Possible creditor objection questions

[imtryingtho]

I have this gut feeling that our biggest creditor is going to object to the discharge of debt. It’s a $50k consolidation loan from a year and a half ago that we took out to try and fix this situation, so we used it to pay off other debts we had. They filed a lawsuit in our county a couple weeks ago, so they’ve already shown they’re willing to spend the money on attorney and court costs. To be honest if it wasn’t for this loan, we would maybe try to just settle everything ourselves since we’re already so behind on payments(and many creditors have mailed us very good settlement offers), but the high amount of this loan plus the fact they filed a lawsuit was the final push we needed to file for Ch13.

Can anyone tell me what to expect if this creditor objects? Will they want to see what we actually used the funds for? I want to be as prepared with documentation as possible.

[justbroke]

Just becuase they filed suit to recover their money, doesn't mean they can or even will object to the bankruptcy. In fact, most creditors understand the finality of bankruptcy and the futility of objection to a discharge. Unless they can prove actual fraud, it's not worth the time in the bankruptcy to "object" to the discharge of that debt. In order to object to the discharge of their debt, the creditor would need to file a complaint known as an adversary proceeding. These can cost thousands to prosecute. While your creditor certainly has a large balance to deal with, even large banks like Chase and Bank of America don't get into these on just any debt.

I would say that because the loan is old, and you've made payments on the debt, there is no likelihood that they can even claim that you did this on the "eve" of bankruptcy without the intent to pay.

So I wouldn't worry about it.

[Carmella]

Based on my personal experience I say do not worry about the lawsuits. My husband and I had 5 or 6 lawsuits starting up since we procrastinated filing. You can slow down the process which was advised by our attorney so that we were never actually sued, but I and/or my husband had to show up in court a few times. As long as it didn't get to an actual proceeding (we had pretrials) and they didn't garnish wages we were fine. They were notified when we filed and the cases were stopped. Some ended with prejudice and some without, one means they will not pursue collections in the future, the other means they left the door open to pursue collections in the future.

[imtryingtho]

Thank you, both! Crossing my fingers that they won’t bother. I have a good feeling the other creditors won’t since they’re already offering to settle as low as 25-30%.