Some people’s debts reach such a high level that they can’t envision paying them off within a reasonable amount of time, if ever. Those who find themselves in that situation often have to endure non-stop calls from creditors. Foreclosure proceedings, repossessions and other aggressive collection efforts may get underway as well.
Debt collectors are legally required to stop their collection efforts once a debtor files for bankruptcy. If a bankruptcy trustee agrees to discharge your debts, then you may think that you will no longer have to deal with those calls and letters from debt collectors. That might not be the case, though.
Which debts are dischargeable in bankruptcy?
Some debts aren’t eligible for discharge. Creditors can ask the court to exclude your debt from the case. You’ll want to learn more about what can and cannot be discharged in bankruptcy. You’ll also want to learn more about steps that creditors can take despite all that so you’ll know what to expect in your case.
Most consumers who qualify to file for Chapter 7 bankruptcy can discharge unsecured debts such as medical bills and credit card balances. Family court support orders and student loan obligations are two examples of debts that are generally not dischargeable in a bankruptcy.
How can creditors’ adversary proceedings change your bankruptcy case’s outcome
Creditors may petition the court to exclude your debt with them from your bankruptcy case so that it’s still collectible. They could also ask the trustee to impose an automatic stay to resume collecting their debt. These examples fall under the umbrella of an adversary proceeding because they involve creditors asking the court to do something that they typically don’t do.
Many people who are overwhelmed by debt file for Chapter 7 bankruptcy with the expectation that the court will discharge the majority of their debts. You need to know what your options are if this doesn’t happen so that you’ll know what steps to take from there.