What happens to me if I finance something and then sell it before I go bankrupt?

Tough question.  yard sale

Not surprisingly, this happens a lot.  Unfortunately, it usually happens to R.C. Willey.  The usual scenario goes like this:

My client buys a couch from R.C. Willey and finances it.  He stops making payments because those payments are one of many things that become overwhelming.  When is forced to move from his nice home, he sells off the couch as one of many household items he can no longer fit in his new, smaller place.   A few months go by, and he files bankruptcy.  At the 341 Meeting of Creditors, R.C. Willey shows up and asks what happened to the couch.  He tells the truth:  he sold it.  They usually sigh and walk away.

So what usually happens is:  nothing.

What could happen?  Well, the creditor could object to the discharge of that particular debt because he argues that the purchase and subsequent sale was some kind of bad faith transaction in anticipation of bankruptcy.  The creditor could argue that they were defrauded.  however, the value of the financed item is usually so low that no creditor goes through the bother.

So yes, bad things could happen, but I’ve never seen it with a financed item.