When a debtor files for bankruptcy, creditors have the opportunity to object to the discharge of their debts. This is known as a creditor objection. Creditor objections can be filed in both Chapter 7 and Chapter 13 bankruptcy cases.Grounds for Creditor Objections
There are a number of grounds on which a creditor can object to a discharge in bankruptcy. These include:
- False or fraudulent statements: The creditor can object to the discharge if the debtor made false or fraudulent statements in their bankruptcy petition or schedules.
- Nondisclosure of assets: The creditor can object to the discharge if the debtor failed to disclose all of their assets in their bankruptcy petition or schedules.
- Failure to pay child support or alimony: The creditor can object to the discharge if the debtor is behind on child support or alimony payments.
- Luxury expenses: The creditor can object to the discharge if the debtor incurred luxury expenses within 90 days of filing for bankruptcy.
- Criminal conviction: The creditor can object to the discharge if the debtor was convicted of a crime involving fraud, embezzlement, or other financial misconduct.
How to File a Creditor Objection
If a creditor wants to object to a discharge, they must file a complaint with the bankruptcy court. The complaint must be filed within 60 days of the first meeting of creditors. The creditor must also serve a copy of the complaint on the debtor.The Debtor’s Response to a Creditor Objection
The debtor has 30 days to respond to a creditor objection. The debtor’s response must be filed with the bankruptcy court and served on the creditor. The debtor’s response can either admit or deny the allegations made by the creditor.The Bankruptcy Court’s Decision
The bankruptcy court will hold a hearing on the creditor objection. At the hearing, the creditor will present evidence to support their objection. The debtor will have the opportunity to present evidence to defend against the objection.
After the hearing, the bankruptcy court will issue an order either sustaining or overruling the creditor objection. If the objection is sustained, the debtor will not be granted a discharge of their debts. If the objection is overruled, the debtor will be granted a discharge of their debts.Appealing a Bankruptcy Court’s Decision
Either the creditor or the debtor can appeal a bankruptcy court’s decision on a creditor objection. The appeal is taken to the district court. The district court will review the bankruptcy court’s decision and issue its own decision.Conclusion
Creditor objections can be a significant obstacle to obtaining a discharge in bankruptcy. If you are considering filing for bankruptcy, it is important to be aware of the grounds on which creditors can object to your discharge. You should also be prepared to respond to any creditor objections that may be filed.