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• BANKRUPTCY OBJECTIONS •
There are ways for creditors to seek better treatment by making objections in the bankruptcy case. For example, objections can be made to the proposed plan of reorganization in the Chapter 11, 12, or 13 case or to the dischargeability of the creditor's debt in the Chapter 7 case. Generally, objections to proposed plans of reorganization are made if the plan does not comply with the requirements of the Bankruptcy Code, is not proposed in good faith, does not pay secured creditors the value of their claims in consideration of the value of the collateral, and is not feasible (e.g., debtor will not be able to pay or comply).
An objection to the "dischargeability" of the creditor's claim in Chapter 7 is made by the filing an "adversary proceeding" or lawsuit in the bankruptcy court. For example, an objection to dischargeability may be brought by creditors with claims for false pretenses or actual fraud of the debtor in obtaining property or credit, for willful and malicious injury by the debtor to another or property of another, and for separation or divorce obligations incurred by the debtor (e.g., equitable distribution order or property settlement agreement).
Before filing an adversary proceeding objecting to the dischargeability of the claim the creditor should carefully assess the amount of the claim, the cost to pursue, including legal fees, the supporting evidence, the likelihood of success, and the future ability of the debtor to pay the debt (e.g., age, health, family circumstances, skills, and earning potential). If the creditor is successful in the suit, the debtor will remain obligated on the claim even though other debts were discharged in the bankruptcy proceeding. Creditors should not hesitate if they have grounds to object to the dischargeability of their claim. A suit must be filed within 60 days of the first date set for the creditors' meeting, and this is a firm deadline.
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Contact KIRK & SIMAS with your creditor rights or collection questions or schedule a consultation today.
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