Did I discharge too many debts?

[Potencia]

Filed pro-se August 7th, individual CH7, most of my debts are from my business so I discharged my libility on them. Among several active accounts, most of the accounts included on the matrix dont show up on my credit report and in fact, many of them are 10 yrs old or more and out of the statute of limitations, and the rest where not even pursuing collection actions. I guess once I stopped renewing the corporation with the state, most of them gave up. I am thinking now that this might not have been the best move after all, and if I should be moving to ammend schedules. Several reasons come to mind:
-High debt but no assets, could open a can of worms in the trustee's mind? What did I do with some much money, lets look further into the business, more paperwork and headaches, etc
- BKing banks and institutions that where not trying to collect, and whom I might want to approach in the future since I am still running the business and intent to continue. Wells Fargo, Citibank business (although I did discharge a personal CC with them), Capital One, Marriot HOtels are examples of creditors which are not reporting to the bureaus nor collecting.
- In the future, in efforts to secure a business loan or simply confiding on a parent, potential spouse, etc, the issue of this BK will arise and showing unusually high debt will not reflect positively.

On the positive side
- No chance for the trustee to force me into a CH13
- There is no way any of these institutions will try to collect in the future, although this is might be a weak argument since all of them will fall out of the Statute of limitations soon anyways.

I am curious to know the take of the Forum on this one. Am I worrying too much or is there an angle of validity in these concerns?

[despritfreya]

1. You are operating a business and filed a Chapter 7 - what type of business - corporation, LLC or sole proprietorship? You state that you let the corporation lapse but then you state that you are still running the business therefore I assume it was a corporation and is now a sole proprietorship. You do know that the moment you filed by your Trustee stepped into your shows and took control of the business - right? I assume your properly disclosed the ownership of the business on Schedule B and on question 18 of the Statement of Financial Affairs. If you didn’t you need to amend your documents.

2. You are required to list ALL debt - including any and all entity debt (corp or LLC) that you personally guaranteed as well as all debt run up for the business once the corporation lapsed and. . . of course, all of your consumer type debt. The running of a SOL is not relevant. All it means is that IF the lender sues you have a defense to the suit. Sounds like you need to amend your schedules to properly list what you owe.

3. Depending upon the facts of your case the Trustee IS going to look into the business. His/her job is to investigate your financial affairs which necessarily includes the operation of a business. That is standard operating procedure and not a big deal if there is really nothing there.

4. Since you have already filed a Chapter 7 you are not getting out of it. You cannot voluntarily dismiss a Chapter 7. Further, even if you could, the damage to your credit report is already done. There are no “do overs”. Now, if you fail to show up at the 341 meeting the Trustee may seek to dismiss the case but there is no guarantee that such will happen nor can one say that allowing your case to be dismissed is in your best interest. You really should have hired an attny. You should seek the assistance of one now.

Des.

[justbroke]

Des has already given you a very detailed analysis of your situation. I would only add that you don't get to pick and choose which debt to "include" in a bankruptcy. It' "all debts" once you file. Unfortunately, you're in a Chapter 7 now and must abide by the rules.

Make sure you check out the Trustee's website, look out for mail from the Trustee, and/or reach out to the Trustee for what documentation that they require before the 341 Meeting. Your Chapter 7 may be a little more work than you had hoped.

Nothing actually "stops" creditors from attempting to collect debt; not even a bankruptcy! What you would have, as Des wrote about, is an affirmative defense to any attempts for them to do so! Either under the SOL or the bankruptcy discharge; the latter being the stronger deterrent with more tools for violations.