When a Creditor Should Hire a Bankruptcy Litigation Lawyer

bankruptcy litigation lawyers signing a contract.

Bankruptcy litigation is a complex area of law with its own rules, procedures, and regulations. Although it isn’t mandatory to have legal representation in order to file a bankruptcy case to pursue a debt as a creditor, hiring experienced counsel can be well worth the cost. Whether you’re an individual creditor or a business who is owed a debt, a bankruptcy lawyer can help you navigate the legal process and help ensure you obtain the judgment to which you’re entitled.

A creditor should strongly consider hiring a bankruptcy litigation lawyer under the following circumstances:

You Are Concerned About the Paperwork

Bankruptcy cases usually involve a significant amount of paperwork that must be reviewed, exchanged, and filed with the court. While your primary concern as a creditor should be operating your business, it’s critical to have an attorney who can handle all paperwork matters for you. They will also know what information and forms to file with the bankruptcy court, and how to respond when necessary. A bankruptcy litigation lawyer will have a deep understanding of the process and ensure you assert your right to be heard in the case.

You Believe the Debt is Nondischargeable

Not every debt is eligible for discharge in a bankruptcy litigation matter. Importantly, some debts cannot be wiped out in bankruptcy proceedings — others can only be discharged if certain conditions are met. If you are a creditor who believes that a debt should not be discharged, you may ask the court for relief from the automatic stay or get an order from the court that the debt is nondischargeable. In fact, a creditor may also object to the entire bankruptcy case by filing a motion or an adversary proceeding.

The Debtor is Abusing the Bankruptcy Law in Some Way

Fraudulent debts cannot be discharged in a bankruptcy litigation matter. A creditor may object to the discharge of a particular debt in cases involving fraud or intentional wrongdoing. For instance, if the costs and damages were incurred as a result of intentional and spiteful conduct before the bankruptcy case was filed, you may be able to show that the debtor is not entitled to the benefits of the bankruptcy code. Examples of fraud can include purchasing a certain amount of luxury goods within 90 days of filing for bankruptcy or taking a certain amount in cash advances on credit cards over a certain amount within 70 days of filing.

The Debtor Committed Fraud in Connection with the Bankruptcy Filing Itself

In addition to contesting a bankruptcy matter for fraudulent debts incurred before the case was commenced, a creditor can object to the discharge of all debts if they can show fraud in connection with the filing. Fraudulent actions can include perjury by providing false information on the petition for bankruptcy, transferring the title to property to another to avoid including it in bankruptcy, or lying to the trustee. Other forms of fraud can include hiding assets, destroying documents or property, or failing to obey an order issued by the bankruptcy court.

The Debtor Has Alleged You Violated the Automatic Stay

Once a bankruptcy case has been commenced, creditors must typically cease their collection efforts. If a creditor violates the automatic stay in bankruptcy, they may face sanctions and be responsible for paying the debtor’s damages. However, it’s important to understand that there are certain exceptions to the stay — a creditor may still be entitled to pursue the collection of a debt that was incurred after the bankruptcy case was filed. Violating the automatic stay is a serious matter, and if you are facing such allegations, it’s vital to have the representation of a skilled bankruptcy litigation lawyer.

You Believe the Automatic Stay Should Be Lifted

Creditors can take steps to request that the bankruptcy court lift the automatic stay under certain circumstances. Relief from the automatic stay may be granted if (1) cause exists, or (2) you can show that the debtor lacks equity in the property and it is not necessary for reorganization. Since the legal process associated with proving that the stay should be lifted for “cause” is very time-consuming and complex, having a bankruptcy litigation lawyer by your side is crucial to help ensure positive results.

Contact an Experienced Bankruptcy Litigation Lawyer

Whether you’re an individual creditor or a business who is owed a debt, it’s essential to understand that you have rights. A knowledgeable bankruptcy lawyer can advise you regarding your options to recover the funds that are rightfully yours and guide you through the legal process of securing a judgment. At Dave Burns Law Office, I provide reliable counsel for creditors in bankruptcy proceedings and work to ensure their rights are protected. If you would like to discuss a bankruptcy litigation matter, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I assist clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.

Categories: Bankruptcy

The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer