What happens to a non-dischargeable debt after discharge?

[highlife]

In the middle of a nightmare right now. Creditor filed an AP to have debt non-dischargeable from a failed business. Asked our attorney recently for a settlemnt offer, our attorney gave him a number (wasn't aware of that, just found out recently) He heard back from creditor's attorney. They rejected offer, and said that creditor wan't to punish me and have entire amount paid back.

I'm trying to look at a worse acse scenario. Assuming they win and have their debt considered non-dischargable what happens to me in terms of collection after the BK is discharge with my CH13 payment plan is finished? I was told by my attny that they could not do anything until after the BK was finished, but what the? Can they start all of their tactics over again and go back trying to foreclose on my house, etc. How will it ever end? Realyy at the end of my sanity right now.

Have small children, one with medical needs. Amount is so large, I iwll never be able to pay it off in monthly payments. How will I ever be able to provide anything for my family once the 13 plan is finished?

Irony is that when I started to google what happens to non-discharged debts....google popped up with what happens when you die sites!! Think someone is trying to tell me something. ALmost seems like the only way out at this point. Any comments or advice would be appreciated. God bless!

[HHM]

Is it an unsecured debt or secured debt, you mentioned something about them foreclosing your house?

Basically, if a debt is declared non-dischargeable and not paid in the chapter 13 plan, as soon as the case is either discharged or dismissed they get to go after you as they normally would, garnish wages, place liens on property, foreclose those liens, levy bank accounts etc. (assuming your state allows all those collection activities).

If they won't settle, you need to fight. It is actually hard for creditors to win these cases.

[biotechsolution]

Agree with HHM, unless you know you did something that was considered 'fraud', I'd fight it. The chances of them winning is quite small but then again you'd be the only one to whether they have a case or not.

[frogger]

I agree. If it was not "fraud" on your part, fight them. Don't give up!

[despritfreya]

Settling or fighting? This depends upon several factors, least of which is the cost of your legal fees.

1. It is true that any judgment obtained will not be subject to collection until you are out of the bk. Theoretically you could do a Chapter 26 - file a 2nd 13 on the heals of the Discharge in the 1st 13. You would then propose a Plan that pays the judgment in full over another 5 years while still getting the protection of the Automatic Stay. Now, this tactic is risky as, if you do not have any other creditors, this is nothing more than a 2 party dispute which could lead to bad faith issues, but you could try it.

2. How much is involved? Remember, if you fight and you lose, you may be stuck with your creditor's legal fees over and above the current claim amount.

3. It appears there has been a judgment entered against you in the State court. I say this as you mention efforts to foreclose on your home. Based upon this it appears that the creditor filed some sort of judgment lien against you prior to the bk. Winning or losing the non-dischargeability complaint could turn on the findings in State Court.

a) Was the judgment by "default"- or did you defend in any way?
b) What kind of findings of fact and conclusions of law were made by the State Court Judge?
c) Did those findings of facts and conclusions of law include fraud?
d) If the State Court has made sufficient findings of facts and conclusions of law to establish the elements of a 523 (as applicable in a Chapter 13 under 1328) you are probably out of luck as the creditor will win on Summary Judgment based upon collateral estopple/res judicata theories.

Before you proceed further you need to discuss with your attorney all of the above. You need to weight the costs involved and the likelihood of success.

Des.

[kornellred]

There are only specific types of debt that are non-dischargeable. If a creditor can prove that you acquired cash or assets from them when your financial situation was clearly negative (you would not be able to pay them back), they will win the AP, and the debt will become non-dischargeable. If they cannot prove it, they will lose. Judgments against debt discharged in bankruptcy are not enforceable. You simply file a motion to have the judgment set aside - the civil court has no choice but to do that.
After bankruptcy, remaining non-dischargeable debt is your problem. Good luck with that.

[AngelinaCatHub]

You mentioned that your adversary said "he wanted to punish you". Did he say this or put that in writing. If you have proof that he wished to "punish", I would think this to be a malicious damage to you. Not being a lawyer, maybe Des can chime in.

I had an enemy who broke me with serial suits never taken to trial. When he drove me to bk, he then sued an AP against me for the unfinished suit knowing that the expense could not be borne by me. The Judge gave four hours for a suit that was in process for four years in Civil Court. I went pro se and in that capacity reasoned with the adversary's lawyer. He was a good guy and could see through his clients act. We had an allowed talk (allowed when pro se) and he gave me success, what I wanted. That was to Kick it back to Civil Court with a stipulation of non-discharge if he won the Civil case. VICTORY for me. It sat there a year, the Civil Court dismissed for lack of prosecution, the AP later closed for lack of prosecution and while the man was posting an additional libel about me on a local forum (where the feud started) he fell over with a major heart attack on April 1, 2009. Appropriately so, and lost all use of his kidneys, never posted again and died in pain a year later. Karma is a b*tch.

[despritfreya]

You mentioned that your adversary said "he wanted to punish you". Did he say this or put that in writing. If you have proof that he wished to "punish", I would think this to be a malicious damage to you. Not being a lawyer, maybe Des can chime in.

Ulterior motive/vindictiveness in prosecuting an AP is a routine problem as Hub indicates. Having something in writing as evidence of the driving force behind the AP unfortunately is not that important if the plaintiff can put forth sufficient facts to show fraud. It will still be up to the defendant to show that the plaintiff did not justifiably/reasonably rely on the fraudulent representations or that simply the representations were not fraudulent.

I am still curious as to what the State Court judgment finds. Was there fraud?

Des.

[AngelinaCatHub]

Thanks Des for making this clear. I believe most AP's are brought about by family, friends, mostly individuals, rather than large companies who look at the expense vs the recovery. The C7 is made for a "New Start" in life. It is too bad that APs exist. I think it should be contested in the bk Court itself, not tried in a Federal Court for a Civil suit. 'Hub

[despritfreya]

Thanks Des for making this clear. I believe most AP's are brought about by family, friends, mostly individuals, rather than large companies who look at the expense vs the recovery. The C7 is made for a "New Start" in life. It is too bad that APs exist. I think it should be contested in the bk Court itself, not tried in a Federal Court for a Civil suit. 'Hub

The majority of the time the AP has no teeth to it. But, it is a necessary evil as there are
those who do commit fraud and have no right to that "fresh start", at least as it relates to the creditor who was injured as a result. Had a case once (brought by an institutional creditor) that I thought was going to go away. As discovery progressed I found that my client had lied on several loan applications (not just the one for the creditor). The creditor had this smoking gun and, while we continued to defend, I knew we were dead.

Des.

[AbbeyA]

I remember this b/c this was a failed business around the time our bk after dh's business failed.

From what I remember when he first posted about this a few months back, the creditor is a bank that administered a business loan, which OP had to personally guarantee - the loan was also secured by OP's house. I don't think there was a judgement issued but since the loan was secured by the house, that's why they tried/threatened to foreclose. I remember all this b/c there were many similarities with the vindictiveness of this creditor and our "vindictive creditor," who was also a bank that administered a business loan to dh. I don't remember all of the details but the problem was something about what was stated on the balance sheets that included a future business contract which did not come to fruition. The loan amount is very significant, in the hundreds of thousands of dollars.

Highlife, please hang in there for the sake of your family!

[CoBelle]

[[/I]Having just been hit with two APs, I empathize with your plight Highlife. But I don't know nuttin about APs, so I can't offer anything but cyberhugs and pixie dust.

HUB: I am so glad that Karma was visited upon the ((*%A(%&(% bankerassholio) .....been waiting for such karma against my ex and his cohorts for years now, but they keep on ticking, sad to say.