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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17080
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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In a debtors Chapter 7 bankruptcy, a creditor has started

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In a debtor's Chapter 7 bankruptcy, a creditor has started an adversary proceeding by filing a non-dischargeability complaint. The debtor is also attempting to discharge debts owed to other creditors. Will a non-dischargeability claim from just one creditor delay the entire bankruptcy process (for example, by delaying the discharge of debts owed to other creditors)?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

Typically in situations such as these, the other creditors who listed would be discharged if they did not file for an adversary proceeding.

WALLSTREETESQ :

Be aware for a creditor to actually win a discharge hearing they have to overcome a significant heavy burden of proof, and rarely do they actually prevail.

Customer:

The creditor here has a default judgment from a previous fraud claim from a year ago. Does this lessen the burden in the creditor's discharge challenge? Or does that creditor still have a tough hill to climb?

WALLSTREETESQ :

If fraud was found in Civil Court,

WALLSTREETESQ :

then the creditor can claim the debt is valid,

WALLSTREETESQ :

however, they will have to prove the fraud was intentional and non dischargeable.

Customer:

So the creditor could not claim res judicata in bankruptcy court - they would still have to show proof?

WALLSTREETESQ :

Under the bankruptcy code 11 U.S.C. 523 makes the following non dischargeable upon proof: fraud, conversion, embezzlement, larceny, breach of fiduciary duty and willful and malicious injuries to person or property.


Credit cards provide the fact pattern in which this issue arises most often. Use of a credit card when the card holder had no intention of repaying the charge or when the individual should have known he had no ability to repay the debt may be fraudulent.


 


 

WALLSTREETESQ :

If their was a Court order that found fraud, that would be used in the case as evidence,

WALLSTREETESQ :

the trustee and Judge may require more evidence, but the Court order and finding will be usually enough evidence.

Customer:

Last thing - how much would an experienced attorney usually charge to file an answer for the debtor in this situation? And if it ends up going to court, how much additional legal fees could a debtor expect to pay to defend himself here?

WALLSTREETESQ :

Legal fees for a debtor would be significant typically $1500 or more, however, if the debtor filed their case without an attorney, very few bankruptcy attorneys will represent them in the middle.

WALLSTREETESQ :

If the case goes to a hearing it could cost over $10000 in fees.

Customer:

Thank you!

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