If financed furniture is sold before paid off but then bankruptcy is filed, is that debt able to be discharged?

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If financed furniture is sold before paid off but then bankruptcy is filed, is that debt able to be discharged?

Asked on October 1, 2012 under Bankruptcy Law, Texas

Answers:

B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You really have two potential issues/questions.

If the furniture that you purchased was for your household, then it's a consumer debt that can be discharged in a consumer bankruptcy.  If it was for a business-- then it could be discharged as a debt through a business bankruptcy. Either way... yes, it is a debt that can be discharged.

The issue that you could run into, though, is that it was financed furniture and it's now been sold.  If the finance agreement that you signed listed the furniture as collateral that could be suject to repossession (in the event of non-payment), then you could technically be charged with hindering a secured creditor-- which is a criminal offense in Texas.  If the finance agreement was not backed by the furniture or if the company agreed to let you sell the furniture, then you are okay.

Before you add this debt to your bankruptcy list, make sure that you discuss this issue with your bankruptcy attorney.  It may be hard to pay it off, but it's better than incurring a criminal record.

 

 


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