some creditor would object to your bankruptcy, this does not really come to pass simply because it is not financially beneficial for creditors to do so. The most usual exceptions involve creditors with ulterior motive, like former business partners or ex-spouses.
The best way to have peace of mind regarding what a creditor will do after you file bankruptcy is to talk to an experienced bankruptcy attorney about your concerns. Whatever you say your attorney is private and you ought to be truthful and detailed. Doing this will give you relief of knowing what you do not have to be stress about.