Since personal bankruptcy is a strategy for debtors to clear their debt, there is often a sense of disbelief that it is possible. After all the stress and worry that comes with accumulating debt and being unable to pay it, it can be difficult to envision Chapter 7 clearing the debt. Pennsylvania residents who are considering Chapter 7 should be aware of the possibility that the discharge could face an objection and work to mitigate that possibility.
While a discharge is likely in most cases with Chapter 7 bankruptcy, the debtor does not automatically get it. It is possible for there to be an objection from the creditor, the case trustee, or the U.S. trustee. The creditors will be notified that there is a Chapter 7 shortly after the filing. With all the information related to the filing, there will be a deadline to object. For an objection, a complaint must be filed in the bankruptcy court prior to that deadline. This will be an adversary proceeding.
There are many reasons for the court to deny a debtor a discharge under Chapter 7. Included are a failure on the part of the debtor to give the necessary tax documents, to compete the necessary course in financial management, to attempt to transfer or conceal books or records, committing perjury or some other fraud, failing to account for lost assets, and violating a court order from a previous discharge. If this case goes to trial, the party that has filed the objection has the burden of proof in the case.
Chapter 7 is a sound strategy to get out of debt, but debtors who are considering it must know all the ins and outs of the case. That includes any potential problem that can lead to an objection on the part of a creditor. Having legal assistance from start to finish when filing for Chapter 7 can help with providing all the necessary information to avoid an objection and help to deal with the case if there is an objection.
Source: uscourts.gov, "Discharge in Bankruptcy -- Bankruptcy Basics -- Does the debtor have the right to a discharge or can creditors object to the discharge?," accessed on July 17, 2017