VERY CONFUSED, got discharge, but AP still open

[mysticspirit25]

Ok, here is the situation. My MIL filed chapter 7 pro se back in January, had the 341 no objections, the TT asked for clarification on HH income b/c her husband made 400k with his business but had over 400k in losses on the taxes, so they just asked why there was zero HH income. No problem.

Chase filed an AP on 5/4 one day before the date to object by creditors. They tried to exclude the 14k balance transfer written 6 months prior to her husband's business (to help him keep afloat), anyways, in her talking with Chase's attys, they agreed to settle for $2400 over 25 months, and making the debt considerd "non dischargeable". They filed their complaint on 5/4, but and just today she mailed their attys a copy of the agreement to settle that has to be signed by the judge. NOTE....THE JUDGE HAS NOT RULED ON THE STIPULATION OF SETTLEMENT...

BUT, she got her discharge today too (70 days).........I looked on the AP and there is no activity other than the filing of the complaint and the summons returned executed.

SOOOOO...how can the judge order a discharge while the AP is still open and active.

Does this mean the Chase debt is discharged too and she does not have to settle?

In case anybody who has better legal knowledge than I do..here are the case #'s, it'e the Eastern District of NC.

her BK is XXXXXXXXX
and the AP is XXXXXXXX

I didnt think a discharge could be granted while there was an active AP.

Advice...suggestions? It was all done pro se, so there is no atty to turn to.

[dingdong]

The AP starts a seperate case within the BK. I think, and I could be very wrong (but I think I am correct) that you can be discharged and once the AP is finalized (ruling by judge) that particular debt that the creditor filed the AP on will be determined separately.

So, you can be discharged of all other debts, and pending the ruling, the debt associated with the AP may be discharged as well.
So...
All her other debts went bye bye,the AP debt is still pending, but may go bye bye in discharge as well, or the judge may agree to the stip , or rule that it is dischargable.

Hope that helps, and hope I got it right.

[HHM]

The AP starts a seperate case within the BK. I think, and I could be very wrong (but I think I am correct) that you can be discharged and once the AP is finalized (ruling by judge) that particular debt that the creditor filed the AP on will be determined separately.

So, you can be discharged of all other debts, and pending the ruling, the debt associated with the AP may be discharged as well.
So...
All her other debts went bye bye,the AP debt is still pending, but may go bye bye in discharge as well, or the judge may agree to the stip , or rule that it is dischargable.

Hope that helps, and hope I got it right.

Correct, an AP does not otherwise upset the normal course of your BK; the AP remains until resolved. So if this AP is a standard creditor objection, the debt of that creditor is tied up in the AP and will not be resolved until the AP is resolved, but the remainder of your debt is discharged or otherwise adjudicated.

[Vanda]

What is an AP?

[dingdong]

AP= Adversarial Procedure.

When a creditor objects to a discharge of THEIR particular debt, in order for the debt to be determined as non-dischargable, they have to start another lawsuit in your BK case called an AP.

The BK judge will determine if it fits within the parameters of the BK code as a non-dischargable debt, and rule accordingly.

A creditor ( or a debtor, say in the instance of student loans) has to iniate an AP to determine whether a debt can be dscharged or not.

[Vanda]

Oh, thanks Dingdong. What a learning experience.

[ready2puke]

Was the BT put into his checking account? This is a case where 6 months before filing wasn't enough. I'm guessing thats why my attorney keeps telling me to wait..God the waiting.....It'll be a year on June 3rd and 99% of mine were to pay other credit cards...

[AngelinaCat]

I implore you not to put down personal account or Court Docket numbers as these can trace right back to a name, address, and partial S.S. number. I have removed the OP's Court numbers.

Please be careful when posting anything on any Public Forum. We are all good posters here, but sometimes the site can be lurked by people with less than honorable intentions.

Thank you and be safe.

[mysticspirit25]

the BT was a convenience check written for the full amount of the credit line of around 15k, to the business itself, they objected because there was a check written to the car dealership, but the schedules listed no cars as assets...well duh...the check was written to the dealership and deposited into the business acct. It was to make curtailment and auction payments (all the cars are floorplanned), so there is no ownership. Payments were continued on the acct until BK (all accounts), she just couldnt keep afloat anymore.

In any case, after she emailed her financials they agreed to settle for 16% of the total balance and wipe out the rest. In monthly installments.

[AngelinaCat]

The AP starts a seperate case within the BK. I think, and I could be very wrong (but I think I am correct) that you can be discharged and once the AP is finalized (ruling by judge) that particular debt that the creditor filed the AP on will be determined separately.

So, you can be discharged of all other debts, and pending the ruling, the debt associated with the AP may be discharged as well.
So...
All her other debts went bye bye,the AP debt is still pending, but may go bye bye in discharge as well, or the judge may agree to the stip , or rule that it is dischargable.

Hope that helps, and hope I got it right.

DingDong got it very correct. We, 'Hub and I, have a very similar situation. We filed Ch7 BK on Dec. 28, 2007, had our 341 on Feb. 7, 2008 and because we are an asset case, there were several extensions. An AP was filed against us in April 2008, yet we were Discharged on August 13, 2008.

We got the AP against us thrown back to the local civil court (it concerned a civil lawsuit against us that has never gone to trial--the plaintiff just wanted to harass us more) in January of this year. The 'behind the scenes administrative stuff' is now going on and we hope for a CLOSING soon.

Good luck to you!