Most people who seek the protection of bankruptcy are doing so to avoid harmful collection or foreclosure lawsuits, and to stop the creditors from making harassing collection calls. Bankruptcy does offer this refuge, and it is one of the main benefits of filing a case. However, there are instances where even filing bankruptcy does not stop your creditors from seeking repayment. In some instances a creditor may elect to file a case against you within your bankruptcy case, and you will be required to defend that case just the same as if bankruptcy had not been filed.
The process is referred to as an adversary proceeding, and the Bankruptcy Code sets forth certain circumstances that give a creditor the opportunity to file such a case. These include:
- Debts that were obtained through fraudulent means. This type of case requires the creditor to show that when you acquired the debt, you did so by giving false or misleading information somewhere along the process of getting the loan. The most common argument made is that the information contained on your loan application is false, and that you knew it was false when it was provided. This is a difficult thing for a creditor to prove, but it is an instance where a creditor can sue you, seeking to have their debt excepted from the bankruptcy discharge. If the lender is successful, you will still owe the debt after the bankruptcy case is over.
- Debts that arose due to the willful and malicious injury to property of another. This might be the case if you were involved in an accident and a finding was made that your actions were more than just negligent. If that is the finding of the State court and there is a judgment against you, the party entitled to receive payment on the judgment can seek to have that amount excepted from the bankruptcy discharge.
- Most student loan debt is not debt that does not have to be repaid, but the student loan lender has to file an adversary proceeding in the bankruptcy to challenge your attempts to include their debt in the bankruptcy discharge.
If an adversary case is filed during your bankruptcy, it is vital that you file a response. If you fail to respond, the Court can rule against you and leave you holding the bag on the debt in question. Call our office for more information.
Call a Plantation, Florida debt relief attorney today for more information about what to expect during and after filing for bankruptcy. We have helped others, and are here to help you too.