Posted on: 10 March 2021
The legal system offers two main branches of bankruptcy that people use when they need relief from their debt. You can only use the branch you qualify for, which might be one branch or both. If you decide on Chapter 7, you should understand that there is a risk your creditors might object to a discharge of your debt. Here is an explanation of how this works in a Chapter 7 case.
Chapter 7 Discharges Qualifying Debts
One of the first things you must do when filing for Chapter 7 is to meet with a bankruptcy lawyer to determine if this branch will provide the relief you need. Your lawyer can browse through your debts to see which ones qualify for a discharge. In most cases, people using Chapter 7 receive a discharge of all their credit card debt, as credit card debt is a qualifying debt. Other debts also qualify, such as personal loan debts and medical bills. After filing, your lenders receive a notification that you filed. When this occurs, most creditors just accept the notice and do nothing. They end up writing off the debt the court discharges.
Creditors Can Object
Your creditors have the legal right to object to a discharge of the debt you owe them, though. They are free to object by attending the court hearing you have for your case. The court hearing is called a Meeting of the Creditors, and it typically takes place around one month after you file your documents. While most creditors do not object, some might, and you should know that this is a possibility.
The Reasons Creditors Object
Your creditors will probably object only if they suspect suspicious activity. For example, if you recently had a lot of transactions on your credit card for luxury purchases, your creditors might object. You cannot go shopping just before filing your bankruptcy case simply to acquire a lot of stuff you do not need. If you do this, your creditors have the legal right to object to the discharge of this debt. You also cannot use your credit cards to take cash withdrawals within a few months of filing. Doing this can also look like fraud. If your creditors object, the court might side with them. If they win, you will still owe them the balances if you file for Chapter 7.
If you have questions about your debt and Chapter 7, talk to a bankruptcy attorney today.Share