Account closed after switching to Ch 7 - what does that mean?

[Anonymous]

We filed Ch 13 2 years ago and and 2 months ago, we ended up getting a new dinning table from Ashley's Furniture as the one we had broke. Last month, we switched to chapter 7 since we got approved for loan modification for our home and going to be returning a car back. Well, on Nov 1, all the account appears to be closed due to switching to Chapter 7 and today, we successfully went through the 341 meeting. Nothing was said about reaffirming or anything like except for our other vehicle. 

However, we called the company to make a payment over the phone for the furniture but they said the account is closed but can make a voluntary payment. We asked if the account would reopen after discharge and they said no. We asked if the furniture will be picked up since we still owe on it and they said that since there is no title for furniture, no one will be coming by to pick it up.

We are concerned and want to do the right thing on paying for the furniture because we did not pay it in full. Has anyone experienced this? 

[Pway]

BK7 requires one to list all their debts, all accounts will be closed balance or none.  Some with a zero balance make it through bk, but it is highly unlikely.  During the process of a BK7, you do not make any payments to any creditor unless it is a home loan or car note that is being reaffirmed.  Yes they were right to close the account because they were notified of the bk filing. 

[Anonymous]

Ok so does this mean that we don't owe them anything at all? I don't feel right if that is the case. 

[Pway]

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@Anonymous wrote:

Ok so does this mean that we don't owe them anything at all? I don't feel right if that is the case. 

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No you don't still owe the debt.  Chapter 7 bk wipes out all unsecured debt however there are stipulations to that.  In your case you no longer owe anything on that account.  Once you are discharged you can pay the debt back if you choose but it is not required.

[Anonymous]

Thank you for the info. 

Just to confirm, could they still pick up the furniture since it was a new purchase after discharge?

[Pway]

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@Anonymous wrote:

Thank you for the info. 

Just to confirm, could they still pick up the furniture since it was a new purchase after discharge?

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No they cannot come after the furniture once you have been discharged.  They would have objected and your attorney would of been notified.  Seeing that there was none, you are good to go. 

[Anonymous]

Ashley furniture is not a secured credit card. If they wanted the furniture, they would have showed up at your mtg of creditors. So, your safe! Now it's time to work on your credit reports and start rebuilding your credit.

[holmesnmanny]

If you took on the debt after converting to your chapter 7 then technically it is still collectible since only debt prior to your filing is discharged. That being said, it's not clear they realize that nor do they care. Technically you can't make a payment to a creditor for debt prior to your bankruptcy without it being considered preferential treatment and the trustee being able to claw back that money but I'm not sure how that would apply to debt acquired after you converted. It all depends on if you are really serious about paying off that debt you aquired after you converted.

During your bankruptcy you can make payments to your landlord, whether for a home or apartment or such. 

[ezdriver]

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@Anonymous wrote:

We filed Ch 13 2 years ago and and 2 months ago, we ended up getting a new dinning table from Ashley's Furniture as the one we had broke. Last month, we switched to chapter 7 since we got approved for loan modification for our home and going to be returning a car back. Well, on Nov 1, all the account appears to be closed due to switching to Chapter 7 and today, we successfully went through the 341 meeting. Nothing was said about reaffirming or anything like except for our other vehicle. 

However, we called the company to make a payment over the phone for the furniture but they said the account is closed but can make a voluntary payment. We asked if the account would reopen after discharge and they said no. We asked if the furniture will be picked up since we still owe on it and they said that since there is no title for furniture, no one will be coming by to pick it up.

We are concerned and want to do the right thing on paying for the furniture because we did not pay it in full. Has anyone experienced this? 

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Accounts closing on filing of ch7 bankruptcy is a normal occurance. Once discharged, you no longer have any obligation to repay the debt ... but you can voluntarily pay it if you wish. You get to decide whether or not to pay the discharged debt.

[StartingOver10]

You can pay any debt (or no debt) that is discharged in bankruptcy after you receive the discharge. As pointed out earlier, it would be a voluntary repayment by you.  It isn't preferential payment. A preferential payment are those payments made prior to filing Bk and they have to meet certain criteria. Here is a good resource on what is a preferential payment (which is not what the OP is considering at all).   Look at this link for details: http://www.nolo.com/legal-encyclopedia/pre-bankruptcy-payments-creditors-can-the-trustee-get-the-mon...

As to Ashley Furniture and whether it is a secured debt or not, I don't know for sure. Your attorney would be the person to ask. I know that places like Jared's and Kays have a Purchase Money Security Interest in the items you  purchase and if you file Bk, they want the security.  I don't know if furniture falls into this catagory or not. Here is a good definition, but it is best to discuss with your attorney:  http://www.nolo.com/legal-encyclopedia/types-liens.html