What Happens if My Creditors Object to a Discharge?
Obtaining a discharge is the primary purpose of filing bankruptcy. For Chapter 7 petitioners, the bankruptcy discharge begins their journey to a “financial fresh start.” The same is true for Chapter 13 filers who achieve personal and financial satisfaction when they successfully complete their repayment plans. A discharge means creditors may not seek further collection on any of the debts included in the bankruptcy estate.
However, the bankruptcy process allows creditors to raise a challenge on whether certain debts qualify for a discharge. Creditors and the bankruptcy trustee must file their objection to a discharge in writing within 60 days of the meeting of creditors. A judge will hear the case and rule on the objection. If the judge approves the objection then your debt will not be discharged.
A creditor may object to the discharge of a particular debt or to the discharge of all of your debts listed in your bankruptcy petition. If a creditor only objects to a specific debt, the creditor’s objection does not have an effect on your other debts.
Creditors objecting to the discharge of a particular debt usually try to prove that you:
- Obtained credit or property through fraud or falsity.
- Engaged in fiduciary fraud, larceny or embezzlement.
- Caused injury willfully and maliciously.
- Purchased luxury goods within 90 days of filing your petition or used cash advances within 70 days of filing.
If the court grants an objection to discharge, you remain personally liable for each debt.
When a creditor or trustee files an objection to the discharge of all your debts, the basis of their objection is usually fraud associated with the bankruptcy case. Bankruptcy fraud, including perjury on bankruptcy documents or during bankruptcy hearings, can be a serious offense. You could face a prison sentence in addition to the court denying the discharge of all of your debts.
If you are overwhelmed with debt and need a solution, contact the skilled and experienced bankruptcy attorneys at the Bankruptcy Law Firm of Lansing Roy, P.A. Schedule a free consultation to determine if bankruptcy is right for you.