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OBJECTING TO THE DISCHAGEABILITY OF A DEBT PURSUANT TO 11 U.S.C. §523
There are number of grounds to object to the discharge of a debt. The most common for money, property, services, or an extension of credit, renewal, or refinancing of credit if obtained by false pretenses, a false representation, or actual fraud (Section 523(a)(2). The next most common is a debt incurred due to fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny (Section 523(a)(4), and for willful and malicious injury by a debtor to another entity or to the property of another entity (Section 523(a)(6). A creditor objecting to the discharge of a debt owed to them pursuant to 11 U.S.C. §523 is not highly common. As provided below only approximately 5% of bankruptcy cases involve an adversary proceeding. Under Section 523 a creditor is only trying to prove that the debt owed to them should not be discharged. The bankruptcy filer can still receive a discharge of their other debts if a creditor is successful. If you believe that you have grounds to object to the discharge of a debt owed to you that is listed in a bankruptcy filing please give us a call at 1-877-963-9543 to discuss your circumstances and determine if filing an adversary complaint if the best course of action.
OBJECTING TO THE DEBTOR’S DISCHARGE PURSUANT TO 11 U.S.C. §727
In some cases a creditor may have grounds to object to the bankruptcy filer receiving a discharge in their bankruptcy case. If successful then the person who filed for bankruptcy protection will not receive a discharge of any of their debts. This means that the person that filed for bankruptcy protection allegedly did something prior to the bankruptcy case is filed or during the case that is so wrong they should not receive a discharge of any of their debts. This is a very harsh penalty and not easy to prove. There are a number of grounds to object to a debtor’s discharge. The most common are if the debtor is an individual and with intent to hinder, delay or defraud a creditor transferred, removed, destroyed, mutilated or concealed, or has permitted to be transferred, removed or destroyed, mutilated or concealed property of the debtor within one year before the date of the filing of the bankruptcy petition (Section 727(a)(2), the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records and papers, from which the debtor’s financial condition or business transactions might be ascertained (Section 727(a)(3), the debtor knowingly and fraudulently, in or in connection with the case made a false oath or account, presented or used a false claim (Section 727(a)(4), or the debtor failed to explain satisfactorily, before determination of denial of discharge any loss of assets or deficiency of assets to meet the debtor’s liabilities (Section 727(a)(5). If you received a notice of bankruptcy filing because you are owed money or have a claim and believe you have grounds to object to the discharge of the bankruptcy filer please give us a call at 1-877-963-9543 to discuss your circumstances.
ADVERSARY PROCEEDINGS
An adversary proceeding is a lawsuit filed within the main bankruptcy case to resolve an issue related to the main bankruptcy case. In the Bankruptcy Court for the Northern District of California during the month of January 2014 there were 59 adversary complaints filed compared to 1,142 bankruptcy cases filed during the same time period. That works out to about 5% of bankruptcy cases involve some sort of adversary proceeding. Of these adversary proceedings not all are filed by creditors objecting to the discharge of a debt or discharge of the debtor. Of the 59 cases adversary cases only about ten of these cases involve creditors seeking to have the debt owed them not discharged (Section 523) or seeking to not allow the bankruptcy filer to receive a discharge at all (Section 727). We have offices in San Francisco, San Jose and Oakland for your convenience.
