Excessive medical bills, job loss and other situations sometimes send debtors in Michigan to bankruptcy court. Bankruptcy laws generally provide a path out of financial hardship, but people filing for bankruptcy protection must comply with necessary requirements to gain a general discharge of debts. Some types of debts, however, may remain active because they do not legally qualify for forgiveness.
At the conclusion of a Chapter 7 or Chapter 13 bankruptcy case, a court will issue a general discharge order that absolves the debtor of responsibility as long as certain conditions have been met. A bankruptcy filer must submit complete disclosures about finances and complete the Meeting of Creditors. Any attempts to defraud a creditor prior to filing bankruptcy will jeopardize the outcome of the case.
A debt might not be discharged if a creditor launches an adversary proceeding, which is essentially a lawsuit that challenges a debt’s eligibility for discharge. A judge will have to decide whether a creditor’s lawsuit has merit. In some situations, a debtor may choose to reaffirm responsibility for a debt instead of seeking discharge. Additionally, bankruptcy law specifically prohibits some types of debts from discharge.
The possibility that a judge decides against issuing a general discharge order also may exist. Due to the high stakes for the debtor, legal advice is appropriate when navigating the bankruptcy process. An attorney might explain how the law applies to the person’s specific debts and assets. This guidance may help the person decide whether proceeding with a filing would be useful. An attorney’s preparation of the court paperwork might also ensure that the client makes a complete and honest disclosure of finances. Should any challenges arise from creditors, an attorney may counteract their claims by citing the debtor’s rights.