Legal Question in Bankruptcy in California
Filing Chapter 7
My husband is employed as a car mechanic. If we file chapter 7 can he keep his account open with a tool company where he purchases the tools he needs for work? He now pays the tool company $80.00 every payday. He owes them approximately $8,000.
2 Answers from Attorneys
Re: Filing Chapter 7
You would have to list the debt in the bankruptcy, but you can always repay it after the bankruptcy. If the debt is secured by the tools (and they may be repossessed if the debt isn'
Re: Filing Chapter 7
All debts must be listed on the Chapter 7 bankruptcy, and usually are discharged. That would include the debt to the tool company. If the tool company wants to extend credit to your husband despite the BK, that is its decision. It is not uncommon for a debtor and creditor to work out an informal arrangement. The tools, however, might be secured debt which means that if your husband doesn't pay, the tools can be repossessed. In that event, a formal reaffirmation agreement may be signed whereby your husband would promise to continue making payment. The danger with reaffirmation agreements is that if his financial troubles continue and he can't keep up after the bankruptcy is over, he can be sued and his paycheck attached, etc. If you don't have an attorney, the court would have to decide whether a reaffirmation agreement is appropriate under the circumstances.