Bankruptcy objections are uncommon, but when you file for Chapter 7 it's important to understand whether a creditor can object to your discharge.
In chapter 7 cases there is no absolute right to a discharge. A creditor may file an objection within the time set down by the court when the bankruptcy case is filed, and they do so by way of what is called an "adversary proceeding."
A creditor may object to the discharge of its debt under Section 523(a)(2) of the Bankruptcy Code, which contains several different types of non-dischargeable debt. They are (generally, and with respect to unsecured creditors only):
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debts incurred for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; debts owed to a single creditor and totally more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the case is filed; and cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the case is filed. If you file for bankruptcy within 90 days of the last use of a credit card, you probably went into it realizing that the individual debt could be subject to an objection. So the more common problem is the other - that the debt was incurred as a result of fraud.
Fraud in bankruptcy, as in the rest of the world, needs to be proven - it can't simply be stated. Therefore, the creditor needs to be able to prove that when you took out the money you knew or had reason to know that there was no way you intended to pay it back.
Three things any bankruptcy lawyer will look when reviewing a dischargeability complaint are:
how recent was your most recent use of the credit card? If you charged up the card over several years and there is no recent change in your pattern of use then the chances of a challenge is reduced; when you used your credit card over the past 12 to 18 months, would a reasonable person conclude that you had a reasonable expectation of repayment? If so, the chances of a challenge is reduced; and If you were honest about your employment, income and your expenses when you applied for the credit card then the chances of a challenge is reduced Unless you acted way outside the scope of your past credit card use, the chances that a creditor objects to your discharge are incredibly rare. Still, it's a good idea to review the options with your lawyer before your bankruptcy case is filed.
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