Friend declared bankruptcy

[Mtdownard]

A friend of mine recently declared bankruptcy last year. He owes me $2500. He claims he listed me as one of the creditors in his bankruptcy. Would I have received a letter in the mail stating this? After the bankruptcy he started paying me back $100 per month for eight months in a row. He stated to me on numerous occasions that he would pay me back because I was his friend despite the bankruptcy. Three months ago he stopped paying me the $100 a month. Do I have any legal recourse since I have proof of the initial payment to him and proof of his payments to me for eight months? We had a verbal agreement that he would pay me back however I do not believe that he listed me as one of the creditors because I did not receive any notice of such.

 

[doucar]

No. A no asset chapter 7 discharges all debts, listed or not. Some circuits have a procedure for adding a creditor some do not, but you didn't list your state as requested, so we don't know for sure. The is a statutory procedure for reaffirm debts that you want to pay post bankruptcy. An oral agreement won't do it. Count the 800 as a windfall, and move on.

 

[Mtdownard]

I am in Texas. So you’re telling me that it doesn’t matter if the verbal agreement was made after the bankruptcy? I do appreciate the response.

 

[doucar]

Yes, it doesn't matter when the verbal agreement was made, it had to be reaffirmed by the bankruptcy judge before the discharge to be enforceable.

 

[quincy]

No. A no asset chapter 7 discharges all debts, listed or not. Some circuits have a procedure for adding a creditor some do not, but you didn't list your state as requested, so we don't know for sure. The is a statutory procedure for reaffirm debts that you want to pay post bankruptcy. An oral agreement won't do it. Count the 800 as a windfall, and move on.

This is not necessarily correct.

 

[Taxing Matters]

This is not necessarily correct.

I rather think doucar was making the point that in a Chapter 7 a debt does not have to be listed by the debtor in the bankruptcy schedules to be included in the discharge order, which is true. Of course, not all debts are subject to discharge in bankruptcy. But if the debt was dischargeable, the mere fact that it was not listed in the debt schedule would not prevent the discharge.

 

[quincy]

I rather think doucar was making the point that in a Chapter 7 a debt does not have to be listed by the debtor in the bankruptcy schedules to be included in the discharge order, which is true. Of course, not all debts are subject to discharge in bankruptcy. But if the debt was dischargeable, the mere fact that it was not listed in the debt schedule would not prevent the discharge.

No. Not always true. There are exceptions in Texas (and it is also not true in the First Circuit).

 

[quincy]

Relevant links:

11 US Code section 523: https://www.law.cornell.edu/uscode/text/11/523

In Re Joanna Elizabeth Reed:
http://www.txnb.uscourts.gov/sites/txnb/files/opinions/08-20229_Joanna_Elizabeth_Reed_04_30_2009.pdf

 

[doucar]

Like I said, I didn't know for sure, because he didn't post his state in his initial post. But it is true about reaffirming the debt.

 

[quincy]

Like I said, I didn't know for sure, because he didn't post his state in his initial post. But it is true about reaffirming the debt.

My objection was to your statement that a no-asset Chapter 7 bankruptcy discharges all debts whether they are listed or not. That statement is not always true, in Texas or elsewhere.

 

[Mtdownard]

So would I have received any official correspondence from the bankruptcy court if I was listed as one of my friends creditors?

 

[quincy]

So would I have received any official correspondence from the bankruptcy court if I was listed as one of my friends creditors?

That is my understanding. Yes.

 

[Taxing Matters]

No. Not always true. There are exceptions in Texas (and it is also not true in the First Circuit).

But it is sometimes true, which is the point I (and I think doucar) was getting at. In other words, it is not always the case that failure to list the debt results in the debt being excepted from discharge. So let me rephrase what I said before as follows: in a Chapter 7 a debt does not always have to be listed by the debtor in the bankruptcy schedules to be included in the discharge order.

 

[Mtdownard]

That is my understanding. Yes.

Does it stand to reason that since I did not receive any such notice that I may be able to pursue the matter in small claims court? My friend was making diligent payments for eight months of $100 per month. All of the sudden they stopped. I didn’t question him about it for three months. After three months of no payments I asked him about it. He stated that I was breaking federal bankruptcy laws simply by asking him about it. And it seems to me that since I did not receive any official notice that I wasn’t breaking any laws. I only have his word that he declared bankruptcy. I don’t know for sure that he actually did honestly. We entered into a verbal agreement after the bankruptcy that he would pay me back. Does that hold any merit whatsoever? My spouse is a witness to that. I suppose he may be able to append the bankruptcy and add me as a creditor? Would eight months of diligent payments be able to show his intent of paying me back and add credibility to my claim of our verbal agreement?

 

[quincy]

But it is sometimes true, which is the point I (and I think doucar) was getting at. In other words, it is not always the case that failure to list the debt results in the debt being excepted from discharge. So let me rephrase what I said before as follows: in a Chapter 7 a debt does not always have to be listed by the debtor in the bankruptcy schedules to be included in the discharge order.

Yes. It is sometimes true. I like that wording better.

Definitive statements bother me because there are almost always exceptions that might apply - and they potentially could apply here (although it might be unlikely).