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Friday, August 17, 2018

Why would a bankruptcy petition be denied or a debt be considered non-dischargeable?

There are many reasons why a Chapter 7 Bankruptcy petition might be denied.  If filings are incomplete or deadlines are missed, the petition might be dismissed by the Bankruptcy Court.  Similarly, if a petitioner fails the Bankruptcy Means Test, a Chapter 7 claim may be denied.  In either of these scenarios, the objection would be to the entirety of the petition and no relief would be granted.  The Court may sustain an objection to a petition if the petitioner does not provide documents requested by a trustee, fails to complete required credit counseling, attempts to hide assets or commits fraud in the Bankruptcy petition.  While there are many other reasons for an objection, it would be impossible to provide an exhaustive list of possible objections.  It is important to remember that an attorney can help to guide a petitioner through the process without incident.

Even if the petition is accepted and the bankruptcy proceedings progress, there are a number of debts that are considered non-dischargeable. Many debts have been deemed non-dischargeable by bankruptcy for public policy reasons.  There are nineteen categories of debt that fall under this classification.  These nineteen categories are listed under 11 US Code § 523.  The most common are tax debts; debts not included in the master list of creditors; debts for child support, alimony, or required to be paid by a divorce decree; debts for government sponsored student loans (with some exceptions); debts incurred after a bankruptcy had been filed; debts secured by collateral; and debts for court fines, penalties, or restitution for criminal behavior.  The courts will automatically deem any debt that falls into these categories  as non-dischargeable.

For other types of debts, a creditor must file an objection with the Bankruptcy Court to prevent the debt from being discharged as part of the Bankruptcy.  After the objection is filed, the Court will hold a fact-finding hearing to determine whether or not the debt should be discharged.  These objections are usually related to situations in which the facts are in dispute, such as when it is alleged that a debt incurred as a result of fraudulent representation by the petitioner. 


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Serving Southeastern Wisconsin, with offices in Milwaukee and West Bend, Affliated Attorneys, LLC represent clients throughout Milwaukee County, Washington County, Waukesha County, Dodge County, Ozaukee County, Racine County, Sheboygan County, Jefferson County, Fond du Lac County and Walworth County.



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