Chapter 7 BK Question

[Genius]

With the new laws effective October 2005, I've seen a Chapter 7 discharged and the trustee requiring to have the debtor refinance there home after the discharge to pay them off. Is this typical or can someone help me understand this? I'm actually a new user and I love this forum. It is very informative and a great resource. Thanks in advance.

Genius

[keepmine]

Sounds like the petitioner had too much equity in their home or car to exempt and they had to pay the trustee to keep the asset. That really isn't too unusual. I've seen it several times over the years.

[Genius]

Thanks!

Thanks for such a quick response Keepmine. Just to clarify, in my situation it was discharged on the credit report but the settlement statement showed a payoff to the trustee. Normally a payoff would come first prior to a discharge. However, from my knowledge, Chapter 7's wipe out all debts included if discharged. From reading your post, my take is that this is typical due to the fact that the debtor had too much equity in their home and trustee made the debtor refi to pay off debts included. Am I correct?

Thanks again!

Genius

[keepmine]

A payoff would come prior to a discharge except, nobody will refi until the the bk is discharged. They would be in violation of the automatic stay if they sent any billing requests.
Sounds like the bk was discharged but, not closed so the debtor could refi and pay the excess equity.

[Genius]

Thanks

Sorry, but I still need more information. Your responses are really great and I hope you don't mind my questions.

I guess I'm really having a hard time understand why they would discharge a BK if it is not satisfied. I thought that once a BK is discharged it is full taken care of. In my scenario the petitioner was discharged then was forced to refi. Please help me understand the difference between a discharge and BK being closed. Also, why it would be discharged and then a payoff being required after. Thanks again for the info!

Genius

[lrprn]

Sorry, but I still need more information. Your responses are really great and I hope you don't mind my questions.

I guess I'm really having a hard time understand why they would discharge a BK if it is not satisfied. I thought that once a BK is discharged it is full taken care of. In my scenario the petitioner was discharged then was forced to refi. Please help me understand the difference between a discharge and BK being closed. Also, why it would be discharged and then a payoff being required after. Thanks again for the info!

Genius

Genius, check out this explanation of discharged vs. closed on the Moran bk website - http://www.moranlaw.net/discharge_decision.htm . Your question about how a bk can be discharged and still have a payoff after is addressed too. Hopefully this will help clear up some of the confusion - these are hard concepts to grasp. Come back anytime and keep asking questions as needed - that's why we're here!

[Minnymouth]

Real good post...... lots of people don't under this situation..... Many don't realize that you can be discharged, but your case is still open till the Trustee files his final report and closes the case.

[Genius]

Thanks so much!

I appreciate the information Minnymouth! I haven't read it but I'm defnitely excited. Hopefully I'll be able to disect it. Thanks again!

Cheers,

Genius