What Happens if a Creditor Opposes the Bankruptcy Discharge?
Bankruptcy should never be considered as the first step if you are struggling with debt.
There are multiple other steps that should be taken first.
These options are going to be far more beneficial to you.
However, there will be some cases where bankruptcy can be the best and indeed, the only option.
This is usually the case if you are struggling with a massive level of debt that is so large you couldn’t even afford to pay a percentage of it.
It’s an option when all other choices have failed or you have found them inaccessible.
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It’s also a way to wipe the slate clean and ensure that someone can gain the fresh start they need.
There’s just one problem here and this comes in the form of your creditors.
You may not be aware that creditors can halt a bankruptcy claim thereby delaying your progress.
It’s worth noting that while this is a rare occurrence, it has still been known to happen in some cases.
One of the reasons why it’s not particularly common is that you can be automatically discharged in either 9 or 21 months, depending on whether you are required to pay a surplus income.
However, in some cases, you can complete your duties, pay the money and then wait to be discharged.
You might find then that just before you’re scheduled to be discharged that one of your creditors is opposing the bankruptcy.
So, what’s the next step?
Meet With Your Trustee
You will be working with a trustee to complete your bankruptcy and it’s important that you speak to them as soon as you notice and issue.
You need to make sure that you quickly find out why they have decided to oppose the claim.
When this happens you will also need to attend a hearing in Bankruptcy Court.
The judge will then decide on what the next step is.
For instance, they may determine that there are other duties that need to be completed.
Or, you might find that there are other payments.
Of course, a judge can also determine no further action is needed.
Do You Need To Worry About The Court Proceeding?
Typically, there’s no need to worry about a court proceeding but you could be in for a wait.
It’s not uncommon for it to be a couple of months or even six months before you get your hearing.
Unfortunately, during this time, you will remain in bankruptcy and you will need to continue to report your income.
You will then meet with your trustee again, usually about two weeks before the hearing.
At this meeting, you can discuss exactly what you should expect and what you need to know.
Do You Need A Lawyer?
You can hire a lawyer to represent you in this court.
Or, you can simply choose to appear yourself.
This is entirely your decision.
During the hearing, the creditor’s lawyer will state why the bankruptcy discharge was opposed.
Usually, it’s because they think that you can actually pay back your debt or there was missing information.
You’ll then need to answer any questions that they choose to ask.
What’s The Next Step?
A decision will usually take several weeks and will often be provided in writing.
At this point, the discharge might go through or you may need to pay more money and complete the further duty.
That’s entirely up to the judge and will be based on the evidence that is presented.
Can You Avoid This?
There’s no way to know how a creditor is doing to react to a discharge which means that there’s no way you can prevent this from occurring.
The only thing that you can do is ensure that you are being honest and truthful with what you can afford to pay.
Even then, a creditor may choose to oppose it.
Some simply don’t like the idea of losing money and may try and make things more difficult for you.
If you want to avoid creditor opposition then you need to make sure that you are avoiding bankruptcy completely.
That means that you need to explore an alternative way to deal with your debt.
If you want to avoid bankruptcy but you are struggling with your level of debt, then the ideal option will be a consumer proposal.
With a consumer proposal, you work with the trustee to calculate what you can afford to pay back.
This will be a percentage of your total debt and that proposal will be presented to all your creditors.
They will need to vote on the issue and if the majority accepts it, the proposal will be approved.
This will also include information on how long it’s going to take you to pay the debt back.
Usually, most people will clear their debt within 1 to 5 years.
Remember, the amount that you offer through the proposal must be more than they would gain through a bankruptcy claim otherwise there is absolutely no benefit to them.
To gain approval with a consumer proposal, you need to make sure that you have the right team by your side.
That’s why you should be choosing your trustee carefully and ensuring that they have a wealth of experience in dealing with creditors.
Don’t forget, a consumer proposal also won’t be as damaging to your credit.
So, there are definitely a few benefits to exploring this particular option.
We hope this helps you understand everything you need to know about creditor opposition to the bankruptcy discharge.
This can be a complex situation but with the right trustee by your side, it can be far easier to manage.
If you are interested in learning more about debt relief options such as a consumer proposal, do make sure that you contact us today.
A friendly member of our team will be happy to assist you further.
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