Objection To Dischargeability
A discharge is the last stage of a bankruptcy petition. At this point, you will be given confirmed freedom from your debts as your assets are sold with the proceeds distributed to different creditors.
An objection to discharge is therefore a motion that essentially stops you from being discharged by the court. The motion is triggered by the creditor and may be done so because of the several reasons.
Reasons for Objection to Dischargeability
- Credit Card Used for Non-Dischargeable Debt
The general rule is that you cannot use a dischargeable debt to pay off a non-dischargeable one. For example, you might pay for your child support through credit cards. The reason here is that you are merely moving the money around in anticipation of the discharge.
- Purchase of Luxury Items
Buying luxury items before declaring bankruptcy creates the presumption that you are not really bankrupt. After all, how can you buy an inessential item when you are already having a hard time paying the more prevalent bills? Purchase above $650 within the 90 days of bankruptcy warrants an objection from the creditors.
- Cash Advance
Any cash advance made within 70 days before a bankruptcy petition gives creditors the right to object to the discharge. Typically, this refers to any advance more than $925.
- Fraud in Making a Loan
Fraud covers a variety of possible situations and the burden of proof is usually left with the creditor. This means that they are the ones who will have to prove that you used fraud in order to obtain a debt. A good example of this would be lying on loan application or perhaps not intending to make the payment even while you borrow money. This can be tough to prove unless there are documents to back the claim of the creditor.
- Fraud in the Application Itself
If you hid an asset or did anything fraudulent in the overall nature of the bankruptcy, this also subjects you to an objection for discharge. In fact, your petition for bankruptcy may be reversed or denied completely if the information suggests that you have abused the system. This is why it is crucial to be 100% honest with the information you provide the courts.
- Damage from Spiteful Conduct
A good example of this would be debt incurred due to the spiteful destruction of another person’s property. Individuals who have charges like these are compelled to make payments despite Bankruptcy.
If Objection is Approved
Typically, the creditor only objects to the particular debt that relates directly to them. If said objection is approved, that means that you will only have to pay for that particular debt while the others are still left discharged. However this isn’t true for all cases – during extreme situations, you might find yourself having to pay off two or more approved objections by creditors.
Upon objection, you will have the chance to give your side of the story. Both parties are often allowed to meet so that they would be able to iron out the differences. Note that in most cases, however, the discharge is dropped if you promise to pay at least a portion of the debt asked for.