What happends to creditors when someone declares bankruptcy?
theplayer225 asked:
What happens to creditors when someone declares bankruptcy?
What happens to creditors when someone declares bankruptcy?
I know they get screwed but if that person starts making money again can they still get the money or they don’t have to pay it back ever? like if they get out of bankruptcy , how does that work?
Tags: Bankruptcy, Creditors, Making Money
June 26th, 2011 at 5:37 pm
There are different kinds of bankruptcy. With one method you have to sell off your belongings to pay your creditors.
June 26th, 2011 at 11:22 pm
Once a bankruptcy is filed, all of the non-exempt assets are taken by the bankruptcy trustee and sold or distributed to the creditors according to the law.
When the bankruptcy is discharged, the debtor is free of all debts except those explicitly not discharged (e.g., certain taxes, certain student loans)
1 day after a discharge, if the debtor wins the lottery for $100,000,000,000,000 the money belongs to the debtor. The creditors can’t touch it.
June 29th, 2011 at 2:47 am
Bankruptcy essentially erases debts. Certain debts are not erased though.
* money owed for child support or alimony, fines, and some taxes;
* debts not listed on your bankruptcy petition;
* loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
* debts resulting from “willful and malicious” harm;
* student loans owed to a school or government body, except if:– the court decides that payment would be an undue hardship;
* mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
This also means that creditors have to stop calling you. Of course, your credit has a giant negative mark on it for the next 7 years.