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I personally loaned money to a friend, who filed for Ch 7 Bankruptcy, but he did not list me as a creditor. Can I still collect?

Los Angeles, CA |

I loaned a friend 60K three years ago. He filed for Ch 7 BK in December 2010 and was discharged in march 2011. He told me in a text message, that I still have, he was going to pay me back and that if he wasn’t going to, he would have included me on the BK petition. He never paid me back, other than two $100 payments that were made in January and February of 2011. I told him I was going to file a lawsuit to collect my judgment because the SOL was about to expire. He told me the debt was discharged anyway. I never received notice other than the text that I wasn’t listed on BK petition, and I live out of state. I would have at least made a claim for fraud had I been listed. However, I was not. Is the debt discharged? Is there any hope that I collect this debt? What can I do? Estopple?

Attorney Answers 5

  1. Best answer

    The answers above are more-or-less correct, depending on various other factors. Notice in a no-asset bankruptcy has been found inconsequential if a no asset case and if the debt would have been characterized as dischargeable if it had been listed in the case. See In re Beezly.

    You may also wish to review 11 USC 523... 11 USC 727 regarding dischargeable debt.

    If you are able to prove that your debt would have been non-dischargeable, and/or if you have any other information leading to a finding of fraud in this case, then you may still have opportunities to preserve your creditor-interests. Had any payments been made on the $60,000 loan? Was the debtor insolvent when the loan was taken out? Did the loan provide you with any security interest in debtor's property (real or personal)? Was there a co-signer? Etc., etc., etc.

    Nonetheless, a realistic expectation would be to expect an uphill battle, and consulting/hiring an experienced bankruptcy attorney.

    For more information visit:

    Best of luck!

    NOTE: This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question.

  2. Not in the 9th Circuit. Even though your friend failed to list you in his bankruptcy, if he had a "no asset case," you wouldn't be in any better position if he had listed you in his bankruptcy. Since you actually did know about the bankruptcy, if you file suit, you may be in for an unpleasant surprise when his bankruptcy attorney brings charges against you for willfully violating the bankruptcy discharge.

    Hope this perspective helps!

  3. If the friend's Chapter 7 bankruptcy was a "no assets" bankruptcy, it wouldn't make much difference. You will not be able to collect.

    Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.

  4. Unfortunately, you have been victimized by this so-called friend more than once. As the other counsel stated, your money has been lost.

    One takeaway from all of this should be not relying on things a friend or anyone *tells* or *promises* you about financial and business matters. If his bankruptcy estate did have assets, you would have been scrambling to participate in some fashion.

    I suspect that you have nothing in writing from this individual regarding the loan.

    If you have not taken a loss in some fashion on your taxes, you should consult with an accountant to see if you can salvage something from this situation.

  5. This is a difficult situation.

    When he sent you the text message, you were put on notice of the bankruptcy and your statute of limitations to sue him in bankruptcy began to tick. IF you miss the time period to sue, there are no equitable defenses to filing a claim late.

    The United States Trustee would possibly have interest in this issue. Why? When you file bankruptcy, you swear that you listed all of your debts. Obviously, he did not list you a very big creditor. You may get some traction because of the size of your claim. More than likely, however, this won't go far because he told you about the bankruptcy.

    They may care about, however, his statement that you were not included and this is why he did not list you.

    You are in a terrible position.

    Please contact me directly with document for a free 30 minute consultation to get more concrete advice. This is not legal advice. I don't have enough information to give actual legal advice. I can only take the limited information presented and provide a framework to know how your situation may turn out. I may have questions that bring up issues you did not think were important but make a big difference.

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