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Help me understand bankruptcy

Discussion in 'Anything goes' started by kingcreole, Dec 20, 2010.

  1. kingcreole

    kingcreole Active Member

    My (step)daughter's father recently filed for Chapter 13. He lives a state away and owns a construction biz. He's been pretty successful.

    As some of you might remember, paying child support has never been among his top 100 priorities. We haven't seen a dime from him since Oct. 2009. He's about $7,000 in the hole, maybe more.

    My wife keeps up with the goings-on in his life via Facebook. For awhile he was concerned about taxes, whining about how he couldn't believe "they'd throw a working man in jail over taxes when there are drug dealers" (like he used to be) and "murderers on the streets." I don't know the full story, but I guess someone reported him to the IRS, and he had to sell off a bunch of stuff.

    Anyhoo, like I said, he filed for Chapter 13. We got some papers in the mail, stating we are a creditor. We are not. The child support agency is the creditor, so they told us to forward paperwork to them.

    OK, I've done some research into this. I know we cannot sue him for back child support while he's bankrupt. He has not been granted bankruptcy yet, only filed. And I know child support is often the debt courts want to settle first. But here's what I don't get - the guy just bought a new pickup truck. A z71 or something like that. My wife showed me a picture of it. This is not exactly a Chevy Colorado. I guess he was bragging on facebook about his new ride and how he had to keep up with the neighbors.

    I guess I don't get it. How can a guy be granted bankruptcy when he's going out and buying an expensive pickup truck? Maybe I'm naive, but I thought bankrupt people didn't have a lot of money. Surely this isn't normal behavior for a person trying to get on a five-year plan to pay off his debts.
  2. Flying Headbutt

    Flying Headbutt Moderator Staff Member

    If Donald Trump can file for bankrupcy multiple times...
  3. YankeeFan

    YankeeFan Well-Known Member

    Trump has never filed for personal bankruptcy.
  4. BTExpress

    BTExpress Well-Known Member

    600-plus Tribune executives splitting a $40 million bonus pot do not see the problem here.

    Bankrupt people tend to have high debts. They can and often do have a lot of money.
  5. Point of Order

    Point of Order Active Member

    This might be good for you. In a Chapter 13 the debtor arranges to pay all of his debts according to a plan that has to be filed by him and approved by the trustee and bankruptcy judge. Creditors are allowed to challenge the plan per the bankruptcy code before a plan is confirmed. Once confirmed, the debtor makes payments to the bankruptcy court, which in turn pays out to all the creditors. If the debtor fails to make the payments the debtor's case can be dismissed and the plan is out the window and all the original debts are due and owing. The case is not "over" until the debtor has paid all of his debts according to the plan or until it has been dismissed. Generally, unpaid back child support is not dischargeable in bankruptcy, so the trustee and judge should generally not approve a plan that does not pay the arrearages in full with appropriate interest over the life of the plan. Also, the plan must pay out everything that is owed within five years or it will not be confirmed. You should be kept informed by the court what the debtor plans to pay in terms of child support and what the time for objecting to such plan might be. You definitely need to take note of those dates. You might want to consult an attorney experienced in bankruptcy about your specific rights.
  6. Stitch

    Stitch Active Member

    If the child support agency is the creditor, the debt can be discharged. I'd look into what assets he has and if he's using his construction business to hide them. Hire an attorney.
  7. kingcreole

    kingcreole Active Member

    I read that child support cannot be discharged. Neither can alimony, debts because you hurt someone in a car wreck, etc.



  8. Bob Cook

    Bob Cook Active Member

    I bet he bought the truck knowing he would soon file bankruptcy. That happens.
  9. Baron Scicluna

    Baron Scicluna Well-Known Member

    Same with the JRC executives who claimed in bankruptcy court that they needed the bonuses or else the company would go out of business.
  10. SoCalScribe

    SoCalScribe Member

    I remember reading some story off of the Yahoo main page a few months ago about some "Real Housewife of New Jersey" (TV show) going on a $400,000 home decorating spree after she and her husband filed for bankruptcy.

    I think the general feeling is, spend it before they take it and hope no one cares enough to try to repossess your gilded curtain rods or whatever.

    There is a certain percentage of monetarily successful people that got that way by being obsessively-driven narcissists who always had to have more, more, more for themselves. Sounds like this deadbeat might be one of those kind of people. It's not about his kid not being supported or his employees getting pay cuts or being laid off or whatever. It's all about him, and so why shouldn't the only person who matters in the world have a new Z71? Heck, he's probably miffed they don't make an Escalade with a full-size bed.
  11. Point of Order

    Point of Order Active Member

    The key point is there's a million miles difference between filing for bankruptcy and having a plan confirmed (or getting a discharge). None of the anecdotes here recognize the difference.
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