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Bankruptcy
Is there any legal recourse for us to recover the money we are owed when someone files bankruptcy?

Is there any legal recourse for us to recover the money we are owed when someone files bankruptcy?

Q: How are Chapter 13 payments disbursed?

In Chapter 13 bankruptcy, payments are made to a bankruptcy trustee, who then distributes the funds to creditors according to the approved repayment plan. The trustee ensures that payments are allocated fairly based on the priority of claims and the terms of the plan, which may include secured and unsecured debts.

Q: Do you get money back from Chapter 13?

Typically, debtors do not receive money back from Chapter 13. Instead, they make monthly payments to the trustee, who distributes the funds to creditors. However, if the debtor completes the repayment plan and has paid more than required, they may receive a refund of any overpayments after all debts are settled.

Q: Do you get money back after Chapter 13 discharge?

After a Chapter 13 discharge, debtors generally do not receive money back. The discharge releases them from personal liability for debts included in the plan, but any funds paid to creditors during the repayment period are not refunded. The focus is on starting anew financially rather than recovering past payments.

Full question:

We own a private school and received notice that one of our families has filed for bankruptcy owing us $16,000 in tuition. They only claimed $14,500 in the bankruptcy. Is there any legal recourse for us to recover the money we are owed or dispute their attempt at dodging the debt?

Category: Bankruptcy
Date: 04/07/2025
State: Tennessee

Answer:

I cannot give you legal advice, but generally speaking there are two sorts of individual bankruptcy: Chapter 7, and Chapter 13. Chapter 7 is a liquidation of the debtor's property, while Chapter 13 is a repayment plan. You'd be more likely to receive relatively more money if the debtor is filing a Chapter 13 bankruptcy. You'll likely receive relatively little if a Chapter 7 is being filed.

Most importantly, you need to go to whatever hearing(s) you receive notice of, preferably after you have consulted with, and perhaps retained, a local bankruptcy attorney. Only a local bankruptcy attorney can assess your situation and give you a legal opinion regarding your best course of action and the likelyhood and amount of possible recovery by you.

More information on bankruptcy can be found here:
http://definitions.uslegal.com/b/bankruptcy/

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What happens after discharge from Chapter 13?

After a Chapter 13 discharge, the debtor is released from personal liability for most debts included in the repayment plan. This means they are no longer legally required to pay those debts. However, certain debts, like student loans and tax obligations, may still be owed. The discharge also allows the debtor to start fresh financially, but they must adhere to any remaining obligations outlined in their plan.

How are Chapter 13 payments disbursed?

How much is paid back in Chapter 13?

The amount paid back in Chapter 13 varies based on the debtor's income, expenses, and the types of debts owed. The court-approved repayment plan will outline how much the debtor must pay over three to five years. Generally, unsecured creditors receive a percentage of what they are owed, depending on the debtor's financial situation.

Do you get money back from Chapter 13?

Do you get money back after Chapter 13 discharge?

Are private student loans dischargeable in bankruptcy?

Private student loans are generally not dischargeable in bankruptcy unless the borrower can prove undue hardship. This is a challenging standard to meet, and most debtors must continue to pay their private student loans even after bankruptcy. However, federal student loans have different rules and may be eligible for discharge under certain conditions.