PURSUIT OF DISCHARGE AND NON-DISCHARGEABILITY ACTIONS
Debtors file for bankruptcy with hopes of receiving a discharge. Creditors have certain means to block the debtor’s discharge (controlled by 11 U.S.C. § 727) and/or the dischargeability of the creditor’s particular debt (controlled by 11 U.S.C. § 523). There are strict time limitations that must be abided by, which is why it is important to seek counsel upon being notified that a debtor has filed bankruptcy and listed you as a creditor.
Pursuant to 11 U.S.C. § 727, a creditor may object to a debtor’s discharge if, in sum, the debtor: concealed or destroyed property prior to bankruptcy, concealed or destroyed financial information, lied in connection with the bankruptcy case, failed to explain loss of assets, or failed to obey court orders. If the bankruptcy court grants an object to discharge, the debtor remains liable on every debt (as if the bankruptcy case was never filed).
Pursuant to 11 U.S.C. § 523, a creditor may object to the dischargeability of its particular debt if the debtor obtained money, property, services or an extension or renewal of credit by false pretenses. An example of a possible dischargeability action is if money is lent to a debtor, who provided a false financial statement or tax return as an inducement for the loan to be made by the creditor. The particulars of 11 U.S.C. § 523 are in depth and beyond the scope of this discussion. However, the important point to remember is that immediate attention must be given when someone who owes you money files for bankruptcy. That may involve consultation with an attorney early on in the process, to ensure a valid complaint objecting to dischargeability of debt can be filed before any deadlines expire.