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What is bankruptcy litigation? When someone challenges
your bankruptcy, there can be a whole other component to
your bankruptcy filing: a lawsuit, under the
umbrella of your bankruptcy petition.
Sometimes it is a challenge to your case brought by
the Office of the US Trustee.
Sometimes a creditor argues that you fraudulently
incurred a debt. Sometimes it is a disgruntled,
angry, vengeful former spouse.
I. Objections by the Trustee
The US Trustee may object to your discharge if you
fail to fully disclose ALL assets, no matter how trivial
(and no matter how stupid the Trustee's argument may
be). Consider this true to life example:
In a recent 2008 case,
the Trustee moved to revoke the discharge of a single,
impoverished, divorced woman. The Trustee's actions
were based on nonsense from her abusive ex-husband, but
the staff attorney for the U.S. Trustee's Office refused
to back off. Following trial, the bankruptcy court
entered judgment on behalf of the client and the firm
prevailed. This client preserved her right to walk
away from tens of thousands of dollars of debt.
II. Creditor Objections
Substantial use of credit
cards in the 90 days prior to your bankruptcy filing may
create a "presumption" of fraud - meaning you didn't
intend to repay the debt and were planning to file
bankruptcy all along. A creditor can file an
adversary proceeding (lawsuit) in your bankruptcy to
have the charges ruled to be non-dischargeable - meaning
you'd have to pay those charges despite filing
bankruptcy.
III. Divorce Obligations
Debts assigned to you in
a divorce proceeding are usually non-dischargeable in a
Chapter 7 bankruptcy but they usually are dischargeable
in a Chapter 13 bankruptcy. If you have
substantial divorce related debt, this may be a
compelling reason to file a Chapter 13 bankruptcy
instead of opting for a Chapter 7 bankruptcy.
These issues and more
most be explored prior to your bankruptcy filing.
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Denver,
Colorado