If debt has become unmanageable, filing for bankruptcy may be the best way to consolidate, repay, or eliminate debt. When a petition for bankruptcy includes a “schedule” to repay debt, a creditor is permitted to object to being included in bankruptcy. While some of these are valid, some of them are not.
This objection must be made within the permissible time frame, and they may appear at the 341 (meeting of the creditors) to voice their objection and ask some preliminary questions. If you are a debtor, you and/or your attorney should object to the same.
Can I negotiate payments?
Yes, you can negotiate a payment plan if you want to do that instead of filing for bankruptcy. Believe it or not, if you are not behind on your payments for at least three (3) months, the creditors are not interested in negotiations, even with an attorney. Although not paying your bills for three (3) months to gain negotiation leverage may sound logical, if you change your mind or the creditor will not reduce the balance as much as anticipated, your finances may experience devastating results.
When an attorney calls a creditor to negotiate a deal, the creditor is notified that you are serious and took the step to make this debt go away. Suppose the creditor is unwilling to negotiate a reduced payment for the debt, or they believe you may just file bankruptcy instead of paying the debt. In that case, the creditor risks getting nothing instead of something. Having a plan and strategy is important to get the best settlement offer. If you are prepared for the worst and do not like how the negotiations are concluded, you can still choose to file for bankruptcy.
Can a creditor object to the discharge of their claim?
Creditors who are owed a significant amount of money or have a secured claim may object to the discharge of their claim. The creditor may attempt to collect some part of the outstanding debt (if the trustee can discover assets). A creditor can also require that the property that secured the debt be returned to them (a car, furniture, etc.).
Know more about what kind of debt is exempt or cannot be discharged when filing a bankruptcy.
Suppose a creditor can prove that the claim is not dischargeable in bankruptcy due to an exception (most common being fraud by the debtor). In that case, they will seek relief from the bankruptcy court to have their claim “dismissed” from the bankruptcy, and that creditor will not be affected by the discharge.
Many debtors do not realize that filing the incorrect schedules (intentionally or unintentionally) can cause significant fines, bankruptcy being dismissed, or even spending time in federal prison. Your bankruptcy petition needs to include the following:
- Schedules of Assets and Liabilities.
- Schedule of Current Monthly Income and Expenditures.
- Statement of Financial Affairs.
- Schedule of Executory Contracts and Unexpired Leases.
- Certificate of Credit Counseling (For individual filers with primarily consumer debts).
It is important to have an attorney assist you with the bankruptcy so they can understand your particular case and what you should and should not include in your schedules.
Camy B. Schwam-Wilcox has been providing bankruptcy services to the community since 2002. The firm has had experience with creditors who attempt to have their claim dismissed from the discharge. We take pride in our attention to detail, our full explanation of the process to the debtor, and our ability to have debt lawfully discharged.
Whether you are looking to liquidate, consolidate, or generally find a new start for your financial security, filing for bankruptcy may be the option for you. Fill out our Bankruptcy Consultation Form, and we’ll schedule you for a complimentary 15-minute phone consultation, or you may come into the office to speak with an attorney.