Bankruptcy & Loan Modifications

If you have filed for bankruptcy and one of your creditors or the Trustee has filed a complaint alleging you are not entitled to a discharge of your debts, there are certain defenses that you want to raise. The two most basic defenses with respect to an adversary proceeding (the name of the proceeding to challenge a debtor’s ability to discharge debt) are to ensure the Creditor has a right to challenge. This is called standing. The second key defense you may want to raise is to ensure the Creditor has put forth actual facts that are supported by evidence, and not simply a theory that you may have done something wrong.In Bankruptcy law, “[t]he burden of persuasion rests with the party either opposing a discharge in bankruptcy under Bankruptcy Code…” Commerce Bank & Trust Company v. Burgess, 955 F.ed 134, (1st Cir. 1992). “Moreover, the statutory requirements for a discharge in bankruptcy are ‘construed liberally in favor of the debtor’ and ‘’[t]he reasons for denying a discharge … must be real and substantial, not merely technical and conjectural.’” Id

In order to have standing, the plaintiff “must demonstrate that it has suffered a concrete and particularized injury that is either actual or imminent, that the injury is fairly traceable to the defendant, and that it is likely that a favorable decision will redress that injury.” Massachusetts, et al v. Environmental Protection Agency, et al, 549 U.S. 497, 509 (2007)(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560- 561). For example, if the party challenging your bankruptcy contends that you transferred, hid or mutilated property of the bankruptcy or other assets, ensure that that party has an ownership stake in those assets. One such example would be if you were holding property of a third party and that property were not yours to begin with, then no one can ever claim you must turn that over to a Creditor, without a Court Order.

It should be noted, that this article is not intended as legal advice for any specific adversary proceeding. If you find yourself faced with such a proceeding, it is always best to speak to an experienced bankruptcy attorney in your jurisdiction.