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The Chapter 7 bankruptcy discharge and possible creditor actions

| Jun 2, 2021 | Chapter 7 Bankruptcy

Floridians who are facing mounting debt and want to get into a better financial situation may want to consider bankruptcy. Chapter 7 bankruptcy is generally the easiest way to clear what is owed including credit cards, medical expenses and other unsecured debts. Once the case is complete, the debtor will receive a bankruptcy discharge. While the process is relatively straightforward and people filing for Chapter 7 can retain certain properties depending on their value, there are still potential challenges that might arise with the discharge. That includes the creditor objections or continuing to try and collect on a debt after the discharge has been granted.

Creditor objections to a discharge

While people in general can expect eligible debts to be discharged in a Chapter 7 bankruptcy, it is not an absolute right. A creditor or a trustee can lodge an objection. When the case is filed, the creditors are informed and they will have a deadline to object. To do this, a complaint must be filed prior to that deadline. There will then be a lawsuit called an adversary proceeding. If the trustee objects, it may be due to the debtor failing to provide all the necessary information in the case. Or it might be because the debtor committed an illegal act such as committing perjury or destroying records. In a bankruptcy case, it is vital to adhere to the legal requirements and understand that creditors can object.

Creditors may still try to collect on a discharged debt

In some instances, a creditor might continue trying to collect on a debt even after the debtor has received a discharge through Chapter 7. If this happens, a motion can be filed to report that the creditor is doing this. The case might be reopened so the court can check if this is a violation of the discharge. Legally, once a debt is discharged, the creditor cannot act to collect on it. That includes the creditor filing a lawsuit. Sanctions can be issued to penalize the creditor for this violation.

Being protected before, during and after a bankruptcy is imperative

The bankruptcy laws can be complicated and people are sometimes confused about how creditors will respond when a person files for Chapter 7 bankruptcy. Although these circumstances sound somewhat unusual, they do happen. From the start, it is beneficial to have professional guidance not just to prepare for the case and provide all the necessary information, but to deal with these issues with the discharge and creditor actions. Consulting with those experienced in these cases can help a debtor move forward in a better financial situation through bankruptcy.

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