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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 nonsensical 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.
The Trustee might object for other reasons including, but not
limited to, "substantial abuse" or a disagreement over how your
means test mathematical calculations were completed. In some
instances, case law is developing nationwide over the exact manner
in which means tests deductions are taken. For instance, are
you entitled to deduct all of your secured debt (for instance, your
mortgage payments) if you intend to surrender your house back to the
creditor? The issues are complex and vary widely across
different bankruptcy cases.
II. Creditor ObjectionsSubstantial 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.
A creditor can also object on any number of grounds under 11
U.S.C. 523 besides fraud. For example, an objection might
center on the filing of a false financial statement in order to get
the credit account to begin with. Other aggrieved parties may
object based on a breach of fiduciary duty.
III. Divorce Obligations
Debts assigned to you in
a divorce proceeding are usually non-dischargeable in a
Chapter 7 bankruptcy specifically in relation to your
obligation to protect your former spouse from the debts 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.
Whatever the reason for the objection to your case, your
interests are not best served by an attorney who has
never set foot in a courtroom. Can your Denver
bankruptcy attorney handle a challenge to your case, if
necessary?
It's a fair
question.
Although personal, prompt, professional service is
the reason our past clients refer their friends and
families to us, over 20 years
of trial experience protects you from unpredictable
scenarios that can threaten the success of your
bankruptcy.
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