QUESTION
Can you sue someone in small claims after their bankruptcy has been discharged?
Asked on Dec 12th, 2013 on Bankruptcy - Michigan
More details to this question:
I was listed on someone's bankruptcy as a creditor, for a personal signature loan, after meeting with the trustee the defendant removed the loan from the bankruptcy. I paid the loan off to not affect my credit.
11 ANSWERS
Debt Settlement Attorney serving Chicago, IL
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Law Offices of Daniel J. Winter
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No, a creditor cannot sue a debtor after bankruptcy. There is no way to "remove" a defendant's loan from a bankruptcy. So, from what you are saying, you can't sue the person. If you do, you could be subject to sanctions, i.e., be ordered to pay money for violating the bankruptcy protections that he is given. I would suggest you contact a lawyer to discuss your situation and review the facts carefully before taking any action.
Answered on Dec 16th, 2013 at 7:37 PM
David Thomson Egli
What do you mean "removed"? In the 9th circuit, if the debtor has a "no-asset" case (all assets of debtor are exempt from unsecured creditors), all debts of the debtor are discharged, whether or not listed on the debtor's schedule, unless the debt is one that is excluded by law from discharge or there is a reaffirmation agreement between the debtor and creditor. Even for many debts that could be excluded by law, the exclusion is not automatic and the creditor must timely seek an order to that the debt is not discharged. A personal signature loan is not the type of debt that would normally be excluded by law from discharge without a court order, nor would be any agreement to reimburse you if you paid the loan as a co-debtor on the loan whether as a co-signer or guarantor on the loan. It would require either a reaffirmation agreement or a court order that any obligation to you was not discharged. Otherwise, sanctions could be imposed on you for filing a small claims action as a violation of the discharge injunction.
Answered on Dec 16th, 2013 at 7:37 PM
Your question is unclear. Do you mean you were a co-signer on a loan? Was this secured or unsecured and for what? What was the disposition of the item if secured? What do you mean, "removed the loan from the bankruptcy"?
Answered on Dec 16th, 2013 at 7:37 PM
If you sue someone to collect a debt when they discharged their legal obligation in a bankruptcy, expect to pay dearly for making this mistake. It is a violation of the bankruptcy discharge and you will be subject to costs of the affected person's legal fees and other monetary sanctions. Don't try it!
Answered on Dec 16th, 2013 at 7:36 PM
Deborah F. Bowinski
Your question does not make much sense. Is this a debt for which you were jointly obligated? You cannot take any action to collect a pre-bankruptcy obligation from someone who has filed bankruptcy and received a discharge. Unfortunately, the creditor retains the right to collect from a co-debtor if one of the borrowers files for bankruptcy relief. That co-debtor CANNOT then collect from the one who filed bankruptcy.
Answered on Dec 16th, 2013 at 7:36 PM
1 Award
Absolutely not. That is exactly what a bankruptcy does: ensures that no one can every sue you for those old debts. You were the co-signer on a debt, you would have had to object to the bankruptcy just like a general creditor to be exempt from the bankruptcy, which you did not do (you probably did not have a good legal reason to object anyway). Suing him would be a violation of his bankruptcy discharge and he could then sue you and he would be the winner.
Answered on Dec 16th, 2013 at 7:35 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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If the debtor received a discharge in the bankruptcy, any suit to collect the discharged debt would be a violation of the discharge injunction and could subject the creditor to sanctions, including all of the debtor's attorney's fees. It is not a good idea to pursue a discharged debt.
Answered on Dec 16th, 2013 at 7:35 PM
Commercial Bankruptcy Attorney serving Davie, FL
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Law Office of Jeffrey Solomon
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Once a debt in bankruptcy is discharged you cannot sue. If you signed a reaffirmation agreement which was filed with the court, then you would still be owed the debt and can sue. Either the debt was reaffirmed or it was not. The debtor cannot just remove you from the list, you are on actual notice of the bankruptcy.
Answered on Dec 16th, 2013 at 7:35 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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If the debt was not included, and in fact was exempted from the bankruptcy you can seek to collect it.
Answered on Dec 16th, 2013 at 7:34 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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By removal, do you mean that you reaffirmed the loan, and the Court granted this? If reaffirmed and defaulted, you could probably sue on it.
Answered on Dec 16th, 2013 at 7:34 PM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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If you were a listed party in a bankruptcy, your debt should be discharged. I am not sure about your comment about removing you from the bankruptcy. That does not jive with my understanding of notice. You knew of the bankruptcy and were discharged along with everyone else. You cannot collect against the debtor.
Answered on Dec 16th, 2013 at 7:34 PM