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Understanding Chapter 7 and the right to a discharge

For those in Arizona whose financial situation reaches the level at which they find it necessary to file for Chapter 7 bankruptcy, it must be understood that it is not just a matter of filing and having all debts discharged. It is possible that the creditors could object. The filing can be made by the debtor, the case's trustee, or a U.S. trustee. The creditors will be informed after the case has been filed and this will yield information such as the deadline for when the objection can be lodged.

If the creditor would like to object, a complaint must be filed in the bankruptcy court prior to the deadline in the notice. This will lead to a lawsuit commencing. It is known as an adversary proceeding. There are numerous reasons why the court can deny a discharge. These include: failing to provide necessary tax documents, failing to complete a course to assist with personal financial management, and the transferring or concealing of property in an attempt to cause a hindrance, delay or defraud the creditors.

Other reasons include: records being destroyed or concealed; committing perjury and other acts of fraud; failing to account for assets that were lost, and violating a court order when there was an earlier discharge. In the event that this type of lawsuit goes to trial, the creditor will have the burden of proof to show the facts that are necessary for the objection.

Those who are filing for Chapter 7 bankruptcy must be cognizant of the reality that they are not automatically guaranteed of the creditor simply accepting the filing and refusing to object. With financial challenges, Chapter 7 can be a useful tool if the entire process is understood. It is important to discuss the matter with a legal professional experienced in how Chapter 7 can be used to discharge debt.

Source:, "Discharge in Bankruptcy -- Bankruptcy Basics -- Does the debtor have the right to discharge or can creditors object to the discharge?," accessed on Jan. 7, 2016