help please

[jgregorio117]

i am currently in the process of filing chapter 7. i agreed to help someone out to open a credit line to get inventory for a business and also
2 business credit cards. i know it was very stupid and reckless to do but i really trusted this person. long story short, in a short span this person racked up a huge amount of debt under my name and has not been able to pay. this person took advantage of me and i am at a loss here. will they consider my side of the story? or will they just go by the debts under my name. i am planning on sueing this person and if need be file a criminal complaint. will yhe trustee listen to my story?

[justbroke]

You can file bankruptcy and discharge your personal liability. I wouldn't worry about this or worry about suing them unless you have a loss that you suffered (and can quantify... reduce to a money value).

Chapter 7 Trustees are typically not interested in criminal prosecution of co-debtors... at least I never heard of such thing. If anyone would pursue charges, it would be the United States Trustee (UST) and for criminal bankruptcy-related items.

If you do plan to file a civil lawsuit, you will need to list it as an asset of the Chapter 7 bankruptcy. That could mean that even if you won, you wouldn't see any of the proceeds. Please seek professional advice from a competent bankruptcy attorney in your area.

[bcohen]

From your post, it is not clear if the accounts in question are solely in your name or if the accounts are jointly held in your name and your friend's name, or if your friend is the accountholder and you cosigned. Also, is there any written contract between you and your friend, or just verbal promises to pay.

[jgregorio117]

the accounts were only in my name and it was just a verbal agreement. i just retained a lawyer and he has told my lawyer that he wants to take responsibility for the debts incurred. my lawyer has been vague so far.

[bcohen]

With the accounts solely in your name, you can certainly attempt to discharge them through Chapter 7 bankruptcy. The problem is that if few (or no) payments were made, there is a risk of the creditors filing an adversarial proceeding to have their debt ruled non-dischargeable.

This risk is minimal if the accounts in question are consumer loans/credit cards and the balances are relatively low (less than $3000). It simply wouldn't be worthwhile for a creditor to file an AP due to the cost versus potential reward.

The risk is much higher if these are business loans and the balances are high. Many business loans claim to be secured by the assets of the business, which are not accessible to you, since you merely took out the loans for someone else. This could pose a problem if the creditors are aggressive.

Also, with no written contract between you and the "friend", it will be difficult for you to go after him legally for any damages. Any claim which might exist against the "friend" would be property of the bankruptcy estate, anyways.