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Our bankruptcy practice extends to litigation. We usually defend debtors in bankruptcy disputes, including examinations under Rule 2004 of the Bankruptcy Code, and in adversary proceedings in which a creditor is asserting that its claim should not be discharged in bankruptcy.
Non-Dischargeability of Particular Debts
The reason individuals file for bankruptcy is to obtain a discharge, or legal forgiveness of ones debts. However, not all debts are dischargeable in bankruptcy. The types of debts that are non-dischargeable in bankruptcy are described in a federal statute 11 U.S.C. § 523. Debts that are incurred dishonestly, i.e. through fraud, are not dischargeable. Most bankruptcy litigation regarding dischargeability of debt revolves around the circumstances under which the debt was incurred and whether the debtor’s conduct in obtaining the debt was dishonest. The attorneys at Goff & Goff, LLC have extensive experience in handling bankruptcy litigation. If you have filed for bankruptcy and are facing the prospect of a lawsuit within your bankruptcy case, you should give us a call to discuss your situation.
Student Loan Discharge
Student loans are presumed to be non-dischargeable in bankruptcy. However, student loans can be discharged if the debtor can prove that he will suffer undue hardship if he does not obtain either partial or complete relief from the student loans. To have student loans considered for discharge the debtor is required to file a lawsuit in the bankruptcy court against the creditor. The debtor can have student loans forgiven if he can establish the following three elements which are known as the Brunner Test: (1) he cannot maintain a minimal standard of living if the loans are not forgiven; (2) his financial situation is not likely to improve in the foreseeable future; and (3) he has made a good faith effort to repay.
Bankruptcy litigation to discharge student loans is generally not advisable for federal student loans, (e.g., Direct Loans) but may be the only viable option to reduce or eliminate private student loans.
Our lawyers would be happy to discuss your student loan questions with you to determine if it may be appropriate to seek a discharge of your student loans through bankruptcy.
Denial of Discharge (11 U.S.C. Sec. 727)
Debtors are required to complete a number of tasks in order to receive a bankruptcy discharge. Among the requirements imposed is that the debtor must accurately list his or her assets and debts. In addition, the debtor is required to answer several questions regarding past financial transactions. Sometimes debtors do not provide accurate answers to all the questions which can imperil their eligibility to receive a discharge at all. Denial or revocation of a bankruptcy discharge is a serious sanction because if this occurs, NONE of the filer’s debts are discharged, and all of the creditors are essentially turned loose on the debtor again.
Normally, this type of litigation can be avoided by doing thorough work at the beginning of the case to make sure the debtor has not overlooked a transaction or asset. However, creditors sometimes seek to use small errors made by debtors to argue that the debtors should not receive bankruptcy relief. If you have been sued by a creditor in bankruptcy, you should call our attorneys to discuss the situation and the defenses available to you.
Automatic Stay/Discharge Injunction Violations
The most important statute in the entire Bankruptcy code is known as the “automatic stay” which is codified at 11 U.S.C. § 362. This statute becomes effective immediately upon the filing of a bankruptcy petition and forbids creditors from taking virtually any action to collect on their debt without first receiving permission from the bankruptcy judge. Some creditors run afoul of the automatic stay by continuing their collection efforts after the debtor has filed for bankruptcy. Such behavior is risky and can result in litigation. If a creditor loses this type of case he or she is frequently ordered to pay the debtor’s attorney’s fees. Punitive damages can be and often are awarded. The lawyers at Goff & Goff, LLC have prevailed against creditors in this kind of litigation, and won payment of attorney fees and punitive damages. If you have filed for bankruptcy and are continuing to be harassed by a creditor, you should contact us to discuss.