1
00:00:00.000 --> 00:00:01.980
Johny Fernandez: First question
is what is a bankruptcy

2
00:00:01.980 --> 00:00:05.100
dismissal versus a bankruptcy
discharge?

3
00:00:06.350 --> 00:00:08.030
Sean Murray: Okay, getting
technical here.

4
00:00:08.030 --> 00:00:09.440
Johny Fernandez: Yeah. A little
technical here.

5
00:00:09.450 --> 00:00:12.029
Sean Murray: Asking the tough
questions now, what are the

6
00:00:12.087 --> 00:00:15.721
bankruptcy dismissal versus a
bankruptcy discharge, I will say

7
00:00:15.780 --> 00:00:18.711
from my my non lawyer
perspective, the reason that

8
00:00:18.769 --> 00:00:22.286
it's important to know these
things, whether you're a broker

9
00:00:22.345 --> 00:00:25.803
or an underwriter is because it
could have an impact on the

10
00:00:25.861 --> 00:00:29.261
financial standing of the
applicant, or of the borrower or

11
00:00:29.320 --> 00:00:32.895
the customer, whatever they are
at that point in time. If the

12
00:00:32.954 --> 00:00:36.236
the bank all right, so if you
were broke, you file for a

13
00:00:36.295 --> 00:00:39.870
bankruptcy, right. And then what
essentially is happening is,

14
00:00:39.929 --> 00:00:43.621
you're trying to negotiate with
all of your creditors, for them

15
00:00:43.680 --> 00:00:47.373
to take less than what they're
owed, that's what's happening in

16
00:00:47.431 --> 00:00:50.831
bankruptcy, you don't have
enough to pay everybody, right.

17
00:00:50.890 --> 00:00:54.700
And so you're going to a formal,
organized legal process for them

18
00:00:54.758 --> 00:00:58.392
to all get something or they're
all kind of, you know, they're

19
00:00:58.451 --> 00:01:02.144
all kind of accepting together,
what they're each going to get,

20
00:01:02.202 --> 00:01:05.367
and a lot of it is based upon
what type of credit they

21
00:01:05.426 --> 00:01:08.708
extended to you. So like the the
people who lent against

22
00:01:08.767 --> 00:01:12.049
collateral will be first and
like the unsecured lenders,

23
00:01:12.108 --> 00:01:15.742
like, you know, would be would
be our last in line. But if the

24
00:01:15.801 --> 00:01:19.435
bankruptcy goes as planned, and
you are truly, you know, truly

25
00:01:19.493 --> 00:01:23.010
so, you know, broke, right, and
you you follow all the rules

26
00:01:23.069 --> 00:01:26.761
that are required of you during
the bankruptcy process, you can

27
00:01:26.820 --> 00:01:30.454
get the bankruptcy discharged,
essentially, that would be a an

28
00:01:30.513 --> 00:01:34.088
agreement an actual agreement
for those lenders to take those

29
00:01:34.147 --> 00:01:37.664
creditors to take less money,
right. And so, anything beyond

30
00:01:37.722 --> 00:01:41.122
that, you're you're free and
clear, you don't owe anything

31
00:01:41.181 --> 00:01:44.873
more to those creditors beyond
what was agreed, agreed upon, in

32
00:01:44.932 --> 00:01:48.449
that bankruptcy process. If
you're a lender, that could be a

33
00:01:48.507 --> 00:01:52.024
good thing, because though that
applicant no longer owes any

34
00:01:52.083 --> 00:01:55.658
money to those creditors. On the
flip side, it could indicate

35
00:01:55.717 --> 00:01:59.292
this is the type of person who
leverages themselves too much,

36
00:01:59.351 --> 00:02:02.633
and is likely to get into
trouble and declare bankruptcy

37
00:02:02.692 --> 00:02:06.209
again, although you have to
wait, you have to wait a certain

38
00:02:06.267 --> 00:02:09.726
period of time before you can
declare bankruptcy again, you

39
00:02:09.784 --> 00:02:13.360
can't just constantly you can't
just declare bankruptcy every

40
00:02:13.418 --> 00:02:16.818
year. Yeah. But I think the
question was, you know, what's

41
00:02:16.876 --> 00:02:20.159
the difference? So the other the
other side of it is the

42
00:02:20.217 --> 00:02:23.500
bankruptcy dismissal. A
bankruptcy dismissal if you're a

43
00:02:23.558 --> 00:02:26.841
broker, or an underwriter could
actually be worse than a

44
00:02:26.899 --> 00:02:30.534
discharge, because it means that
the bankruptcy process itself

45
00:02:30.592 --> 00:02:33.757
failed? Yeah. For whatever
reason, maybe maybe the the

46
00:02:33.816 --> 00:02:37.098
person in bankruptcy didn't
follow the the rules, right?

47
00:02:37.157 --> 00:02:40.674
Maybe they were hiding money on
the side, they weren't being

48
00:02:40.732 --> 00:02:43.722
honest they weren't being
straightforward. Or maybe

49
00:02:43.780 --> 00:02:47.414
they're not actually bankrupt.
Yeah. And they were just trying

50
00:02:47.473 --> 00:02:51.224
to, you know, trying to cut you
know, cut their creditors out of

51
00:02:51.283 --> 00:02:54.624
all the money that they're
making. So a bankruptcy can be

52
00:02:54.683 --> 00:02:58.258
dismissed, can be dismissed. And
the problem with that is, if

53
00:02:58.317 --> 00:03:01.482
you're a underwriter, you now
have to worry about this

54
00:03:01.540 --> 00:03:04.881
particular applicant, still
owing all that money to their

55
00:03:04.940 --> 00:03:08.457
creditors, while and not being
able to, right? But not being

56
00:03:08.515 --> 00:03:12.091
able to get out of it. So they
are still high risk. You know,

57
00:03:12.150 --> 00:03:15.549
it goes back to what we were
talking about before. If your

58
00:03:15.608 --> 00:03:18.949
applicant had a recently
dismissed bankruptcy, that would

59
00:03:19.007 --> 00:03:22.348
be probably a red flag and
something that would make them

60
00:03:22.407 --> 00:03:26.100
high risk because they tried to
get out of the debt. Yeah. They

61
00:03:26.158 --> 00:03:29.675
failed, they still owe it now
they're coming to you. Now you

62
00:03:29.734 --> 00:03:33.368
have to decide if this is the
risk you know, you you'd want to

63
00:03:33.426 --> 00:03:33.720
take.