Can a deficiency balance be discharged in bankruptcy if it is owed to the U.S. Treasury? 16 Answers as of December 08, 2011
I lost my house in '09 and received garnishment papers the first of '11. The USDA is who the loan is collecting. I filed for chapter 7 and was given a discharged but still have a garnishment. Did the lawyer mess up or is this something that can't be discharged?Free Case Evaluation by a Local Lawyer!
Enter Zipcode or for Immediate Assistance call (888) 428-7281
Have a general legal question? Click hereAsk a Local Attorney. 100% Anonymous. Free Answers.
Or for Immediate Assistance call (888) 428-7281
Free Case Evaluation by a Local Lawyer: Click here
Heupel Law | Kevin Heupel
It's hard to say without more facts. The debt should have been discharged in your Chapter 7 provided the mortgage existed prior to you filing. I would contact your attorney and have him look into it further.
Answer Applies to: Colorado
Replied: 12/8/2011
The Law Offices of Kristy Qiu | Mengjun Qiu
It is an unsecured but priority debt, you do have to pay them if they're less than 3 years old.
Answer Applies to: Florida
Replied: 12/7/2011
Grace Law Offices of John F Geraghty Jr. | John F. Geraghty, Jr.
It seems that should have been part of the discharge debt depending on how long ago the discharge took place it is possible to re-open the Bankruptcy.
Answer Applies to: Georgia
Replied: 12/7/2011
Mazyar Hedayat and Associates | Mazyar Malek Hedayat
Discharge of debts is governed by Section 727 of the Bankruptcy Code, which excludes or "exempts" certain types of debts. The chief of exempt obligation that cannot be discharged in bankruptcy is sums owed to a governmental body. The typical example is taxes. Distinctions can also be made for penalties and punitive interest, which may be discharged under some circumstances even though imposed by the government. And taxes become dischargeable if they are old enough: generally more than 9 years.
Answer Applies to: Illinois
Replied: 12/7/2011
Ashman Law Office | Glen Edward Ashman
A USDA loan is completely dischargeable absent fraud. Your lawyer probably didn't mess up, but the USDA may have. Call the lawyer.
Answer Applies to: Georgia
Replied: 12/7/2011
Charles Schneider, P.C. | Charles J. Schneider
The debt should be discharged. Respond to the garnishment with your discharge papers.
Answer Applies to: Michigan
Replied: 12/7/2011
Weber Law Firm, P.C. | William Weber
Yes. No problem, so long as it is not a tax.
Answer Applies to: Texas
Replied: 12/7/2011
Gregory J. Wald, Attorney at Law | Gregory J. Wald
It isn't necessarily the case that your lawyer made a mistake, but I would need to know more about this debt in order to give you advice. Some types of debts are automatically not discharged in bankruptcy. Some examples would be court fines and criminal restitution, some types of tax debts, child support and alimony. With some other types of debts, the creditor would have had to file a lawsuit called an "adversary proceeding" in your bankruptcy case.
Answer Applies to: Minnesota
Replied: 12/7/2011
Law Office of William C. Wood, LLC | William C. Wood
It is not clear from your question what the deficiency balance is r elated to. If it was due to a foreclosure, then in all likelihood, it should be dischargeable.
Answer Applies to: Maryland
Replied: 12/7/2011
Burnham & Associates | Stephanie K. Burnham
It sounds as though you may need to speak with your accountant. If you lost your home in 2009, you may or may not be subject to taxes on the deficiency. If you owed taxes, that is not dischargeable. You may want to investigate whether or not you qualified for the deficiency to be forgiven by the IRS. You should look at your tax return from 2009.
Answer Applies to: New Hampshire
Replied: 12/7/2011
Engberg Law Office | Harry A. Engberg
I do not have enough information to full answer your question, but if the garnishment is for a home loan, the garnishment should stop. What you need to look at, is if the USDA was listed as a creditor or only the bank. If the bank was listed and then the USDA may not know about the bankruptcy. Your attorney needs to handle this problem.
Answer Applies to: South Dakota
Replied: 12/7/2011
Dan Wilson Bankruptcy | Dan Wilson
The deficiency should have been discharged. Contact your lawyer and if he is of no help get another lawyer.
Answer Applies to: Colorado
Replied: 12/7/2011
Foster Law Group | William Foster
The loan with the USDA (if a home loan) should have been discharged in your bankruptcy. You should contact the bankruptcy attorney who filed the case.
Answer Applies to: Colorado
Replied: 12/7/2011
Buff & Chronister | G. Scott Buff
That is a debt that would have been covered under your general discharge order from your Chapter 7 case. It sounds as though there has been a violation of that discharge order and you should go back to the attorney who filed the case for you or seek other counsel to get this resolved. Any money recovered via the garnishment should be returned to you. Please understand that you have provided limited information in this forum and you should consult a Bankruptcy attorney to look at your particular situation in detail.
Answer Applies to: Georgia
Replied: 12/7/2011
Sanders Law, P.A. | Andre Keith Sanders
If it is a deficiency from a mortgage, then it should have been discharged and the garnishment stopped. If it is anything else with the federal government, it is probably not dischargeable.
Answer Applies to: Florida
Replied: 12/7/2011
Charles R. Nettles - Attorney at Law | Charles R. Nettles
That should be fully dischargeable unless there is something about your case I don't know. It is still not too late to file action in the bankruptcy court to have it decided and possibly have your money refunded to you.
Answer Applies to: Texas
Replied: 12/7/2011
