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Dealing with a Debt Collector’s Threat to Fight Your Intended Discharge of the Debt

Woman looking at bills and receipts on floorThe goal of most bankruptcies is the “discharge:—the legal write-off of debts. If you are thinking about filing bankruptcy to get a fresh financial start through a discharge of your debts, and a debt collector tells you that you won’t be able to discharge that debt, is that true? Is it likely a valid threat?

Idle Threats?

Most of the time that a creditor or collector is telling you that a particular debt would not be discharged, they are wrong. They are likely lying to you to or trying to confuse you to prevent you from filing bankruptcy. It’s true that any creditor can challenge the discharge of its debt, but they almost never have the necessary legal grounds to make such challenges. So they very seldom actually do raise such challenges once you do file bankruptcy.

Debts that Aren’t Discharged

Most debts that you want to discharge in bankruptcy ARE in fact discharged. There are three broad categories of debts that may not be:

  1. Those debts that you yourself decide not to discharge, usually because they are secured by something you want to keep, such as your vehicle or home; you are willing to continue to owe the debt in exchange for your right to keep the collateral.
  2. Those debts that the law makes not dischargeable for certain special reasons, such as child and spousal support, newer income taxes, most student loans, and such.
  3. Those that were incurred through fraud, embezzlement or other similar bad behavior on the part of the debtor.
  4. The first category doesn’t really apply here since those kinds of debts are voluntarily not discharged.

    Also, most of the time the threat from a creditor or collector is not based on the second category—your debt is probably not one of the few types that can never be discharged. If that is what you are being told, and the debt is not a tax, student loan, and does not arise out of a divorce, most likely the creditor or collector is not correct about the debt not being dischargeable.

    But because there are some other rare types of debts that may not be dischargeable, ask the person to tell you WHY the debt wouldn’t be discharged. Then talk to a bankruptcy attorney to find out if that debt can in fact be discharged.

    Debts that Arise Out of Bad Behavior

    The third category above is the one that is usually at issue when a creditor threatens to challenge the discharge of the debt. It is telling you to not bother filing bankruptcy because his or her company will act to prevent the discharge of its debt

    We said above that such threats are almost never valid because the creditor can almost never meet the legal grounds needed for such a challenge. Those necessary grounds are quite narrow, usually requiring you to have intentionally cheated the creditor in some way AT THE TIME the debt was incurred.

    Proving Fraud

    For a creditor to show that you fraudulently incurred the debt, it would have to show that you received or used credit by giving some specific false information to the creditor, AND you knew it was false, AND you gave it purposely to cheat the creditor into letting you get or use the credit, AND the creditor actually relied on that information to give you credit, AND the creditor was directly harmed by doing so. Again, the facts almost never support a creditor being able to establish all these in order to prove fraud. If not, the debt is generally discharged.

    But be careful because sometimes the creditor’s task is made easier if the false information that you allegedly gave was implied. For example, when you write a check, doing so implies that you have money in the account to cover the check. So, often a bounced check, or a similar use of credit without the intent to pay it back, can be challenged as “fraud” for bankruptcy purposes.


    If a creditor or collector tells you that you can’t discharge a debt in bankruptcy, and you are in New Jersey, the attorneys at the Law Office of Andrew B. Finberg can advise you about your best bankruptcy strategy. Bankruptcy is a complex area of law, and you benefit from working with a firm that focuses on it. Please call us at (856) 988-9055 or use this form to set up a free, no-obligation consultation with us. We look forward to serving you.

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