Re: Bankruptcy Question - Posted by ray@lcorn
Posted by ray@lcorn on March 19, 2000 at 22:43:24:
I hope I don’t confuse you, but there is a distinction here that you need to understand.
From what you have desciribed, you are an unsecured creditor in the debtor’s case. If the primary borrower on the mortgage is the Corp., and the Corp. has not filed bankruptcy, then the personal guaranty from the debtors is most likely an unsecured obligation unless you specifically added other personally owned property as additional collateral with the guaranty.
The post below is correct. You must file a claim. You don’t have to go to the 341 hearing, but depending on the size of the note, you may want to go just to find out what is going on. One advantage in a 341 hearing is that it is just about the only time the creditor’s are allowed to fire questions at the debtor about anything and everything to do with the bankruptcy estate without the formalities of courtroom procedure. The hearings are not conducted by judges, but by the trustees. They are usually pretty lax about rules of testimony and often use the creditors to raise the issues they themselves should be aware of, and the business of a corporation wholly owned by the debtor’s will be of great interest to the trustee. The debtor’s stock in the corporation is property of the estate, so knowing what all the corp owns and what they intend to do with it would also be of interest to the trustee and the other creditors as well.
If I had a note in your situation in any significant amount, I would attend the hearing just to hear the questions, even if I didn’t ask any of my own.
If you are on good terms with the debtors, it may be valuable to hear their side of the story before the hearing. Be careful though, the law says that you cannot make any contact in regards to a debt with a debtor after he has filed. However, discretion is sometimes the better part of practicality. Side deals are cut all the time. Pleading for forgiveness for the first call would be an easy sell if need be, but if the debtor is hostile, or tells you not to call, then end the conversation immediately. Pressure from you will not play well when you hear it replayed in the debtor’s terms in front of a judge.
As an unsecured creditor you are not in the best of positions with regards to the debtors’ personal case. But if the Corp gets dragged down with them, you are secured to the extent of the value of the collateral. I would need more info to go any further.