Creditors can challenge the discharge of some debts in a bankruptcy. If a creditor challenges your bankruptcy filing in Michigan, you could be liable for repayments. It could also jeopardize the entire bankruptcy case.
A Michigan bankruptcy lawyer can assist you if you face debt discharge challenges, protecting your rights and fighting for a successful conclusion to your bankruptcy proceedings.
When Can a Creditor Challenge a Bankruptcy Filing?
Bankruptcies allow debtors to eliminate some of their debt. When a debt is discharged through bankruptcy, the debtor is no longer legally liable for repayment, and the creditor cannot take any action to collect on the debt.
However, in some situations, creditors can challenge a debt’s discharge. According to the United States Courts, in a Chapter 7 bankruptcy, creditors may challenge a debtor’s request to discharge if the debtor:
- Failed to provide requested tax documents
- Failed to complete a personal financial management course
- Failed to account for the loss of assets
- Transferred or concealed property to hinder, delay, or defraud creditors
- Destroyed or concealed records or books
- Committed perjury or other fraudulent acts
- Violated a court order or an earlier discharge
Creditors may also challenge a bankruptcy if the debtor:
- Bought luxury items on credit before filing for bankruptcy
- Used their credit card to discharge non-dischargeable debts
- Took a cash advance before filing
- Incurred debts through false pretenses, misrepresentation, or fraud
In Chapter 12 and 13 bankruptcies, creditors usually cannot challenge the discharge of debts if the debtor completes their payments under the repayment plan. However, the court may allow challenges if the debtor has not completed a personal financial management course or received a prior discharge in another case commenced within certain time frames.
What Happens if a Creditor Challenges Your Bankruptcy?
If a creditor challenges your bankruptcy, you can argue your case during a bankruptcy court hearing. If the challenge is unsuccessful, the court will discharge the debt. If the challenge is successful, you will have to repay the creditor, but you may be able to negotiate a reasonable repayment plan.
A successful challenge only applies to the debt in question, not all debts. Also, a successful objection does not necessarily mean the court will dismiss the entire bankruptcy.
Are There Debts that a Bankruptcy Cannot Discharge?
You cannot discharge some types of debt, even if your bankruptcy is successful. The most common types of non-dischargeable debt include:
- Debts not listed on the debtor’s bankruptcy petition and schedule
- Certain types of tax claims
- Debts for spousal or child support
- Debts incurred through fraud
- Debts for willful or malicious injury caused to another person
- Debts for personal injury or wrongful death
- Most student loans
- Certain condominium or cooperative housing fees
- Fines, penalties, and restitution for criminal offenses
Contact Marrs & Terry, PLLC, for Help with Your Bankruptcy Case
The team at Marrs & Terry, PLLC, can handle every detail of your bankruptcy case, including fighting back against creditor challenges. Let us put their decades of legal experience to work for you. Contact us online or call today to get started with a consultation.