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    jojo55's Avatar
    jojo55 Posts: 29, Reputation: 1
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    #1

    Apr 23, 2008, 10:08 AM
    Filling Chapter 7 - secured debt was sold - any problems?
    I know somebody who is about to file Chapter 7 bankruptcy and they owe about 5K on furniture they bought a year ago. Now they are selling the furniture and they plan to file Chapter 7 in a month or so. I'm guessing they plan to use the money to pay their lawyer, but this is just a guess.
    BTW, they have never paid a dime yet (no payment until 2009 deal).

    Personally I think this a bad idea, but can they actually get in trouble for selling the furniture which is a secured debt?
    George_1950's Avatar
    George_1950 Posts: 3,099, Reputation: 236
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    #2

    Apr 23, 2008, 11:54 AM
    Better not sell the furniture; the seller/financing party may have a security interest in the furniture, and its sale could lead to criminal prosecution. Also, the debt may be nondischargeable.
    twinkiedooter's Avatar
    twinkiedooter Posts: 12,172, Reputation: 1054
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    #3

    Apr 23, 2008, 06:17 PM
    When you file bankruptcy you have to disclose items that were sold just prior to the bankruptcy being filed - I think there is a 6 month prior timeline. In this case the furniture sale would have to be disclosed if they sold it.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #4

    Apr 23, 2008, 06:20 PM
    It is very possible that this secured property ( if the loan on the furniture uses it for security and is not merely a open account or a store charge account.

    But if it is secured, and they sell it, remember on secured debt, it has to be returned to be sold, or the debt has to be reaffirmed and paid.
    Or the debt may not be allowed to be included in the bankrutpcy.

    They should not sell it at all until they get permission from their attorney after he reviews their file.
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