Once you file your consumer bankruptcy petition, the court may impose a protection known as the automatic stay. This order generally shields you from collection activities against you and your property. In other words, creditors may be temporarily barred from pursuing lawsuits against you, garnishing your wages, repossessing your real property, harassing you with calls and mail, and other actions. However, you must understand that this is not a guaranteed benefit of a bankruptcy filing under all circumstances. With that being said, please continue reading to learn whether creditors can object to a bankruptcy court’s automatic stay order and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you prepare for this possibility.
Can creditors object to a bankruptcy court’s automatic stay order?
In short, a creditor may object to the pause put on their collection efforts by filing a formal motion with the New York State bankruptcy court requesting relief from the automatic stay. Importantly, they may have to supplement this request with a mandatory $188 filing fee. Then, they may be expected to attend a hearing and fight for this motion to be granted. Here, they may have to present specific grounds for why they should be given this relief. The most common grounds read as follows:
- A creditor may claim they have a lack of adequate protection for their interest in the property.
- A creditor may claim the debtor has a lack of equity in the property they are looking to protect.
- A creditor may claim the debtor is acting in bad faith and manipulating the court system to get relief.
Can creditors object to the discharge of certain debts in bankruptcy?
A creditor may not be successful in lifting the automatic stay on a debtor’s bankruptcy case. However, they may not give up their efforts to object to the discharge of certain debts along the way. First of all, dischargeable debts are those that a debtor is no longer personally obligated to pay. Meaning, a creditor will no longer hold the legal right to attempt to collect that debt.
That said, a creditor may object to this by initiating an adversary proceeding. This is essentially a lawsuit handled within the New York State bankruptcy court. Here, they may have to demonstrate that a certain debt is not eligible for dischargeability because it was incurred through fraud, willful and malicious injury, debts related to fines and penalties, or other disqualifying reasons. They may even go so far as to argue that certain transfers of assets before bankruptcy were fraudulent, preferential, or improper. Or, a debtor’s actions throughout the bankruptcy process thus far have been deceitful or questionable.
In conclusion, you should retain legal representation before you even get close to this adversary proceeding. So please, contact a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C. today.
