If you have a promissory note from a person who filed for bankruptcy can you still recover that money?

Answer 1

I'm not certain what youmean by "go after them for personal bankruptcy." If you mean can they be included in your bankruptcy filing as a third party who owes you money,they might be claimed as assets to be collected. If you mean can you file a petition to be excluded from their BK and then pursue a lawsuit, you can, but it is doubtful it would be granted. Usually only secured creditors are allowed that option.

additionI assume the business has a debt towards you and the business' owner has guaranteed this loan. In such a situation, you should ask the money back from the business and if the business fails to do so (on first request) you can go after the owner. If the owner is not willing or capable of paying you can go after him for a personal bankruptcy.

Answer 2

no. the lawyer will tell you that its your responsibility to get that person to pay. small claims court can help but it depends on the amount. they handle only up to 1000.00 dollars. some amounts may be different in other states. chapter 7 is for business entities and not personal loans. but you can go to a lawyer to file a lien against that person and possibly get a garnishment. those are two separate things. and for each thing a lawyers does is a separate charge. i know, i worked for them in the past. if the person owes you money and isn't working or can't be found, you are out of luck. you can't get blood out of a turnip, that means you can't get won't they don't have. alot of the time judges don't send people to jail for owing money because the tax payers have to pay for them to be there. if someone gets a job at mcdonalds then that is ok with the judge rather than throwing them in jail. the person that lent the money goes without.

Better answer: Maybe. When a person [debtor] files Chapter 7 bankruptcy, all of that person's "assets" come under the purview of a Bankruptcy Trustee that is appointed by the Bankruptcy Court. A lawsuit that the debtor is pursuing is an "asset" that may or may not have value. Two things come into play: in each jurisdiction, a debtor is entitled to exempt a certain dollar amount of assets from collection by the Trustee on behalf of creditors. If the potential dollar value of the lawsuit is less than the exemption amount, the debtor would likely get to keep the lawsuit as a personal asset. On the other hand, if the Chapter 7 Trustee determines that the lawsuit has value that exceeds the debtor's exemptions, the Trustee will keep the lawsuit and try to collect it for the benefit of the debtor's unsecured creditors. If the debtor files a Chapter 13 bankruptcy, the debtor could keep the lawsuit and pursue the collection of it, but if the debtor did collect on the lawsuit, the debtor would have to disclose the recovery to the bankruptcy court, and would very likely have to use the proceeds of the lawsuit to fund the debtor's Chapter 13 Bankruptcy Plan. Bottom line: if the lawsuit has value, it's probably going to end up in the hands of the debtor's creditors, which is as it should be.

The first answer above is ridiculous. "the lawyer"? what lawyer is he talking about? the debtor's? the note holder's? the trustee's? the jurisdictional limit for small claims courts varies from court to court. Chapter 7 is for both individuals and business entities. You don't file a lien for money owed on promissory note, you file a law suit. Garnishment only comes after a claim has been reduced to judgment. Judges never send people to jail for failing to pay a debt. We do not have debtor's prison in the united states; this is the whole reason we have bankruptcy. I hope the questioner ignored the first response.

The second response is closer to correct, but exemptions are based on classes of assets, i.e. homestead exemptions (which can be waived), retirement accounts, etc. These vary from state to state, based on state law and whether or not that state has "opted out" of the exemptions set forth in the bankruptcy code. In any event, this is a bit of a digression. A trustee is appointed to marshall the assets of a debtor in bankruptcy, which will include obligations owed to the debtor, e.g. an outstanding claim on a promissory note. The trustee has the authority (and discretion) to step into the shoes of the debtor and prosecute any such claims and collect any amounts owed to the debtor. The trustee also has the ability to unravel certain transactions occurring just prior to the debtor's bankruptcy filing. For example, if a soon to be debtor pays a large debt to one particular creditor right before filing bankruptcy, the Trustee has the ability to force that creditor to return the payment to the bankruptcy estate, for the benefit of the other creditors. Accordingly, if you have an outstanding note and file for bankruptcy, the trustee will likely file and adversary complaint against the obligor of the note and ultimately seek a judgment ordering that person to pay the trustee the amounts owed under the note. That amount then becomes part of the bankruptcy estate and is distributed accordingly.

My head is spinning...it isn't all that complex.

The Bankrutpcy court has substantial powers and can take jurisdicition of most any case from other courts, IF IT WANTS and NEEDS TO in order to best resolve the BK case. It is normally reluctant to do so and would prefer to let the other case take it's course.

However, the BK court is absolutely interested in collecting any asset the debtor may have, like debts others owe it in this case. It insists all reasonable colection efforts are made by the debtor ( and as the creditors are interested too, it is not unusual for them to to be involved in collecting)....and again, if for some reason the collection case is not proceeding quickly enough and it may jeopardize resolving the BK case and getting asssets to distribute to Creditors...it can take actions (like jurisdicition of the case).

Answer 3

It is the duty of the bankruptcy trustee to recover all available assets of the petitioner. That includes action against third parties which owe the petitioner money. The method in which such a transaction can be handled is pursuant to federal or state bankruptcy laws.

Answer 4

Notarizing a promissory note does not give the lender any special protection if the borrower files for bankruptcy. The debt would be discharged in bankruptcy unless you could prove fraud or if you had a lien on some of the debtor's property.

Answer 5

Not if the debt is included and discharged in the bankruptcy. If the debt is not discharged in the bankruptcy the lender(note holder)may take whatever actions are permitted under the laws of the state where the debtor resides to recover the money owed.