Can Creditors Object to the Discharge?

Posted: 16 Sep 2008 | Categories: Bankruptcy

Mostly under chapter 7 cases, the defaulter has no complete right to a discharge. In few cases apart from the creditor, the trustees or the U.S. trustee are required to register an objection to the debtor’s discharge. Typically, creditors get an acknowledgment letter soon after the case is registered. This letter initiates all the significant information pertaining to the case such as the cut-off date for rejecting the discharge. In cases where the creditors wish to reject to the debtor’s discharge, they are required to lodge an objection in the bankruptcy court prior to the cut-off date specified in the acknowledgment letter. Once you have registered an objection it initiates a court case called as an “adversary proceeding” in the bankruptcy court.

The court has the full authority to reject a chapter 7 discharge for any of the definite reasons mentioned in the Bankruptcy code, such as not being able to submit required tax documents, failure to finish lessons on personal financial management, obliteration of proceedings, deceitful acts and infringement of a court notice. If the issue of the debtor’s right to a discharge goes to trial, the objecting party has the burden of proving all the facts essential to the objection.

Typically, under chapter 12 and chapter 13 cases, the defaulter is allowed to a discharge after all the expenses are paid in the plan. Nevertheless, under chapter 7, discharge may not take place in chapter 13 if the defaulter does not succeed to finish a necessary lesson on personal financial management. A debtor cannot attain a discharge in chapter 13 if he or she would have got a discharge in the prior case.

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