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Ask Terry L. Your Own Question

Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2565
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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As a creditor of an non-priority personal loan listed on the

Customer Question

As a creditor of an non-priority personal loan listed on the schedule F of a personal bankruptcy case AFTER the debtors case was finalized, what can I expect to happen next and what options do I have to recover the debt owed to me ?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 1 year ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

You can file for an adversary to determine the discharability of the debt if it falls under http://www.law.cornell.edu/uscode/text/11/523

Terry L. :

these are the exceptions to discharge

Terry L. :

you would file an adversary for the judge to determine if the debt meets the requirements under that section.

Terry L. :

You cannot contact the debtor during the case, otherwise that is a violation of the automatic stay, and you could be sanctioned for it

Terry L. :

Their attorney is unlikely to give you any info, so you would need to consult your own attorney to determine what course of action to take.

Terry L. :

Otherwise, the debt will be discharged in the bankruptcy case.

Terry L. :

Time is of the essence for you to file your objection/adversary, so consult that attorney asap.

Terry L. :

If discharged, provide a copy to your accountant, as it may qualify for a taxable deduction for you for uncollectible debt.

Terry L. :

Let me know if you have any further questions.

Terry L. :

otherwise, good luck to you

Terry L. :

Terry L

Customer:

...doesn't really answer my question. I'm asking YOU what I should do, and you're simply telling me to consult my own attorney

Customer:

...doesn't really answer my question. I'm asking YOU what I should do, and you're simply telling me to consult my own attorney.

Terry L. :

i understand what you are asking.

Terry L. :

I cannot provide legal advice here, if you read the disclaimers attached to this site. we can provide legal information and point you where to go, but I cannot tell you what to do. This site is not the substitute for hiring your own attorney. Each case facts can vary

Terry L. :

Your attorney can review the debt owed to you, advise you if it falls within one of the exceptions to discharge, and they can file an adversary objection to ask the court to determine the debt not discharged

Terry L. :

that would then allow you to collect on the debt

Terry L. :

No attorney client relation is formed from this chat site.

Terry L. :

your question also asked what you can expect to happen, and what options you have.

Terry L. :

Options are simple - file an objection if your debt falls within one of the exceptions, or you are discharged and you take a tax write off

Terry L. :

those are really the only 2 options you have here.

Terry L. :

If there are assets to be liquidated by the trustee, then they will send you a proof of claim form to share in the dividend to creditors.

Terry L. :

did you have other questions about the process?

Customer:

My question also included the fact that I was listed as a creditor AFTER bankruptcy was finalized. Can they do that ?

Terry L. :

If the debt was incurred prior to the case filing, then you are properly included.

Terry L. :

The debtor likely amended their schedules to list a pre-petition debt.

Terry L. :

This is permitted under the code

Customer:

...occured between filing and finalization.

Terry L. :

If the debt was incurred post-filing, then the debt isn't subject to discharge.

Terry L. :

pre-bankruptcy = dischargable, post-filing, new debt and not subject to the bankruptcy.

Terry L. :

date of the initial filing is the 'filing date' for that purpose

Terry L. :

Any futher questions?

Customer:

can I simply sue for the amount owed to me ?

Terry L. :

Is the amount pre/post bankruptcy?

Terry L. :

If pre, then no, the bankruptcy automatic stay prevents that.

Terry L. :

if post, you should bring a motion to modify the stay to be sure there is no violation of the bankruptcy automatic stay. Once modified, then you can collect from the debtor

Customer:

debtor was making payments to me post finalization of bankruptcy. More than half of the debt remains.

Customer:

...plus interest

Terry L. :

voluntary payments on debt have no impact on dischargability

Terry L. :

if pre-petition, your only options are adversary or tax write-off.

Terry L. :

that's it

Customer:

I have to figure out what all this means. I don't understand a lot of the terminology.

Terry L. :

ok

Terry L. :

lets break it down

Terry L. :

when did the debtor first incur the debt with you. what date?

Customer:

as it applies to MY case please. Not a lot of info that doesn't apply to the parameters of my case.

Terry L. :

i understand

Customer:

Jan. 21

Terry L. :

what date did the debtor incur the debt?

Terry L. :

what year?

Customer:

2012

Terry L. :

what is the date the debtor filed bankruptcy?

Customer:

sorry , 2013 jan. filed for br in sept 2012

Terry L. :

so, debtor filed BK sept 2012

Terry L. :

what chapter?

Customer:

loaned her $ in jan 2013. Filed for br in sept 2012. finalized in April 2013

Terry L. :

you loaned money 4 months after the bankruptcy case was filed.

Customer:

chapter 13

Customer:

yes , 4 mos.

Terry L. :

Did the debtor bring a motion to incur debt?

Terry L. :

during the case?

Terry L. :

did the debtor convert to chapter 7?

Customer:

...don't know. letter accompanying sched. F says 13. just got it today.

Customer:

...don't know anything about motion to incur debt. All I got was a brief letter instructing me not to contact her and a sched. F

Terry L. :

So, you can chose to be paid from the debtor's chapter 13 if you wish, since it was post petition.

Customer:

How do I do that /

Terry L. :

You would have received a proof of claim form from the court

Customer:

Should I be expecting one

Terry L. :

Otherwise, collection actions are blocked by the automatic stay. the debtor can voluntarily pay though

Terry L. :

Technically, the debtor would have had to ask the court to incur debt during the chapter 13.

Terry L. :

By finalized in april 2013, do you mean the case was confirmed?

Customer:

yes, confirmed

Terry L. :

so, if you want to collect on the debt, you need to bring a motion to modify/lift the automatic stay before you do

Terry L. :

otherwise that is a violation of the bankruptcy protections

Customer:

what is a violation...? the fact that debt was incurred without the courts permission ?

Terry L. :

ok

Terry L. :

with chapter 13, debtors need permission to take out debt during the case.

Terry L. :

Reason being is that they should have no funds available since all funds need to go to the BK

Terry L. :

So, before you can collect against a chapter 13 debtor, you need to ask the court permission to do so

Terry L. :

This is what the attorney can help you with.

Terry L. :

otherwise, you are subject to sanctions

Terry L. :

Therefore, you should definitely meet with a local attorney to assist you, as you can see the hurdles and complications here!

Customer:

anything else I should know ?

Terry L. :

Once you get permission to collect on the debt, then you are free to do so

Terry L. :

that's the key, modify/lift the automatic stay, so that the court knows what's up

Customer:

...to sue in small claims court ?

Terry L. :

once the court modifies the stay, you can collect under your state collection laws.

Customer:

ok, then s/c court may not be necessary.

Terry L. :

maybe the debtor will pay, you never know, but you just have to jump thru the correct hoops to find out

Customer:

...was paying voluntarily. not any more.

Customer:

That was the whole idea of turning the debt over to bankruptcy.

Terry L. :

If you want to be paid from the case, your attorney can help you file a motion to allow a late claim too

Customer:

Thank you. I'll find an attorney.

Terry L. :

ok, best of luck., feel free to request me if you have any further questions.

Terry L. :

If you are done, please click accept to close the question and rate the answer

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2565
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and 4 other Bankruptcy Law Specialists are ready to help you

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Better Business Bur 15yrs bankruptcy experience. Chicago Bar