Builder Filed Chapter 7

[frayne]

Recieved in the mail yesterday a form B9A from the United States Bankruptcy Court informing me of a notice of chapter 7 bankruptcy filing by the contractor who built and sold me the house I purchased last month.

Basically looks like the guy is filing for bankruptcy. I bought and paid cash for the house through a title company and all the appropriate papers, titles, etc. have been completed and conveyed as far as I can tell. I did call the builder's attorney's office and was told the builder basically listed everyone who he has built homes for during the past year as possible creditors that he would like relief from in the future.

I was also told that my home warranty would be void if this case goes through. There are still a few odds and ends that he has agreed to complete but as of right now they haven't been worked on, nothing major. I also owe the guy about a grand for a refrigerator that he purchased and installed at his cost as part of the purchase agreement.

Guess my question to the masses are: should I refuse to pay for the frig in light of the possibility of having a void home warranty, or are there any other things I should be checking into, in order to ensure I'm not miss something.

I have yet to call my hometowm lawyer who is 500 miles to the north and I haven't established a local attoney as of yet.

Would appreciate any and all suggestions.

[Martha]

Was the chapter 7 filed by a person or by a corporation or other legal entity?

Any contingent liability to you is only discharged in a chapter 7 bankruptcy if the bankruptcy was filed by an individual or husband and wife. Corporations don't get discharged in Chapter 7s.

You may have a right to offset what you owe for the fridge against your claim of damages for failure or your builder to provide a warranty and failure to complete the work.

[frayne]

Was filed by husband and wife.

[farmerEd]

Personally I'd come up with a $1000+ worth of "stuff" that he still owes you(assuming that he does), put it in writing and send it to him, and then refuse to pay for the fridge. Let him try and come after you for it - my guess is he'll be to busy to bother, especially since any money he collects will probably go to other debtors, not to him.

[Martha]

OK, so they can get a discharge in a chapter 7.

Was any notice sent to file a claim? Generally no notice is sent unless it appears that there are going to be assets for creditors. If you do get a claim form at some point, you will have to estimate your damages. You will want to talk with a lawyer at that point.

I would try to avoid paying for the fridge and say that you are offsetting the cost against your damages.

There are several possible entities that may try to collect from you. It could be that no-one will try because little money is involved. It could be that the debtors claimed the money you owe them exempt. If exempt, the debtors could try to collect. If not exempt, the trustee may try to collect. In any event, I suggest dragging your feet and refusing to pay because you have a damage claim that you are offsetting against what you owe them. If they get really determined, you will want to talk to a lawyer.