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Discharge litigation

A creditor in bankruptcy may try to escape the effect of a discharge in two ways. The first is to seek to have the debt excepted from the discharge. Under BRA s523, there are numerous exceptions to the discharge. Among them are debts for alimony and support, for willful or malicious injury, for educational loans, and for fraud in obtaining credit. A debt that is not properly listed on the schedules of assets and liabilities also is excepted unless the creditor is aware of the bankruptcy. Most exceptions can be raised at any time, including after the bankruptcy is concluded. But, those contained in BRA s523(a)(2), (a)(4) and (a)(6) must be raised within the time set for doing so or the exceptions are waived. BRA 523(c). There is also provision for denial of a discharge, for example, for engaging in a fraudulent transfer within one year of bankruptcy, or committing some other "bankruptcy crime." A denial of a discharge means that no debts are discharged and all the creditors share in whatever assets are available for distribution. A proceeding to determine the dischargeability of a debt is a full-blown adversarial action under BR 7001. A complaint contesting a discharge normally must be filed within sixty days of the date of the creditors' meeting. BR 4004(a).