Can a bank come after collateral after taking payments from a Chapter 13 that has been disbursed?

UPDATED: Jun 27, 2012

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Can a bank come after collateral after taking payments from a Chapter 13 that has been disbursed?

My mom has a CD for $10,000 that was used as collateral for a personal loan for my brother. He filed and the bank never challenged, nor did they call in the CD to satisfy the debt. The debt was also $10,000. The bank accepted $1100 in payments through the trustee, the 5 years of payments ended Sept. 2011. My mom recently tried to move the CD but was told there was a hold on it and she had to roll it over. Are they still able to take funds out of it to satisfy the debt after everything is over and disbursed?

Asked on June 27, 2012 under Bankruptcy Law, Ohio


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If your brother filed a bankruptcy petition where it was approved under certain terms by the court and all creditors and the terms of the bankruptcy were adhered to, then the $10,000 collateral loan that your mother placed for a loan with respect to one of the creditors of your brother should be able to be moved by her if in fact your brother has satisfied his contractual obligations to that particular creditor in full.

I suggest that your mother consult further with an attorney about her situation experienced in contract law.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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