The Dayton Bankruptcy Attorney: Objections to Discharge

Creditors Last Line of Defense in Bankruptcy – Objections to Dischargeobjections to discharge

Little stands in the way of a debtor who has passed the multiple hurdles in bankruptcy from discharging all of their unsecured debts, except a creditor’s objections to discharge.  Discharge of debts is the primary purpose for filing bankruptcy; bankruptcy language for “getting rid of debt you can no longer afford to pay.”  However, a creditor may file an adversary proceeding to determine if a debt should be eliminated.

A creditor may have objections to discharge if the debt fits into one of the following categories:

  • taxes;
  • debt incurred through fraud or misrepresentation;
  • certain consumer debts for cash advances or luxury goods incurred shortly before filing;
  • secured debts to the extent of the collateral;
  • debt resulting from embezzlement or larceny;
  • alimony or child support;
  • debt resulting from willful or malicious injury, fines and penalties;
  • student loans;
  • DUI/DWI/OVI judgments;
  • debts not scheduled on the debtor’s petition; and
  • debts arising after bankruptcy is filed.

A common example of a creditor’s objection to discharge is a run up of credit cards shortly before bankruptcy is filed.  If charges are made on a credit card with no intent to pay, the debtor may have defrauded the creditor.  The bankruptcy court will look at the charges in contrast to the debtor’s ability to pay, and the timing and use of the charges.  Many credit card companies review the charging patterns of bankruptcy credit card holders and aggressively bring forth non-dischargeability actions.

Do you think creditors may have legitimate objections to discharge?