Can Creditors Object to my Bankruptcy Case in Atlanta, Georgia?

Many of my clients are worried that creditors can object to the discharge of their Georgia bankruptcy cases. The truth is that creditors rarely object to discharge, but if they do, they must timely file what is known as an adversary proceeding in order to preserve their objections.

Who can Object to Discharge of a Bankruptcy Case or Debt in Georgia?

All creditors have an opportunity to object to a debtor’s discharge to their particular debts or a general discharge. The trustee, whether it be the Chapter 7 or Chapter trustee, also has a right to object to discharge.

When Does the Objection to Discharge of a Bankruptcy Case Need to be Filed in Georgia?

Under bankruptcy law, the deadline for filing objections to discharge is 60 days from the date of the first meeting of creditors. If a creditor fails to meet that deadline, it is barred from filing any objections against discharge. Creditors are allowed to file motions to extend the deadline to file objections, but must do so BEFORE the deadline passes. The bankruptcy code also requires that creditors wishing to extend the deadline for filing an objection discharge at the last minute show that they acted diligently to determine whether there is a basis for filing such an objection. Actions such as asking the debtor for written documents or requesting an interview of the debtor under oath known as a Rule 2004 examination could reveal information that is necessary to form the basis for an objection.

What is the Basis for an Objection to Discharge of a Bankruptcy Debt?

There are several reasons why a debt could not be discharged, including where money was obtained through fraudulent means, the debt is child support, or was a result of a criminal act such as a DUI. One of the more popular objections to discharge is fraud. A creditor needs to show that the debt was obtained fraudulently or at a time where the debtor knew that s/he could not repay the debt. There is even a part of the bankruptcy code that addresses taking cash advances or charging large amounts of money for luxury items on a credit card, stating that such acts are presumed to be fraudulent if done shortly before the bankruptcy case is filed. Thus, some of the questions a knowledgeable Atlanta bankruptcy attorney would ask you are related to determining whether your credit card charges are subject to objections to discharge.

What Happens When a Creditor Files an Objection to Discharge?

When a creditor files an objection to discharge or an adversary proceeding, a new case number is created. The creditor basically brings a lawsuit that starts with a complaint and involves a process known as discovery where the parties exchange information. The final step is trial, where the judge decides if the debt should be discharged or not. The debtor must answer the lawsuit in order to avoid a “default judgment” where the creditor automatically wins. Normally, in simple cases involving credit cards, the parties will enter into a settlement agreement wherein the debtor may agree to pay something toward the debt. However, in more complicated matters that may involve past business debts or complex loans, an adversary proceeding can involve heavy litigation.

While most Chapter 7 or Chapter 13 consumer bankruptcy cases in Georgia do not involve objections to discharge, such objections do arise from time to time. Many times, a bankruptcy attorney can spot potential issues before the bankruptcy case is even filed. Thus, it is important to to consult with a good bankruptcy lawyer before you proceed with your Chapter 7 or Chapter 13 case. For a free consultation with an Atlanta bankruptcy attorney, call 404-593-2620.