I was sued in my bankruptcy for nondischargeability. What will happen if I don't respond? Are the consequences harsh?
If you have been served with an adversary proceeding in your
bankruptcy for nondischargeability of a debt, you should respond as soon
as you can.
(Learn more about adversary proceedings in bankruptcy.)
bankruptcy discharge is typically the purpose behind your bankruptcy,
particularly in Chapter 7. When you receive your bankruptcy discharge,
the court is discharging your liability on dischargeable debts. That
means that although the debt still exists (so cosigners and joint
accountholders are still responsible), you are no longer legally
obligated to repay it, and your creditors cannot try to collect it from
Dischargeable debts include credit card debt, personal loans,
some utilities, medical bills, money judgments (as long as there is no
judgment lien), and certain income taxes, amongst others. (Learn more
about the Chapter 7 bankruptcy discharge.)
However, dischargeable debts can be made nondischargeable if the
creditor to whom you owe money files a nondischargeability action
against you in the bankruptcy court and wins.
that are generally dischargeable can become nondischargeable.
Bankruptcy law provides that debt incurred by use of fraud is
nondischargeable; however, the creditor has to ask for the debt to be
nondischargeable by filing a lawsuit within the bankruptcy case. Debts
that are normally dischargeable may be deemed nondischargeable if the
creditor can show that you incurred the debt fraudulently. For example,
if you run up your credit card with the intent to file bankruptcy and
get rid of the debt, the credit card company may accuse you of fraud and
file a nondischargeability action to make the credit card debt
you receive a nondischargeability lawsuit, you will have a deadline to
respond. If you do not respond within the deadline (usually 21 to 30
days, depending on the local rules of your bankruptcy court), the court
will enter a default. The creditor who filed the lawsuit can then obtain
a default judgment against you. The judgment will state that the debt
is nondischargeable, and after your bankruptcy is over, you will have to
repay the debt even though you obtained a discharge. Therefore, if you
receive a nondischargeability lawsuit, responding as soon as you can is
within your best interest.
by: Rebecca K. McDowell, Contributing Author