Dishonest debtors might find that their debts are still there at the end of their case. See you in court.Yesterday I talked about how most debtors in the Oakland bankruptcy court never even see a judge. I explained that the bankruptcy system is actually pretty automated so the bankruptcy judges don’t have to get involved most of the time. One time when the bankruptcy judges do get involved is when someone believes that the person filing for bankruptcy has been dishonest.
The Bankruptcy Code provides for a mechanism to “catch” dishonest debtors and make it so some or all of their debts don’t get wiped out. That mechanism is called objection to discharge. If someone is going to gripe about the debtor’s honesty, the griper can either object to a particular debt being wiped out, or object to all of the debts being wiped out. If the judge agrees with the griper, the debtor may find himself still owing one or more debts at the end of his case.
It’s not quite as simple as it may sound. In order to win, the griper has to file a lawsuit, called an adversary proceeding. This is done in the bankruptcy court in Oakland, the same place where the debtor filed his bankruptcy case. The adversary proceeding is connected to the debtor’s bankruptcy case and sometimes the bankruptcy case is put on hold until the adversary proceeding is resolved. The court gives the griper and the debtor time to get information from each other about the alleged dishonesty and eventually there’s a trial.
These types of adversary proceedings are pretty rare. After handling bankruptcy cases for nearly fifteen years, I can still count on one hand the number of times any of my clients have been sued for nondischargeability of a particular loan. It just doesn’t happen very often. And when it does, it’s not at all a sure thing that the griper’s going to win. I’m pretty aggressive when it comes to defending my clients from adversary proceedings. I don’t like them. I don’t like it when creditors try to beat up on my clients. I want to see my clients debt free.
If you’re worried that a creditor might grip about a particular debt that you owe, you should speak with an experienced Oakland bankruptcy attorney about your concerns. The best attorneys in Oakland will be able to give you clear and realistic answers.
Image credit: By V Smoothe (Ronald V. Dellums Federal Building) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
