Legal Question in Bankruptcy in California

The bank will have 60 days after your meeting of creditors to sue you in bankruptcy. It is called an adversary proceeding to obtain an order from the bankruptcy court stating that the debt will not be dischargeable due to fraud. Usually before the adversary proceeding is filed your attorney (and you should certainly have one) will be contacted with an offer to settle for less with terms to pay the debt over a reasonable length of time with or without interest. At that point you might want to settle or fight the lawsuit if your attorney so advises. Obviously you need to consider the settlement amount vs. the cost of defending the lawsuit and the chances of winning vs. chances of losing and being liable also for the bank's attorneys' fees. Many times the threat of an adversary proceeding is a bluff and you need to have an attorney who based on experience can tell if the threat is real. Also, if you are unrepresented you are more likely to be sued in bankruptcy court since you are an easy target and they figure you will not be able to get a lawyer. Most lawyers, like me, will not take an adversary proceeding unless it is for a client I already represent in the bankruptcy case.

The simple answer is to file under chapter 13 and repay part of your debt in a 3 year plan.

http://www.absolutebankruptcy.org

Fraudulently incurred debt is subject to exception from discharge (forgiveness) of debt in bankruptcy upon sufficient showing by the creditor. In addition, fraudulently-incurred debt may subject the bankruptcy debtor to inquiry by the United States Trustee's Office. While a specific creditor may contest a particular debt in bankruptcy, the United States Trustee may object to the entire bankruptcy discharge. Consult with bankruptcy counsel to determine whether bankruptcy is a recommended course of action based on the totality of the debts and the circumstances of their incurrence. Fraudulently incurred debt is a term of art in bankruptcy. There may be harmless error that is not material to the incurrence of debt-- creditors are hardly discriminate in freely lending money regardless of the objective circumstances of debt repayment ability. People make mistakes and the essence of bankruptcy law is forgiveness and a second chance.

This answer (by San Diego bankruptcy attorney, Asaph Abrams) doesn�t address all facts & implications of the question; it�s general info, not legal advice to be relied upon and exceptions may apply. It creates no attorney-client relationship; it may be pertinent only to CA and/or its Southern District Bankruptcy Court in San Diego. It�s independent of other answers. It may be time sensitive, as in past the �Use by� date: laws and case law change. Hire a bankruptcy lawyer before acting or refraining from bankruptcy or other legal action.