Why? The creditor may assert that the debt falls under one of the exceptions to discharge, such as debts incurred through fraud, intentional or malevolent injury, or personal injury resulting from intoxication-related accidents. Or, the creditor argued that the bankruptcy petition was filed in poor faith. A debtor may initiate an adversary proceeding against a creditor during a bankruptcy filing. The debtor may recover damages for actions taken by a creditor in violation of the United States bankruptcy code, the automatic stay, or the discharge injunction.
Once a debtor has been granted a discharge, former creditors are prohibited from attempting to collect the discharged debts. In an adversarial proceeding, the filing of a claim does not guarantee that the claimant will prevail against the opposing party. It is the responsibility of the judge to determine who is right and who is incorrect. A bankruptcy attorney can provide advice regarding the likelihood of success in an adversary proceeding, but the judge has the final say.
The initial step in declaring bankruptcy is determining which option is ideal for you. Understanding Chapter 7 and Chapter 13 bankruptcy is crucial. The first bankruptcy filing option entails the liquidation of assets, in which case nonexempt assets, if any, are distributed to creditors. In a brief time, unsecured debt can be eliminated. Chapter 7 bankruptcy filers almost always receive a discharge. The law presumes that the person is eligible for a discharge. Only if a creditor or trustee files an adversary proceeding challenging the eligibility for a discharge is there an investigation. In order for a judge to determine whether a bankruptcy discharge is merited, those who file for bankruptcy must either justify the filing of the case or demonstrate their good faith efforts to avoid filing. This is not how it works. Unless there is a successful claim that the debtor is ineligible for discharge, the discharge is granted.
This option is only available if certain criteria are met, despite the fact that it may seem appealing. Among these are a sufficiently modest income and credit counseling. The personal bankruptcy law has made the application process more difficult. The second option involves reorganizing one's debt. Here, one has the option to pay off all debts over a lengthier time period. A payment plan makes it simpler to fulfill one's financial responsibilities. This entails recurring payments over a predetermined time frame, typically three to five years. Following which, any remaining unsecured debts are cancelled.""
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