Author Topic: My $25 lesson on bankruptcy  (Read 7265 times)

Fiscal Sergeant

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My $25 lesson on bankruptcy
« on: February 04, 2013, 01:45:05 PM »
As I was looking threw my late note listings, I noticed the status of one of my notes went from "BK Filed" to "Discharged in BK".  I have just a couple notes pending bankruptcy and this particular note is rather bothersome to me.  The note was funed on 10 Oct 12 and bankruptcy was filed on 24 Oct 12.  For those not good with math, that is two weeks later.  Being this was a Chapter 7 bankruptcy I had full faith in the court system that the judge would identify the obvious fraud that the loan was taken out with no intent of repayment.  The bankruptcy was completed on 23 Jan 13, chapter 7, complete loss to the Prosper investors.  I have lost my share of notes to being discharged so this isn't a rant that I lost some money.  My concern is if the court system is America still allows people to take a loan one day, then two weeks later file for bankruptcy,  there needs to be some sort of accountability to the debtor.  I figured on this one the loan would be pushed to chapter 12 and some sort of payment plan would have been issued and my fund recouped.  Instead, total discharge with no repayments.  So my $25 less is Americans can still commit fraud and hide behind bankruptcy. 

SBryantMS

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Re: My $25 lesson on bankruptcy
« Reply #1 on: February 04, 2013, 02:37:35 PM »
Many years ago, I spent a little time pursuing several claims through BK court and watching other filings while waiting for my case, IMHO, if no one shows up to challenge the debt, then the debt will be discharged. 

When I asked to address the court on my claim, there was usually a lot of paper shuffling as they try to figure out where this debt was in the filing and did I have standing to address the claim.  Having spent several hours watching BK court in action, very few creditors showed up and the few that did got little satisfaction from the court. 

I went just because these are small business inventory debts and it allowed me to question the defendant (pound of flesh) -- my goal was to move my claim up higher on the list.  If I asked the right questions and got the right answers, I moved into the priority class.   

The bottom line question which we will never be able to answer -- did the lender challenge the debt?   

Xenon481

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Re: My $25 lesson on bankruptcy
« Reply #2 on: February 04, 2013, 02:47:09 PM »
There have been documented cases in the past where Prosper has failed to challenge fraudulent bankruptcy inclusion and even where Prosper failed to submit themselves as a creditor in Chapter-11 BK's.

I suggest that you specifically request proof from Prosper that they submitted all filings properly and within the required time constraints for this BK.
The Motley Fool says to Avoid Prosper Like The Plague.

Read about historical Prosper actions/problems at Prospers.org

graceful

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Re: My $25 lesson on bankruptcy
« Reply #3 on: February 04, 2013, 02:58:41 PM »
What was the loan balance? If under $3500, it would not have been profitable to pursue. Depending on the state, it might cost much more to file with the bankruptcy trustee, paying for representation though a lengthy process. Of my notes, only the larger ones get something in collection, and it takes many months for anything to show up.

http://p2plending.forumatic.com/viewtopic.php?f=10&t=231&hilit=bankruptcy

It is prudent to choose not to file if the cost is greater than the debt owed. That is why so few debtors appear at bankruptcy. They are farther behind if they hire someone to represent and file.

Graceful

MTaylor

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Re: My $25 lesson on bankruptcy
« Reply #4 on: February 04, 2013, 07:16:07 PM »
I believe I also own a piece of that loan. It was for $3,000.

He also says this in his profile:

"I am the type of person who hates to owe someone money. It has been over seven years since I have missed a payment or been late on any type of bill and have no plans of starting now."

I guess filing for BK is one way of not owing someone money.

Fiscal Sergeant

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Re: My $25 lesson on bankruptcy
« Reply #5 on: February 06, 2013, 01:42:18 AM »
The loan was for $3000.  With a Chapter 7 bankruptcy, I doubt he will have a problem paying bills for another 10 years as he will have a hard time obtaining credit.  I wonder if the guy filed a chapter 13 in the past and those are the 7 years he is refering to.

I am no lawyer, and have no intention on becoming one.  But it seems like the court does not need to have someone from prosper there to plead the case.  It just seems logical that a judge could look at the loan and see it was funded two weeks prior to filing for BK.  I investigate fraud for a living and this loan is screaming fraud as it appears to have been funded with no intent to repay.