In a Chapter 7 bankruptcy filing, most of your debts are discharged and you no longer have to worry about paying them. However, there are some instances in which a creditor might successfully challenge the discharge and you still have to pay the debt. If a creditor is challenging a debt, here is what you need to know.

Why Is the Creditor Challenging the Debt?

After you file for a Chapter 7, all of your creditors listed on your petition documents are notified that you are seeking a discharge of your debts. Each creditor has a certain period of time to challenge the discharge. To challenge the debt, the creditors must submit a proof of claim that states how much is owed and why the debt should be reaffirmed. 

Creditors can challenge a debt for a wide range of reasons, including fraud. For instance, if you applied for and received a new credit card right before filing for bankruptcy, the credit card company could argue that you took out the new line of credit knowing you were going to file for bankruptcy.

Should You Object to the Challenge?

In Chapter 7 cases, there usually is not a reason to object to the challenge. Chances are, you might not have enough assets to cover the amount of the debt and the court will decide in your favor anyway. However, if there is a possibility that an asset you were attempting to keep could be seized by the bankruptcy trustee and liquidated, you should consider fighting the creditor. 

How Can You Object?

The rules for objecting to a challenge can vary by county and state. When you receive notice of the challenge, the directions for objecting should be included. In some instances, you need to submit a written objection to the bankruptcy court. In the objection, you need to explain why the debt should be discharged. You might have to attend a hearing with the creditor and bankruptcy trustee in court. 

When you file an objection to the challenge, the creditor is notified. If the creditor chooses not to pursue the situation any further, there is a good chance that the court will side with you and the debt will be discharged. However, if the creditor chooses to fight your objection, you and your attorney need to be at the hearing. 

Since bankruptcy law is complex and fighting a challenge to a debt requires an intimate knowledge of the law, you should work with an attorney to get through the process as smoothly as possible.