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How will a creditor paid in full from the estate report?

New Contributor

How will a creditor paid in full from the estate report?

I filed for bankruptcy in July, however, there was a pending personal injury case when I filed. The trustee attached it to the estate (which was fine as I'd hoped it would have settled sooner and not been forced into the bankruptcy, but that's not how it turned out), but I am curious as to how they can file a claim if they've already deducted it as a loss on their taxes. Either way, because the PI case has settled and the funds forwarded to the trustee, she has notified the creditors they have until May 7th to file their claim. I noticed that Target has already filed. I am wondering if they are paid in full, will they continue to report it as discharged in bankruptcy even though they've been paid in full? Also, will the fact they were paid out of the estate make it any easier to "get back in" with them later?

Any help with these questions would be greatly appreciated.

Community Leader
Super Contributor

Re: How will a creditor paid in full from the estate report?

Oh wow, first sorry for the PI case, thats a tough question, and would suggest talking to your attorney! If a company filed a 1099-C on a loss already, they can't come back and reclaim funds, thats fraud. By filing the 1099, they are claiming it to be a "loss" on their part to the IRS, and you had to claim their loss as income on your taxes!  I would make very sure your attorney knows this, so they can mention it to the trustee.

This is a tough one, because technically Target is listed in your BK, (IIB), but if they are PIF from the money the trustee has, they need to change their reporting to PIF/$0 bal, and NOT have the notion of IIB, because then they would not be IIB at that point. But, once a BK if filed, its either dismissed or discharged, so again, see what your attorney says about all of it.

If might make them a little easier to get back in with 6-12mo post DC if paid, but never a guarantee. I burned Target for about $2k on their visa, and they were IIB. I got them back 2 1/2 yrs later, and my limit is $2k currently Smiley Wink

My rebuild worked for me, but won't necessarily work for you!
BK7 D/C- 08/2013
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