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Do I still have to pay back a loan to a bank that filed for bankruptcy protection

do i have to pay debt owed by a bankrupt bank

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Attorney answers (5)

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Reputation Level 18
Yes, you are still obligated to pay, even if the bank has filed bankruptcy. The assets of bankrupt banks belong to their creditors. Normally, when a bank is in bankruptcy, its assets are collected either by it, if it is in Chapter 11 and continuing operations on some basis, or by the Trustee in Bankruptcy.

Avvo Pro

Reputation Level 14
Yes you do. When a company files for bankruptcy protection, it's assets become an asset of the bankruptcy estate and your payments are going to be used to continue the business of the bank and pay the bank's creditors. Right now might be a good time to try to negotiate a settlement of the debt with the bank, though. It's obvious its finances are tight and it might be willing to take less than you owe now rather than wait and get it over time.

Reputation Level 8
The financial condition of the bank does not affect your obligation to pay what you owe. If it truly is a bank that you owe, it probably has not filed bankruptcy. When banks "go broke", they are taken over, either by the Federal Deposit Insurance Corporation or the banking authority in your state. Often, troubled banks' assets are sold to another bank. No matter what steps are taken to deal with the banks's financial troubles, whoever is in charge will have the rioght to collect loans owed to the old bank in full. You may be able to negotiate a discount if you can convince whoever is in charge that you cannot pay.

Reputation Level 8
The financial condition of the bank does not affect your obligation to pay what you owe. If it truly is a bank that you owe, it probably has not filed bankruptcy. When banks "go broke", they are taken over, either by the Federal Deposit Insurance Corporation or the banking authority in your state. Often, troubled banks' assets are sold to another bank. No matter what steps are taken to deal with the banks's financial troubles, whoever is in charge will have the right to collect loans owed to the old bank in full. You may be able to negotiate a discount if you can convince whoever is in charge that you cannot pay.

Avvo Pro

Reputation Level 8
The bank's bankruptcy doesn't relieve you of your obligations. If you have a claim against the bank as a result of something it did (before filing bankruptcy), you might have a right to offset your debt against the bank's. You should consult an attorney in that event.

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