When A Creditor Alleges Fraud
If the omitted creditor alleges that you fraudulently failed to list its debt or that the debt is otherwise nondischargeable , you will likely have to litigate the issue in bankruptcy court if you want the debt discharged.
In that case, you might have to show that you made an innocent mistake, that there was no fraud involved, and that the debt is dischargeable.
Discharging Debts In Bankruptcy
A bankruptcy discharge releases a debtor from being personally responsible for certain types of debts. So, after a bankruptcy discharge, the debtor is no longer legally required to pay any debts that are discharged.
The discharge prohibits the creditors of the debtor from collecting on the debts that have been discharged. This means that creditors have to stop all legal action, telephone calls, letters, and other type of contact with the debtor. This prohibition is permanent for the debts that have been discharged by the bankruptcy court.
You cannot discharge all debts in bankruptcy. Some of the most common debts that you cannot get rid of in bankruptcy are debts from child or spousal support, most student loans, most tax debts, wages you owe people who worked for you, damages for personal injury you caused when driving while intoxicated, debts to government agencies for fines or penalties, and more.
Consult With Our Seasoned Bankruptcy Team Today
If you want to attempt to discharge your debts by filing for Chapter 7 bankruptcy, then please dont hesitate to get in touch with Weintraub& Selth, APC to discuss our comprehensive legal services with one of our attorneys. We know firsthand that advance planning with a skilled attorney can make the difference in whether some debts are discharged or not, so stop by or give us a call today.
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What Can The Debtor Do If A Creditor Attempts To Collect A Discharged Debt After The Case Is Concluded
If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit, designed to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine.
Which Debts Are Dischargeable
Below is a list of commonly discharged debts.
- collection agency accounts
- money owed under lease agreements
- civil court judgments
- tax penalties and unpaid taxes past a certain number of years
- attorney fees
- revolving charge accounts
- social security overpayments, and
- veterans assistance loans and overpayments.
Note about fraud and utility deposits. Any debt-related misconduct or fraud can render an otherwise dischargeable obligation nondischargeable. Also, a utility provider cannot refuse to provide service because of a bankruptcy filing however, the provider can charge a reasonable deposit to ensure future payment. Find out about utility shut-offs and Chapter 7 bankruptcy.
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Two Factors Determine If Unlisted Debt Can Be Discharged In A Chapter 7 Bankruptcy Non
When you file for Chapter 7 bankruptcy, it is your responsibility as the Debtor to list all of your debts to the best of your knowledge. A credit report will be obtained prior to the filing of your case that will assist in identifying your debts however, since not all creditors report to the bureaus a debt may inadvertently be omitted. Will this debt still be discharged? The answer depends on a few factors.
How Do I Know If My Debts Qualify
If youre still having trouble determining if your debts qualify, keep in mind that youll be required to talk to a credit counselor who will be able to answer a lot of your questions. Also, you can always talk to your local courts. They cant give you legal advice but they can answer a lot of questions.
An interview with a bankruptcy attorney is also very useful. Researching the process is a good way to get started exploring debt discharges. But, its always wise to ask a professional to look at your personal financial situation to find out what you actually qualify for.
Take advantage of your own knowledge plus advice from the experts to make an informed decision about filing for bankruptcy.
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What Cannot Be Discharged In Chapter 7 Bankruptcy
Some debts that cannot be discharged in chapter 7 bankruptcy are student loans, spousal alimony, child support, debts owed to the government as fines, and debts incurred from intoxicated driving.
Besides these, any debts that the court deems fraudulent or in bad faith are unlikely to be discharged.
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Who Qualifies For Chapter 7 Bankruptcy
There are a few requirements you’ll need to meet to file for a Chapter 7 bankruptcy:
- You generally must complete an individual or group credit counseling course from an approved credit counseling agency within 180 days before filing.
- Either the average of your monthly income during the previous six months must be less than the median income for the same-sized household in your state or you must pass a means test, which determines if your disposable income is high enough to make partial payments to unsecured creditors. If you don’t pass the means test, you may still be able to file a Chapter 13 bankruptcy.
- You can’t have filed a Chapter 7 bankruptcy during the past eight years.
- You can’t have filed a Chapter 13 bankruptcy during the past six years.
- If you tried to file a Chapter 7 or 13 bankruptcy and your case was dismissed, you have to wait at least 181 days before trying again.
- You may be eligible to file, but a court could dismiss your case if it determines you’re trying to defraud your creditors. For example, if you take out a loan or use credit cards with the intent of then declaring bankruptcy to avoid repaying the debt.
Secured Debts In The Event That You Simply Surrender The Property
Any secured debt is also dismissed you return anything securing the duty to the leaser. In the event that you simply do not want to keep the secured property, it will be very beneficial for you to let the leaser take it back. To do this, demonstrate on the Statement of Intentions form that you are willing surrender the property and make it accessible for the investor to get. You do not have to deliver the property to the loaner yet you should want to collaborate with the loaners repossession. A number of the time banks will not try and repossess very little items based on the fact that its not well worth the price for them to urge the thing.
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Phase : 341 Meeting Date Of Discharge
Remember how the date of the 341 meeting determines a lot of deadlines for the rest of the case? Here is how it works:
341 meeting + 30 days = Deadline for the trustee to object to an exemption you claimed. This deadline starts when the 341 meeting is âconcludedâ which can be delayed if the trustee schedules a follow up meeting.
341 meeting + 60 days = Deadline for creditors to object to having their debt discharged. are not very common in typical Chapter 7 cases, but they do happen.
341 meeting + 45 days = Deadline to deal with secured debts, like car loans .
