Many individuals who feel overwhelmed by their debt opt to file bankruptcy. They often do so in hopes that it will stop bothersome collections calls, eliminate their obligation to repay their unsecured debts, stop foreclosure proceedings or repossessions and bring some stability back to their life.
Bankruptcy can indeed give you a fresh financial start, but not all debts are dischargeable. In addition, your creditors can also petition the court to have their account excluded from your bankruptcy. Here’s what you should know about how that can happen and what it may mean for your situation.
Creditor objections can impact bankruptcy cases
When filing for bankruptcy, debtors generally submit a listing of their unsecured debts, including credit cards and medical bills. Bankruptcy trustees will commonly discharge these accounts provided that the debtor meets all other eligibility requirements for this form of debt relief.
However, your creditors do have an opportunity to object to the discharge of a debt. Creditors can ask the bankruptcy trustee to deviate from the standard practice of eliminating a debtor’s balances by employing different approaches:
- Initiating adversary proceedings by alleging that you incurred the debt knowing that you were unable to repay. This might happen, for example, if you went on a final “spending spree” with your credit cards shortly before filing your bankruptcy petition.
- Petitioning the court to set aside an automatic stay so they can continue collection actions. For example, if you’re already in foreclosure, the bank may ask the court to allow them to proceed with the process.
- Requesting that the court exclude their claim from your bankruptcy for other reasons. For example, you can’t generally include student loans in your bankruptcy (although there are exceptions).
No two debtors have the same debt obligations, and thus, each bankruptcy is different. It’s imperative that you learn more about Connecticut and federal bankruptcy laws and how they apply to your unique situation so that you can get the debt relief you really need.