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What issues may cause bankruptcy litigation?

Filing for bankruptcy may prove beneficial to your financial future. In some cases, however, other issues arise during the process that throws you into litigation.

Bankruptcy litigation is not common, but it can happen. Typically, it means that an interested party filed a court action against you that could derail or modify your bankruptcy. Discover some examples of this type of litigation in Texas.

The right to keep property

During Chapter 7 bankruptcy, the trustee combs through your assets and decides what you should liquidate to pay off creditors. While this process is not always pleasant, it usually does not become contentious. However, you may feel that some of your property falls into the exemption category while the trustee does not. Disputes over your property and what the trustee decides to sell off could become an issue for a judge to decide.

Creditor objection to discharge

After bankruptcy, if you have fulfilled the terms set by the trustee, the court typically discharges any remaining debt. In some instances, a creditor may not agree and file an objection to the discharge. There are times when this action can move forward through court, much like a civil lawsuit. The end ruling could remain in your favor, or, in rare circumstances, you may need to reassess the debt and either pay it or continue to a settlement with the creditor.

Proceeding through bankruptcy can put you on a firm financial path. While most such cases run smoothly, the chance of further litigation always exists. It helps to have someone walk you through the entirety of the situation before making a move. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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