Who can challenge your bankruptcy?

[TomTea31]

I'm trying to decide if I want to file pro se or hire an attorney. I already filled most of the paperwork out, well 25 of the 60 pages. From what I can tell my case is going to be pretty easy. We're a clear cut no asset case.

Nearly all of my debt is non consumer. The only reason I wouldn't be a non consumer chap 7 is because I owe 60k in student loan debt that is non discharged and that amount is more than my non consumer debt.

Is it just the consumer creditors that can appeal in court or can medical creditors do it to? What about an insurance company that I owe money to?

Knowing this will determine if I should use an attorney or not

[justbroke]

Generally speaking, creditors do not challenge your general discharge. if anything, a creditor would seek to have a specific debt, owed to them, determined to be non-dischargeable. The costs to do this can be prohibitive, so most will not file such a complaint - to determine dischargeability - unless the amount in dispute is "significant". We tend to think that $4,000 is the point where it becomes more palatable for the creditor.

However, this doesn't stop creditors from "threatening" to file a complaint on dischargeability for single debts that are only $2,000.

As for an insurance company, if it's just premiums, it's dischargeable. No company in its right mind - there are some strange ones - would seek such a non-dischargeability determination for merely several hundreds of dollars.

So if you have been spending on the eve of bankruptcy, the likelihood increases that the specific debt will be challenged.

[TomTea31]

I owe an insurance company almost $19,000 from a car accident. It is discharable and I am definitely not able to pay it and have no assets for them to take. But 19k is a lot and I wouldn't be surprised if they did at least try. So assuming they were to file a complaint would I just file a motion? Is this something I can take care of myself or would I need an attorney?

[keepsmiling]

I'm trying to decide if I want to file pro se or hire an attorney. I already filled most of the paperwork out, well 25 of the 60 pages. From what I can tell my case is going to be pretty easy. We're a clear cut no asset case.

Nearly all of my debt is non consumer. The only reason I wouldn't be a non consumer chap 7 is because I owe 60k in student loan debt that is non discharged and that amount is more than my non consumer debt.

Is it just the consumer creditors that can appeal in court or can medical creditors do it to? What about an insurance company that I owe money to?

Knowing this will determine if I should use an attorney or not

I find this interesting. Since student debt is non dischargeable, this doesn't appear, on the surface, to make sense.

[TomTea31]

I find this interesting. Since student debt is non dischargeable, this doesn't appear, on the surface, to make sense.

My understanding is student loans are consumer debt regardless of if they are dischargeable or not.

[Drazil65]

Has the insurance company filed for a judgement against you? I take it you were not insured at the time of accident or are there facts regarding the accident that you have not discussed here? I am thinking that if you have some issues regarding this insurance money (I am a little confused how you could owe this money even if you were not insured if they do not have a judgement) and especially if you have a judgement against you, you would want an attorney looking at your case? Good Luck!

[HHM]

There may be court decision that vary, but the general rule is, student loans are NON-Consumer debt. The court looks at how the student loans were used, the proceeds used for educational expenses (tuition, books, fees, etc) are non-consumer, the portion used for living expenses is consumer debt.

Creditors don't just willy-nilly object to discharge, they need some basis; see bankruptcy code section 523, for a debt to be non-dischargeable, it must fit into one of categories described in the code section.

For example, a mere insurance subrogation claim (which is what this sounds like) is dischargeable. Now, if the underlying accident was caused due to intoxication of the debtor, then the debt is likely non-dischargeable (523(a)(9))

[TomTea31]

Has the insurance company filed for a judgement against you? I take it you were not insured at the time of accident or are there facts regarding the accident that you have not discussed here? I am thinking that if you have some issues regarding this insurance money (I am a little confused how you could owe this money even if you were not insured if they do not have a judgement) and especially if you have a judgement against you, you would want an attorney looking at your case? Good Luck!

