When a person goes Bankrupt, who pays the creditor's bills? (and one more Q, read detail)?

Question

do the taxpayers pay it?

here's the other question: can someone do this? rack up major credit, let's say $79,000 or whatever. then, instead of paying it, they declare bankrupcy.

then they never have to pay it!!!

is that right?

and then, next year, they rack another 47,000 dollars, whatever, and they do the same thing over and over.

can that b done?

ps: i am in no way insinuating that i do this. lol, i pay in full every month :)

Answer 1

Discharge in any type of bankruptcy is a permanent court order barring the creditor from taking any action to collect the debt.

In a Chapter 7 case, the job of the trustee is to collect and sell all of the debtor's nonexempt (unprotected) assets and sell them to gather up money to distribute to creditors. In a Chapter 13, the debtor(s) pledge portion of future income to repay a portion of their debts.

While a debtor could theoretically borrow a bunch of money again after filing a BK, they need to find someone willing to lend it to them. Furthermore, there are limitations on how often you can file for bankruptcy. For example, a Chapter 7 debtor must wait another 8 years before getting another Chapter 7 discharge.

While is is more difficult to file for Chapter 7 these days and cases do get a closer look, the courts do not get nearly involved as other people answer this question have suggested.

Answer 2

When a person goes bankrupt, nobody pays the creditor. In truth, all the other customers of that creditor pay higher prices because of some people going bankrupt.

If you have assets, those can be seized to pay toward your debt.

Filing for bankrupcy doesn't mean that the judge approves your application. If it looks like you are just playing games with the system, it'll be denied.

A person can't do it year after year. There is a substantial time, I think seven years, after a bankrupcy when you aren't eligible to file again. And since the bankrupcy shows on your crecit report, it's unlikely that the person could even GET much credit in that time without collateral.

Bankrupcy laws have been tightened down a lot in the last several years, in an attempt to prevent people from abusing the system.

Answer 3

Whenever a debtor (borrower) can't pay a debt, the creditor suffers the loss. Only in cases where the government has guaranteed the debt will the taxpayers pay.

In your example, if someone racked up $79K of cc debt and then truly was unable to pay, the bankruptcy court would first look to see if any of the expenditures were recent and if there were assets that could be sold. If the person owned a house and a typical car they would be allowed to keep them but any major purchases would get sold and the proceeds go to the creditor.

Once the bankrupcy is finalized, that person's credit is ruined and they wouldn't qualify for more credit cards. It doesn't mean no one would ever lend them money, but it's unlikely unless your name is Donald Trump.

Answer 4

first there are two different Bankruptcy Chapter 13 and Chapter 7, one is for people with no assets, the other
is for people with assets.

If you rack up 79K in credit card debt and you file
bankruptcy it means that the Creditors get notified
you are claiming bankruptcy for whatever reason
the lawyers give and they have a choice to say
ok, they will right it off, or say no and still try to collect

If you have assets, the Court and the Creditors will
come on a monthly payment that you pay they Court
and they distribute the money to do the creditors.

Bankruptcy stays on your credit report for 7 to 10 years
so no you would not be able to claim bankruptcy again
until it came off.

Answer 5

1. The taxpayers do not pay the creditor.
2. Sometimes the person who filed still has to pay.
3. Sometimes it does not get paid.
4. They cannot bankruptcy to discharge debts over and over. They must wait at least a certain number of years.
5. Almost no one will lend $47,000 to someone who has repeatedly filed for bankruptcy, so no, a person cannot do what you describe.

Answer 6

chapter 13 the consumer pays back a portion of the debts.
chapter 7 the whole debt is written off.
yes people do consistently rack up debt every few years and file bankruptcy to clear it. i was a mortgage credit reporter and the most bankruptcies i've seen on a report is 4 in a ten year period.

Answer 7

you can't get credit card debt totally written off anymore - you have to go on a payment plan or they may deny it all together if all the debt was run up in a short period of time before you file - that's FRAUD-you'll go to jail. If you did get bankruptcy approved - there is no way in H E L L you would be approved for 47,000 of credit in 7 years, never mind 1 and you can only declare bankr once every 7-10 years

Answer 8

Who Pays For Bankruptcies

Answer 9

You're all speaking to personal bankruptcy here. What about corporate bankruptcy? Surely the government ends up involved in that somehow.