In standard bankruptcy cases, a debtor’s debts are discharged and some of their property is considered exempt from seizure and sale. However, creditors and bankruptcy trustees can object to these in objections to dischargeability and objections to exemptions. In this article, we define both of these terms.
Typically, a debtor who files for bankruptcy has all of their qualifying debts discharged, or erased. This can include things like credit card bills, medical bills, and personal loans. However, a creditor or the case’s bankruptcy trustee has the ability to object to the discharge of a particular debt, or even the entire bankruptcy case, by filing something called an objection to dischargeability.
There are two ways that an objection to dischargeability may be filed.
Examples of nondischargeable debts include:
Examples of situations that may allow for objecting to an entire bankruptcy case include:
When a debtor files for bankruptcy, it is standard for certain types of property to be exempt from being seized and sold off. This usually includes a variety of things that are thought of as being necessities of daily living such as home furnishings and clothing, with each state and the federal government having their own exemption lists. However, creditors and bankruptcy trustees can object to exemptions if they believe that the exemption is being used improperly.
This may happen for a few reasons, including:
For example, one category that is usually considered exempt is tools of the trade that a debtor needs to perform their job. However, if a debtor tried to claim their car as a tool of the trade because they used it to commute to work, an objection to this exemption could be made.