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Creditors Wishing To Challenge Bankruptcy Confirmation Must Move Quickly

Posted By admin || 7-Dec-2009

Creditors Wishing To Challenge Bankruptcy Confirmation Must Move Quickly

In the bankruptcy case of Wise, Vernon R. and Jennifer P.; In re, the bankruptcy court denied a creditor's mo­tion to set aside the confirmation order and dismiss the debtors' Chapter 13 bankruptcy case.

The details of the bankruptcy case:

The Chapter 13 debtors received their credit counseling on the same day that they filed for bankruptcy protection. Four days after the confirmation hearing, an unsecured creditor filed a motion to set aside the confir­mation order and dismiss the case because the debtors received their credit counseling on the same day they filed for bankruptcy. In In re Hammonds, No. 08-40928-JJR-13 (Bankr. N.D. Ala. 09/22/08), the court ruled that a debtor's failure to receive credit counseling at least one day prior to filing for bankruptcy was grounds for dismissal of the case. However, because the creditor did not raise the issue until after the confirmation hearing, the court ruled that the objection was waived.

While debtors filing for bankruptcy must receive credit counseling at least one day before filing bankruptcy, the bankruptcy court did not consider the creditor's objection because it was not brought before the court in a timely manner.  However, if the creditor had brought the objection forward in a timely manner (i.e. before the bankruptcy was confirmed) the debtor may have faced a dismissal of their bankruptcy case.  It is important that debtors understand and follow the rules of filing bankruptcy. Failing to complete steps within the prescribed time period can result in a dismissal of their bankruptcy case.  Filing another bankruptcy may cost them in time and money, unnecessarily. Please work with your bankruptcy attorney to make sure that you are not making mistakes that make you vulnerable to a bankruptcy dismissal.

Categories: Bankruptcy
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