What is the goal of filing a Chapter 7 Bankruptcy? Getting a Chapter 7 discharge. Getting a Chapter 7 discharge means the debt is wiped out, tax free, forever. Are there situations where creditors can object to you discharging a debt? You bet there is. Section 523 of the Bankruptcy Code outlines several reasons a creditor could object to you discharging a debt made with the creditor.
Now, before we begin, it is important to note again, that the vast majority of Chapter 7 Bankruptcy cases go through without a single creditor objecting to you discharging a debt with them.
Now that this is out of the way, what is the most common reason a creditor objects to you discharging a debt made with creditor? The answer is fraud. Section 523(a)(4) of the Bankruptcy Code allows a creditor to bring an adversary case against debtor asking the court to except the debt made with creditor from discharge for fraud. There are even provisions which says that purchases or cash advances within certain times frames are presumed to be fraud. If there is a presumption of fraud, debtor must go first and present evidence to rebut the presumption of fraud.
If there is no presumption of fraud, creditor has the burden of showing debtor committed a fraud and the debt should be excepted from discharge. The vast majority of these cases brought are settled or dismissed by creditor. Very few make it in front of a bankruptcy judge.
To find out what the presumptions of fraud are speak to a local experienced bankruptcy attorney.
When the time is right, or when you are ready, reach out to Minnesota’s highest GOOGLE REVIEWED bankruptcy law firm at www.kainscott.com. You will be so thankful you did.