Can Creditors Stop Me From Filing Bankruptcy?
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When you file bankruptcy, you submit a list of all your debts along with the contact information for those creditors. The bankruptcy court then sends out a notice to all of your creditors letting them know that you filed.
Your creditors can’t stop you from filing bankruptcy, but they do have 60 days after the first creditors meeting to object to your debt being included in the bankruptcy discharge. That means they believe you should still owe that debt to the creditor and not be allowed to have it wiped out in a chapter 7 bankruptcy, or included in a chapter 13 bankruptcy payment plan. If they file an objection the bankruptcy trustee will typically proceed with the rest of your bankruptcy while starting an investigation to determine if the objection should be honored. The objection may have to go to trial to determine if the creditors claims are true and the debt should not be discharged.
Most creditors do not object to a bankruptcy filing unless they believe the debtor has committed some type of fraud, like racking up debt right before filing knowing that they would be filing, or lying about income to gain credit. We often also see co-debtors, meaning people who co-signed for a loan with another person, filing objections when the other party tries to file bankruptcy since they will then be stuck with the debt. This is common in divorce as well where a spouse is ordered to pay a debt in the divorce decree but tries to file bankruptcy in order to have the debt discharged from their name.
While a creditor can’t stop you from filing bankruptcy, some prebankruptcy planning with a bankruptcy attorney can go a long way if you have fears of creditors filing an objection. An attorney can help you determine the chance that a creditor could file an objection and put a wrench in your bankruptcy filing.
