debt discharged but...

[iuunc2003]

if a debt is discharged in chapter 7 are you legally in default of the loan?

[newbie2]

if a debt is discharged in chapter 7 are you legally in default of the loan?

I'm a bit confused as to what you are asking. If a debt was discharged in bankruptcy you are not responsible to pay it any longer. Legally in default? Again, I'm confused as to what you want to know.

[iuunc2003]

The reason is this...when I bought our buisness the seller gave us an license agreement to market and use the nme of the product and as long as we are not in default of the money he took back (it was discharged) we could use the mark and the name. So i really need to know if it considered default if it is discharged.

[justbroke]

First, you will probably need to review your State's non-bankruptcy laws. Marks (trade, service, etc) are generally executory contracts. Therefore their treatment in a Bankruptcy is special. In order to keep using the mark, which is actually licensed under a contract, you need to assume the Contract.

However, if you discharge the debt on the contract, the license owner would be able to seek the Courts permission to force you to reject the contract. Either way, something needs to be done with the contract. The Bankruptcy Code covering executory contracts and leases is in 11 USC 365.

Please know that if you assume the contract, you are basically saying that the contract continues in full force and effect and any monies due and owing are not discharged! It's similar to a reaffirmation.

Since this is very specific business law and you're talking about service marks, trade marks and/or registered names/marks, you should be consulting a bankruptcy attorney who specializes in business.

The smart service/trademark owner would file a motion to get you to reject the executory contract.