Tennesseans who have reached the point in their financial struggles that they decide to move forward with a Chapter 7 bankruptcy must be aware of certain facts about filing. For example, there might be a misplaced belief that the debtor is automatically entitled to a discharge of debts. This is not the case. Understanding all the various issues that can arise during a Chapter 7 filing can avoid any surprises and help the person prepare for them.
There can be an objection to discharge lodged by a creditor, by the trustee in the particular case, or by the U.S. trustee. When the case has been filed, the creditors will receive notice with the information regarding it. Included is the deadline for there to be an objection. In order to object, the creditor is required to file a complaint with the bankruptcy court prior to the deadline. With that, there will be an adversary proceeding.
There can be a denial of discharge if the requested tax documents are not provided; if the person does not complete a course on managing finances; if there is a concealment or transfer of property to defraud, hinder or delay creditors; if there is a failure to account for lost assets; and if the court order is violated or discharge that was provided in an earlier case began with time frames that are a violation of the code. The case might go to trial. If that happens, then the burden of proof rests with the objecting party to prove the facts that are necessary for the objection.
While filing for Chapter 7 is a smart way to get a fresh financial start, that does not eliminate certain issues that must be considered during the case. One is the possibility that a creditor can object to the discharge for the reasons listed above. When making the decision to try and get out from overwhelming debt, having help and guidance from an experienced attorney can be useful whether there is an objection or not. Before beginning a Chapter 7 case, consulting with a lawyer is imperative.
Source: uscourts.gov, “Discharge in Bankruptcy — Bankruptcy Basics — Does the debtor have the right to a discharge or can creditors object to the discharge?,” accessed on Feb. 7, 2017