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Can creditors stop the discharge of debt in a Chapter 7 filing?

When Tyler residents are struggling with overwhelming debt, the law provides an option from them to obtain a truly fresh financial start. Chapter 7 bankruptcy allows debtors to eliminate many debts that are unsecured (i.e., not associated with property like a mortgage or a car loan). We say that the debt is discharged -- that is, it no longer has to be repaid.

However, some of our readers may wonder: can creditors object to a discharge in Chapter 7 bankruptcy? The answer is yes, creditors can object once they have been notified of a Chapter 7 filing. When they do so, they initiate a legal action called an adversary proceeding. In some cases, the discharge may be denied if the objection in the adversary proceeding is valid.

The grounds for denying a discharge of debt in Chapter 7 bankruptcy generally arise from some inappropriate or even fraudulent conduct on the part of the debtor, such as committing perjury or falsifying or destroying relevant financial records. Intentionally attempting to defraud your creditors in a bankruptcy proceeding can certainly lead to the denial of your discharge. Even simple mistakes like not providing complete tax returns or failing to participate in a mandatory personal finance class can also lead to objections and potentially a denial of discharge.

For these reasons, it is important to ensure that one does not make any mistakes that could derail the bankruptcy process. If creditors do resort to an adversary proceeding, the burden of proof will be on them -- not the debtor -- in court. This information is not intended as legal advice, but as a general background on Chapter 7 bankruptcy.

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