My bankruptcy dismissed, but so was my debt.

October 15, 2008 11:08 AM

I filed for Chapter 7 bankruptcy(mostly credit card debt) a couple of years ago, and it was dismissed on a technicality (missed a credit counseling class). I was going to refile as soon as I got a call from a creditor, but none of them has ever called me, and it's been 2 years now, and I'm wondering what to do.

I just checked my credit score and it shows 0 delinquencies, and the only debt I have is my car payment, which is almost paid off. It also shows a bankcruptcy that was dismissed. What should I do? Just let it ride? What happens if I apply for another credit card, will they see that my bankruptcy was dismissed and hit me with a $20,000 bill? I did everything through a lawyer (who wasn't very good, apparently.)

posted by anonymous to law & government (14 comments total)

You could try suing your lawyer for malpractice.
posted by delmoi at 11:20 AM on October 15, 2008

I'm not clear on why this is the lawyer's fault if you missed a credit counseling class that was required for the bankruptcy to proceed.

That said, I think this is a clear situation where you need to see a lawyer. So you should probably find a new one.
posted by miss tea at 11:23 AM on October 15, 2008

You should probably go talk to your old lawyer, as he undoubtedly still has your case in a file cabinet somewhere. Unless he screwed something else up, it's not his fault you didn't comply with the court order.
posted by T.D. Strange at 11:42 AM on October 15, 2008

I think what the OP is getting is at is that although he (she?) had his bankruptcy dismissed, his debt was adjusted anyway.

Just let it ride

Whatever you do, when it comes to money owed, never do this. It will come back to bite you.
posted by mkultra at 11:58 AM on October 15, 2008 [1 favorite]

Credit reports can often be wrong or incomplete.
posted by GPF at 12:36 PM on October 15, 2008

Bankruptcy was designed to be a tool to help people down on their luck get a fresh start. It wasn't designed to help people who aren't serious about their commitment or didn't take the process seriously.

You need to speak to a lawyer.
posted by micawber at 12:54 PM on October 15, 2008

Actually, letting it alone may in fact be the best thing to do, depending on the Asker's location (and their location when the debt was incurred).

In some states, the statute of limitations may have already tolled, in which case they can't come after you for the money. (well, they can try to make you pay, and can even sue you, but you have an affirmative defense, but they can put things on your report, just as they can now)

Just whatever you do, don't pay them or make a promise to pay, unless you want the clock to reset.
posted by wierdo at 12:55 PM on October 15, 2008 [1 favorite]

What happens if I apply for another credit card, will they see that my bankruptcy was dismissed and hit me with a $20,000 bill?

I wouldn't touch credit cards until at least 7 years have passed.
posted by mathowie at 1:05 PM on October 15, 2008

If you previously owed money to bank A, and you apply for a credit card with bank A, and assuming your bankruptcy in fact never went through (determining this may require a lawyer, your situation may be complicated), then yes, they could decide to come after you for the money, according to the terms of whatever you signed originally when you got the first card with them. This could include interest that has accrued in the meantime.

Would they? That involves speculation about how well their internal departments talk to each other--new accounts and collections might or might not work well together.

Or they might offer to give you a card if you settle your previous debt (although in the current climate, that seems unlikely). Or, they might simply decline you and forget about it.

If you previously owed money to bank A, and you apply for a credit card with bank B, bank B will probably simply turn you down, and that would be the end of it.
posted by gimonca at 1:44 PM on October 15, 2008

You also fail to mention if you're in the same position now that you were then.

If your economics have changed, and you would actually like to discharge the debt, there's nothing stopping you from making a list of all your outstanding debts, then attacking them one at a time.

Just don't try to do this all at once, and have a sizable chunk of the money on hand before calling. You can probably even fully discharge many of them at a fraction of what you owe. Just make sure to get any offers of settlement in writing before giving over any money.

I listen to The Dave Ramsey Show whenever I get a chance. You might find it helpful.

He'd have you never get a credit card again. No offense, but you;ve proven they aren't exactly working for you, so why mess with them at all?
posted by cjorgensen at 1:48 PM on October 15, 2008 [1 favorite]

Seconding weirdo's comment. Depending on where you live, there's a statute of limitations on how long a creditor has to settle an unpaid debt with you.

First off, IANAL, so this is only my personal understanding of the law. Let's say you owe CC Company A $5,000. Let's say you live in a state where a creditor has four years to collect on a delinquent debt, after which they no longer have a legitimate claim. If you make no payments for four years time, and CC Company A has not already engaged in legal action to obtain a judgment against you for the money in that time period, then CC Company A no longer has a legitimate claim to collect that debt from you. The 'reset' that weirdo referred to is that if you ever make a payment against that debt, the 4-year clock resets to 0, and you'd have to go another 4 years before the debt claim became invalidated.

Of course, just because a creditor no longer has a claim to collect the debt doesn't mean they won't try, even after that period has passed. Collection agencies may still file suit against you, hoping for a default judgment in their favor when you don't respond. In this case, you'll have to lawyer up to fend them off, but it will likely cost you a fraction of what it would to actually pay off the debt (assuming the debt was enough to make you go for bankruptcy).

This link aggregates the various state statutes and limitations on debt collection, which might be a useful starting point for you.
posted by Brak at 2:06 PM on October 15, 2008

Your credit report is not your credit obligation any more than an x-ray is actually your ulna.

You can look in my profile for links to several long-winded explanations I have written on Ask in the past about your credit report, statutes of limitations, etc blah blah blah. I will admit, however, that your situation is one I have never seen before.

There are provisions in most state laws to toll the statute of limitations, but perhaps you'd prefer to call it a pause. If you flee the state of Florida, for example, the SOL is tolled until you return. It may be that some companies could have a claim that this aborted bankruptcy would qualify. I have no facts to back this up or disprove it, but it's something you should figure out.

Regardless, you absolutely should not be applying for a credit card. Not just because they are fundamentally evil and allow you to pay $1.25 for something that costs $1.00, but because the last thing you want to do is rattle the cages of the people to whom you owe money, or perhaps the people who bought that debt if they resold it.

Time is fundamentally on your side here, though presumably with time you will gather up more to potentially lose. However if there's the slightest chance you can slide through with a SOL defense then you should try to do so. And don't get yourself in trouble again.
posted by phearlez at 2:23 PM on October 15, 2008

Yet another thing to consider--if your old bankruptcy filing is somehow in limbo, or if you're planning to re-file it somehow soon, be careful about preferential transfers. You don't want be cutting a deal with one creditor and possibly cutting another out of the loop if your obligations are really supposed to be divvied up by the judge. If this could apply to you, absolutely seek out a lawyer first.
posted by gimonca at 3:25 PM on October 15, 2008

If you owe somebody money, they will come for it eventually. Another vote for getting a lawyer
posted by winston at 6:50 PM on October 15, 2008