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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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in my unsecured private loan document there is a guarantee

Resolved Question:

in my unsecured private loan document there is a guarantee by me and my father that we assign the right under 509 code to not file bankruptcy is this legal?
As i know anyone can at least try to file bankruptcy
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.

Hi JACustomer,

What is meant by assigning the right to not file a Bankruptcy? (One cannot assign a right to not do something.)

Also, what is the 509 code you referred to?

Customer: replied 5 years ago.

11 USC 509 - Sec. 509. Claims of codebtors - U.S. Code - Title 11 ...

When we borrowed the funds it was a personal loan made ut to us where we guranteed for each other to pay back the loan, 2008 it became impossible to carry on with the loan as the business went under so both of us are filing for chapter 7 protection however there is a point that we signed in the gurantee that we waive our rights to claim or use sec 509 to not pay the debt i can provide you with the paragraph if needed, i am wondering how it can effect our ability to discharge the debt in chapter 7 proceedings

Expert:  cfortunato replied 5 years ago.

Yes - please provide the paragraph you are referring to.

Thank you!

Customer: replied 5 years ago.
4 (e) any other circumstances which might otherwise constitute a defense available to or a discharge of Guarantors in respect of its obligations or liabilities hereunder or any defenses which the Borrower may have or assert with respect to any of the Guaranteed Obligations (including, without limitation, discharge in bankruptcy, confirmation of a plan or reorganization, composition with creditors, failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction, waiver, estopel, release, usury, fraud or misrepresentation)
5. (a) The Guarantors hereby irrevocably waives all rights of subrogation (whether contractual, under Section 509 of the Bankruptcy Code, under common law, or otherwise) to the claims of the Lender against the Borrower and all contractual, statutore or common law rights of contribution, reimbursement, indemnification and similar rightsand claims against Borrower which arise in connection with, or as a result of the Guaranty.
(b) The Guarantors hereby postpones and and subordinates all obligations and liabilities of the Borrower to the Guarantors to the Guaranteed Obligations until such time as the Guaranteed Obligations are indefeasibly paid in full, and agrees to hold in trust for the benefit on the Lender, and to turn over to the Lender upon the Guarantor's receipt of the same for application towards the Guaranteed Obligations, all payments received by the Guarantor in respect of any such obligations and liabilities of the Borrower to the Guarantors.
Expert:  cfortunato replied 5 years ago.

A debtor cannot waive his right to discharge debt in a Bankruptcy. If this were possible, many if not most, creditors would require this waiver, resulting in making Bankruptcy in general relatively ineffective.

In other words, you and/or your father can file a Bankruptcy, and you and/or your father should be able to have this debt discharged in that Bankrutpcy.


I think this is what you wanted to know. If not, please let me know.
Thank you!


Customer: replied 5 years ago.
Can you please proivde a statue or a precident, because i am getting different answers from different places thank you
Expert:  cfortunato replied 5 years ago.

The right to file Bankruptcy is in the US Constitution - Article 1, Section 8, Clause 4.

Constitutional rights cannot be waived.

Customer: replied 5 years ago.
The question was a little bit different can the debt associated with the gurantee that waives the right to bankruptcy be discharged in bankruptcy, i understand bankruptcy can not be waived, how ever i am wondering if the debt associated with the chapter 7 will not allow the opposing party to raise the waiver as a reason to not discharge the debt as the exception.
Expert:  cfortunato replied 5 years ago.
Yes - the right to have any debt discharged in a Bankruptcy cannot be waived.
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