People often want to know what happens after a Chapter 13 Bankruptcy hearing. The next step is a confirmation hearing where the bankruptcy court approves or “confirms” the Chapter 13 Bankruptcy plan. But, prior to the confirmation hearing, creditors also have a chance to object to debtor discharging debts with creditor for certain reasons identified in Section 523 of the Bankruptcy Code.
By far and away the most common Section 523 objection is found under Section 523(a)(2) of the Bankruptcy Code. This provision allows creditors to bring an objection arguing debtor should not be allowed to discharge a debt with creditor because of fraud. Now, a few things before we proceed. First, these adversary proceedings are the exception not the rule. The vast majority of Chapter 13 cases filed have no adversary proceeding at all. Second, there are all kinds of ways to commit a fraud but here are some of the more common ways.
For example, if you applied for a credit card and said your income was 100k per year when in reality it was only 10k. Or, maybe debtor was incurring charges knowing that debtor had no intent to repay the debt. Creditors will review credit card history, especially just before filing bankruptcy, to see if there is evidence of fraud. Numerous purchases with no payments or a “flurry” of activity is a sign the purchases may have been made fraudulently.
If a creditor brings an adversary proceeding based on Section 523(a)(2) or any other section in 523, speak to your local and licensed bankruptcy attorney immediately. Your attorney can tell you how you should proceed with any adversary proceeding that may be brought.