Moving forward with a bankruptcy filing is rarely an easy decision and Indiana residents undoubtedly take it seriously. The benefits of a Chapter 7 or Chapter 13 bankruptcy are many. People can get into a better financial situation and clear onerous debts to get a so-called “fresh start.” However, the process is one that must go through the proper legal channels and in some instances, stumbling blocks might arise. It is imperative to be prepared. Those who are considering moving forward with a case without professional guidance should think twice.
The critical point of bankruptcy is the discharge
A common concern is whether the discharge is a fundamental right or creditors can object to it. In general, with a consumer bankruptcy, it is unlikely that there will be an objection to derail the case. Still, it is possible. With a Chapter 7 liquidation bankruptcy, there is no absolute right to have the debts discharged. Several entities can lodge an objection. A creditor or a trustee can do so. There are steps that the creditor must take to object and a deadline will be in effect. The objection comes in the form of a lawsuit called an adversary proceeding.
Reasons for the objection can vary. If, for example, major charges were made on a credit card shortly before the case was filed, then the creditor could claim that it was done intentionally so the person could make purchases and not be obligated to pay for them. The trustee and creditors will notice this behavior. Other reasons for which an objection to a Chapter 7 discharge can be made is if the proper tax documents were not filed, the person did not take and complete a financial management course, information was withheld, the person committed perjury and more.
With Chapter 13, the debtor will be given a payment plan. The payments will be sent to the trustee each month and the trustee will then distribute portions of those payments to creditors. This is comparable to a consolidation loan in which some of the debts will be repaid and the debtor can retain various properties like a home or an automobile. It differs from a Chapter 7 in that the person’s property will be sold to pay back creditors. Once the payments are complete, the debtor will be able to get the discharge. The Chapter 13 discharge can be denied if the person did not take the financial management course or had received a discharge in a prior Chapter 7, 11 or 12 within four years or a Chapter 13 within two years.
Bankruptcy can deal with financial challenges, but adhering to the rules is key
People can find themselves in financial trouble for many reasons. Recent events have shown just how quickly it can happen with massive medical bills, job loss and uncertainty about the future. Those who are under the impression that filing for bankruptcy is a way to avoid responsibility should get the facts and understand that it is an invaluable and legal tool that has helped a significant faction of people get their financial lives in order. It remains important to know the basics about it and that includes the discharge. Having assistance with the case from the start can help with ensuring there is a good chance at a successful outcome.