Bankruptcy can be more than just filing papers. Sometimes, you get sued in the bankruptcy court. And sometimes you have to sue someone else in bankruptcy court. At Lakelaw, our bankruptcy attorneys know how to litigate and how to defend against bankruptcy lawsuits. In fact, the Chicago bankruptcy law firm managing member, David P. Leibowitz, made a presentation to the National Association of Bankruptcy Trustees on bankruptcy litigation at its 2011 Spring Meeting. Here are some questions our clients ask us about bankruptcy litigation.
If I file a bankruptcy case, can I get sued?
Yes, a creditor can file a complaint against you seeking to bar the dischargeability of a particular debt. This means that you could still be liable for this debt even though you are discharged, or released from every other debt. A creditor or the trustee might also sue you to bar your right to a discharge. This means that even though you filed a bankruptcy case, you would not be released from the obligation to pay your debts.
Why might a debt be not discharged in bankruptcy?
There are many reasons. For example, the debt could have been incurred through fraud. Or maybe a creditor claims that you obtained a debt through a false financial statement. A bank or credit card company might claim that you purchased luxury goods or obtained cash advances shortly before you filed bankruptcy. Other grounds for debts being declared not dischargeable include a defalcation, embezzlement or larceny and claims arising from death from operating a car, boat or aircraft while intoxicated. There could be other reasons too.
How could I lose my discharge in bankruptcy?
There are many grounds to deny a discharge in bankruptcy. For example, you could have gotten rid of property with the intent of hindering delaying or defrauding your creditors. Or you could have failed to keep proper financial records. People can lose their discharge if they lied on their bankruptcy papers. You could lose your discharge if you can’t explain loss of assets. You also could lose your discharge if you disobey court orders or commit an improper act in connection with another bankruptcy case.
This sort of litigation sounds serious.
It is extremely serious. If you are trying to sue someone on these grounds or if you get sued on these grounds, you need an attorney, like the attorneys at Lakelaw, who have experience in these matters.
Are there other types of bankruptcy litigation?
Yes, you could sue somebody or get sued to recover a preferential transfer. This is a transfer within 90 days of a bankruptcy case which leads to the person getting the transfer to receive more than he or she would get compared to other creditors in your bankruptcy case.
Is getting sued on a preference serious?
Preference litigation is an unpleasant reality. There are many defenses to preference claims. Lakelaw is very capable and experienced in defending preference claims. Many times, they can be eliminated if proper conduct can be explained. Frequently, these matters are settled without the need for a trial.
I don’t owe my creditor as much as they are claiming!
We can object to a claim, particularly if the creditor doesn’t file the proof of claim with adequate supporting documentation.
I am a creditor in a bankruptcy case.
We can file a proof of claim for you and defend your claim against any objections which might be raised.