Once the deadline to object to the discharge has passed, the court will enter the discharge order.
Can the discharge date be delayed?
Yes. If you donât take your financial management course after filing and submit a certificate of completion, the bankruptcy court canât grant your discharge. If too much time passes, the court can close your case.
Other Things That Can Delay The Entry Of The Discharge
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Realistically You Could Never Repay Everything You Owe
The alternatives above can all help consumers get out of debt. But can you afford them? Sometimes, your debt is so large that it would be difficult or impossible to make the monthly payments.
Be honest with yourself. If you cant afford to pay down your debt even with reduced interest rates, Chapter 7 bankruptcy may be your best option. Even Chapter 13 has a repayment plan you would have to stick to.
Can A Chapter 7 Discharge Tax Debt
Yes, in some cases. The tax dischargeability rules are very complex. Generally, we can discharge income taxes due more than three years ago provided that the returns were filed more than two years ago. Additionally, liens are retained in a Chapter 7 so even if the debt is discharged, the IRS would retain its lien until it expired.
However, we know the ins and outs of tax dischargeability not only from the bankruptcy side, but also from the tax resolution side. When we have a client with tax issues, we first perform a full tax dischargeability analysis. We determine which tax debts are dischargeable and which tax debts are not. We would then develop a strategy for dealing with the non-dischargeable tax debts. Sometimes, we can use an Offer in Compromise or a financial hardship plan. Other times, we simply need to have get your federal tax lien released.
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Priority Debts And Debts That Cant Be Discharged
Theres a list of ten different kinds of priority debts in the U.S. Bankruptcy Code. .) Many of them only apply to businesses filing bankruptcy, and of those quite a few to rather obscure businesses. Only a few kinds of priority debts apply to consumer and small business bankruptcies. In our last blog post we mentioned two of themchild/spousal support and certain taxesbut there are a couple others you may encounter.
If all the assets that you own are not protected, so that the trustee is not going to take anything from you, and not going to pay any of your debts, the priority debt distinction doesnt make any difference.
But many kinds of priority debts have a characteristic that does make a difference in every Chapter 7 case where they are found: they cant be dischargedlegally written offin bankruptcy.
Not every priority debt is nondischargeable. We must look at each kind of priority debt one at a time to see if it can be discharged. One of your biggest concerns when considering bankruptcy is whether you have any debts that bankruptcy would not discharge and that youd have to pay anyway.
Student Loans Do Not Go Away In Bankruptcy
As noted in the above list, educational loans are generally not discharged by a Chapter 7 bankruptcy. However, they may be removed if the court finds that paying off the loan will impose an “undue hardship” on the debtor and their dependents.
To qualify for a hardship discharge of a student loan, you must demonstrate that you cannot make payments at the time the bankruptcy is filed, or in the foreseeable future.
You must apply for the hardship discharge before any discharge of other debts is granted. Application for a hardship discharge is not included in the standard bankruptcy fees. It must be paid for after the case is filed.
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Understand Bankruptcy With The Fuller Law Firm
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records failed to explain satisfactorily any loss of assets committed a bankruptcy crime such as perjury failed to obey a lawful order of the bankruptcy court fraudulently transferred, concealed, or destroyed property that would have become property of the estate or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727 Fed. R. Bankr. P. 4005.
Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale
Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced professionals will work with you to obtain the best possible outcome. You can on the firm to represent you well so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business Bankruptcy, Chapter 7 Bankruptcy, , Chapter 5 Claims, Chapter 13 Bankruptcy, Business Restructuring, Chapter 11 Bankruptcy, and more.
*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.
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Should I File For Chapter 13 After Filing For Chapter 7
If you file Chapter 13 at least four years after filing Chapter 7, you can have a very low monthly Chapter 13 payment plan and receive a full discharge of all remaining balances after you complete the three- to five-year plan. For example, you could pay as little as $100 a month for three years inside of Chapter 13, paying very little to your creditors and yet still discharging the remaining balances owed.
This may be a good option for people who have student loan debt, certain types of income tax debt and child support payments to make, says Sean Fox, president of Freedom Debt Relief. These things cannot get discharged in a Chapter 7 bankruptcy.
What Happens To Debt In A Chapter 7 Bankruptcy
Dischargeable debts are able to be dismissed these are your typical unsecured debts:
- Personal unsecured loans
- Other general unsecured debts
If you have debts secured by a piece of property, such as a vehicle or a home, you dont have to pay the loan if you surrender the property . If you want to keep the property, you either have reaffirmed the loan , or pay the fair market value all at once .
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Youve Exhausted All Other Options
Even though bankruptcy can be good for some people, it should still be a last resort because your credit will take a major hit. Look into these options first.
Debt consolidation loans
You can use a personal loan to pay off all your debts, consolidating your bills into one monthly payment. Depending on your credit score, a debt consolidation loan could save you money in interest charges. The loans interest rate could be significantly lower than the rates of your credit cards.
Before signing on the loan, make sure you can afford the monthly payments. Otherwise, you will fall behind on this, too.
Debt management program
When you call a credit counselor, they help you find the best debt solution for you. This could be a debt management program that you enroll in through the counseling agency.
A DMP can lower your interest rates and consolidate your payments, making it easier for you to pay off your debt quicker. This is the best option if you want to maintain a good credit score.
Debt settlement
Settling your debtmeans paying less than what you owe which means your credit will take a hit. The effect wont be as bad as after bankruptcy, but if you want to maintain your score, this may not be the best option.
You can either settle your debts on your own by speaking with your different creditors or work with a settlement agency that will consolidate your payments.