I was uninsured. Trust me very big mistake and totally not worth the risk. My insurance premiums for around $60/month and now sky rocketed to $134 and I know owe the other parties insurance 19k! I think it's safe to say I learned my lesson. Ouch! The good news is the other driver had uninsured motorist coverage and as far as I know he was fully compensated for his vehicle and damages. I just have to reimburse the insurance for that.

So anyway, in my state, if you drive uninsured and get into an accident and you are at fault then you will get your license suspended if you do not make payments to the insurance company. The company sends them a letter and then the process starts. My situation was just an accident. There was no drugs or alcohol involved. My brakes & emergency brake went out at the same time when I was going down a hill!

FYI, I DID try to make arrangement with the insurance company. I wanted to try and avoid bankruptcy because my credit rating isn't bad

I do not know exactly how the whole license thing goes. I may be wrong but I do not think they need a judgment against me for that. Right now there is no judgement "yet" and there has been no paperwork filed to my knowledge. I just got the bill from sept a couple days ago.

[TomTea31]

There may be court decision that vary, but the general rule is, student loans are NON-Consumer debt. The court looks at how the student loans were used, the proceeds used for educational expenses (tuition, books, fees, etc) are non-consumer, the portion used for living expenses is consumer debt.

Creditors don't just willy-nilly object to discharge, they need some basis; see bankruptcy code section 523, for a debt to be non-dischargeable, it must fit into one of categories described in the code section.

For example, a mere insurance subrogation claim (which is what this sounds like) is dischargeable. Now, if the underlying accident was caused due to intoxication of the debtor, then the debt is likely non-dischargeable (523(a)(9))

HHM, thanks for clearing that up. So I DID use some of my loans for living expenses. Most was for school expenses but I did get a pretty hefty chunk back each semester. So my guess is they are going to be consumer, right?

The accident was not criminal. I did get a no insurance ticket but nothing else and I was not taken to jail. I was not drinking and driving and I was not under the influence of drugs. So I am definitely good on this front.
Do you know if the dmv will suspend a license BEFORE a judgement has been placed? Maybe it depend son the state. the insurance company told me they already sent them a letter and that in a couple weeks I should be receiving something from the dmv and my license will be suspended. Now I know they will say anything to get paid, but from my research online and the few attorneys I talked to about this it sounds like that's what happens.

OH I decided to go ahead and hire an attorney. I think it's best as my situation is a bit unique in the sense that it's mostly non consumer and I have no credit card debt. I also think having an experienced attorney at my side is a good thing because the insurance company would prob be less likely to stir up trouble

[aaengel]

As far as I know, regardless of you getting your bankruptcy everything that is a student loan is not dischargeable.... even if you used it for living expenses....

[HHM]

As far as I know, regardless of you getting your bankruptcy everything that is a student loan is not dischargeable.... even if you used it for living expenses....

That is true, but that is not the question.

Student loans are non-dischargeable but for a showing of undue hardship. But as to the issue of qualifying for chapter 7 bankruptcy as a "non-consumer" chapter 7, student loan proceeds used for "educational expenses" are non-consumer debt. Student loan proceeds used for other, non-educational expenses (e.g. living expenses) are consumer debt. But, in either case, the entirety of the student loan is non-dischargeable.

So, to TomTea, the portion of student loan proceeds you received after the school was paid is "consumer debt", the portion used to pay tuition, fees, and books, is non-consumer.

E.g. let's say you borrowed a total of $10,000 for a student loan. $7,000 went to pay tuition and school fees (e.g. lab fees etc). The student gets a check for $3,000. Let's say you use $600 of that check to buy books and the rest you keep in your bank account and use to pay living expenses. $7,600 is non-consumer debt, $2,400 is consumer debt.
Or, this example. My Alma Mater, 1 year school and board is now $44,848 per year (ouch), of that about $9,000 is room and board. If some poor sap were to take student loans to cover 100% of the cost, $35,848 would be non-consumer, the rest, consumer debt for purposes of BK.

[TomTea31]

Thanks for clearing that up HHM,

Would I just ask the attorney if I'm non consumer or not?