What happens when the person trying to collect from you files for bankruptcy?

[ramirezjoshua]

What is the name of your state (only U.S. law)? Texas



I had a repossession years ago. I had sent the company the check for my gas bill and the gas bill the check for my car payment. The car company cashed the gas check somehow but it was not enough to cover my payment. I was not aware of this until my car was repo'd. I took my payment up there, but they would not accept it and then tried to charge me for the difference in what was owed and what they sold it for. I sent them proof of everything and they dropped it and would no long return my calls. However, it is still on my credit.

I received a letter saying that the company trying to collect from me has filed for bankruptcy. What does this mean for my credit? Will it be taken off or can I have it taken off?

[cosine]

The debt held by the company filing bankruptcy is an asset of some value at or below the balance value. It will have to be declared by that business as an asset like all the other assets. If those assets are distributed to creditors that business owes money to, then the debt will end up held by another business. It is likely that other business is more experienced at debt collection. It is still owed and collectible. Bankruptcy does not make debts owed to the filer go away.

If you have a good cause to challenge it on the basis of misbehavior of the original creditor, you should get prepared to do that as it will be a hard fight now. If you believe the original creditor really owes money to you, you could petition the bankruptcy court to be included as a creditor. If you would have sued the original creditor had they not filed bankruptcy, and if you could have won (not sure how likely that is based on the story), then you could be a creditor. But I don't know how far the bankruptcy court will look into issues that get stayed by the bankruptcy.

If I were in your position, I would try to challenge the gas check through the bank, as improperly cashed. It's not likely it can be reversed now, but there's a chance.