Some claims against an individual debtor survive the discharge without the creditor having to do anything to protect the claim.
Examples are child support, student loans, criminal restitution and judgments arising from drunk driving.
Other kinds of claims survive the bankruptcy only if the creditor takes action in the short time allowed.
Snooze, you lose
A creditor whose claim against the debtor was incurred by fraud, dishonesty or other forms of intentional “bad acts” may contest the discharge of his claim in a Chapter 7 bankruptcy by filing a timely nondischargeability suit.
That suit is called an “adversary proceeding” in bankruptcy lingo.
For the claim to survive the bankruptcy, the creditor must prove, to the satisfaction of the court, that the elements for non dischargeability are met. These adversary proceeding must be filed within 60 days of the first meeting of creditors or the claim is discharged.
The deadline for filing is shown on the notice of filing sent to all creditors when the bankruptcy case is filed.
The time may be extended if you file a motion for more time before the deadline for filing the complaint.
If you hold a pre bankruptcy judgment for fraud against the debtor, that judgment may be conclusive in an action for non dischargeability in the bankruptcy court. You still need to file the non dischargeability action; you may not have to prove anything more than the existence of your judgment.
Whether the pre bankruptcy judgment is conclusive in the bankruptcy case may depend whether the judgment contains findings of fact that match up with the standards for non dischargeability in bankruptcy court.
The question for most creditors with claims that may be non dischargeable is whether the cost of the adversary proceeding, the likelihood of success, and the probability of actually collecting make it worth the effort.
Image courtesy of MomMaven