What is litigation? Litigation is basically the term that the legal system uses for the process of settling disputes between parties. The dispute can involve the following:

• Debtors and Trustees
• Trustees and Creditors
• Debtors and Creditors

While most consumer bankruptcy cases do not involve any actual litigation, there can be a lot to fight over. Common issues that lead to arguments between debtors and creditors during the bankruptcy process include: 

Automatic stay violations. The automatic stay is a court order that prohibits a creditor from collecting once a bankruptcy filing has taken place. As a result, a debtor can sue a creditor for attempting to collect debt. This is referred to as an automatic stay violation or a discharge injunction violation. 

Objections to claims. Debtors have the ability to challenge a creditor’s right to payment on a proof of claim, which is a form that must be submitted by creditors prior to receiving payment. This document also tells the bankruptcy trustee about the type of claim, as well as how much a creditor is owed, so the trustee can determine the amount to pay the creditor.

Objections to discharge. A creditor has the right to challenge the debtor’s ability to receive a full discharge if there is reason to believe the debtor has defrauded the creditor or the court. As in any other case, it would appear honesty is the best policy. Especially if you’re seeking a fresh start. 

Dischargeability of debts. A nondischargeable debt does not go away in bankruptcy. However, there are situations where the debtor or creditor must file a lawsuit within the bankruptcy case in order to determine whether or not the debt will remain.

The possibility of litigation is what can often guide the parties and the process in resolving disputes, as most people want to avoid significant conflict. After all, the debtors want a fresh start and the collectors are completely content moving on (there’s always another door to knock on or call to make). 

No matter what litigations or challenges you may face, McCune Legal is here to walk you through the bankruptcy process. Our dedicated and experienced team of bankruptcy attorneys are committed to getting you the second start you deserve. Just give us a call!