Who can object to discharge

[Dst1]

I've been doing a lot of reading but there is one question that I can't seem to find the answer to. Who can object to discharge? Is it only the OC? Or, if the debt has been sold, only the person who currently holds it? Or can anyone who ever owned the debt object? I really don't understand how that works.

[keepmine]

It's my understanding that the current owner is the only one who has standing to object or file an AP.

[AngelinaCatHub]

An Advers Procedure is rare with an unsecured debt. In reality an AP is a suit and anyone can make one, but then they must make it "fly". They are rare to say the least but I had one against me. It was an unfinished civil suit, and we petitioned it back to the State venue. I have heard no more of it. 'Hub

[justbroke]

Who can object to discharge? Is it only the OC?

Any Creditor may file a complaint (Adversarial Proceeding) to determine the dischargeability of a debt. The Debtor can do this as well! (Federal Rules of Bankruptcy Procedure Rule 4007)

Or, if the debt has been sold, only the person who currently holds it? Or can anyone who ever owned the debt object? I really don't understand how that works.

Anytime any plaintiff brings forth a complaint in any court, the first thing they must always have is something called standing. A debt that has been sold and properly transferred to the new creditor, is presumed to have standing!

You can put it this simply. If they can actually file a Claim and that it has the proper documentation, then they have standing.

I have objected to many claims as to standing and documentation. If a junk debt buyer, didn't provide the original signed credit card agreement, and/or a bunch of prior statements, and a copy of the assignment on which their claim is based, I objected to their claim, and was sustained (won) in all cases!

With poor documentation that they (the JDB) actually owns the debt, they couldn't even win in a non-bankruptcy court! Many of the JDBs win through default judgments. You need to challenge the standing of a particular plaintiff (who brought on the case) because it's assumed that they have standing. Debtors need to be aware!

And, as my bud AngelinaCatHub wrote, Adversarial Proceedings (AP) are rare because they are expensive to prosecute! I would guess that the cheapest AP costs well over $5,000 to prosecute. I've read of some with $200K in lawyer fees! And, if the creditor spent $10K to collect $4K and loses, they are now out $14K.

Standing, standing, standing!

[keepmine]

Standing! That's the word I was groping for. Here'a case where a debt collector couldn't prove their claim.

Claims Purchaser Violated Rule 9011 in Filing Proof of Claim

In an opinion examining "the standard operating procedures of one creditor whose entire business centers on [the] purchasing and filing of bankruptcy claims and the receipt of dividends on account of such claims," an Ohio bankruptcy court has ruled that the claimant violated its obligation under F.R.B.P. 9011 to make a reasonable inquiry prior to filing its proof of claim against the Chapter 7 debtors. The court declined to award sanctions, however, finding that none were warranted in light of the time and energy devoted by the claimant's senior management in response to the court's show cause order.

After purchasing, at a significant discount, a portfolio of alleged bankruptcy claims, the claimant filed a proof of claim against the Chapter 7 debtor-husband for "money loaned." The debtors, who had not identified in their schedules any claim for the claimant or for the entity identified in the claimant's proof of claim as the originating creditor, objected, asserting that, to their knowledge, they did not have any indebtedness to the originating creditor and, hence, to the claimant. The court directed the claimant to find the supporting documentation for its claim, and stated that it was not going to simply allow the claimant to withdraw its claim. The claimant, however, purported to withdraw its proof of claim, thereby ignoring a specific court order as well as F.R.B.P. 3006, the bankruptcy rule governing withdrawal of claims. The court then entered a show cause order directing the claimant, which filed numerous claims in this and other bankruptcy courts, to explain fully its routine for filing proofs of claim in bankruptcy cases and raising the issue of whether Rule 9011 sanctions should be assessed against it for having filed an unsubstantiated claim. In response, the claimant filed a pre-hearing brief, accompanied by the sworn declarations of its president/chief operating officer, its operations manager, and its in-house attorney, and a show cause hearing was held.

The court began its opinion by noting the "exponential increase" in the trading of bankruptcy claims that has occurred over the last two decades, fueled, at least in part, by technological developments such as electronic case filing (ECF) and proprietary software that is able to conduct searches with limited human attention. "Once a fairly low-volume activity restricted to chapter 11 cases (and primarily undertaken to achieve strategic influence in chapter 11 cases), claims trading now also routinely occurs through the purchase and sale of `claims portfolios' in consumer cases," the court observed. "Apparently lost in the fast-paced world of selling and purchasing bankruptcy claims has been attention to compliance with long-established bankruptcy procedures for filing proofs of claim," the court stated, adding that the claimant would have this and other bankruptcy courts accept "industry standards" as excusing its noncompliance with F.R.B.P. 3001, the bankruptcy rule governing proofs of claim, and its failure to fully complete Form 10, the official form adopted in conjunction with that rule. "Thus, this case poses the central question whether an industry that has grown up solely to operate within the bankruptcy system can expect courts to ignore procedural rules that were in place prior to the birth of the industry because compliance with those rules would not promote maximum efficiency for the claims trading industry."

Rule 9011(b) focuses upon the circumstances surrounding the filing of a document that is later subjected to Rule 9011 scrutiny, the court explained. Rule 9011(b) provides, in pertinent part, that, "[b][b]ecause of the time and energy that [the claimant's] senior management devoted in response to this Court's show cause order . . . the Court [did] not view any further sanctions to be necessary." In re Wingerter, 2007 WL 2932809 (Bkrtcy.N.D.Ohio, Judge Shea-Stonum).

[StartingOver08]

Wow! Good post! I hope that more debtors challenge these claims so that this industry can be put back in its place. It is a shame that the judge did not issue sanctions, maybe if more debtors challenge the filings (the false claims), then sanctions will be made against these claim buyers (jdb's).