Last week on Mr. Whitmore’s calendar a creditor appeared to ask a debtor questions. Mr. Whitmore conducted the hearing and asked the basic questions at the meeting of creditors. The debtor answered the questioned satisfactorily, then Trustee Whitmore asked if there were any creditors.
The creditor’s representative appeared and stated he was from a furniture company. He asked if the debtor had purchased certain items in 2014? The debtor said “yes”. The creditor then asked if he still had those items. The debtor said “yes” again. Then the creditor said he had no further questions. The matter was concluded.
The Debtor’s attorney then spoke to the creditor’s attorney outside of the hearing. The Debtor’s attorney said that his client did not want the furniture and that he is willing to surrender the items. The creditor then said he would make arrangements to pick up the items.
I highlight this exchange as it is not something we have seen in a while. The creditor’s agents used to live at the meetings of creditors 15 to 20 years ago. It was not uncommon for representatives of department stores and furniture companies to be present at the hearing and ask for reaffirmations of debt. Times changed and now creditors for furniture companies and department stores generally do not attend the hearings. So it was unusual to see a furniture company rep here again.
The Practice Pointer: Furniture is usually a secured debt. The debtor cannot expect to discharge his debt to the furniture company and keep the items. The easiest way to avoid this problem is to have the debtor surrender the items back to the creditor. The used furniture is usually not worth what is owed on the contract. If the items are given back to the creditor, then the creditor no longer has a security interest in the item and the debtors can get on with their lives.