00:00.000 --> 00:01.980 Johny Fernandez: First question is what is a bankruptcy 00:01.980 --> 00:05.100 dismissal versus a bankruptcy discharge? 00:06.350 --> 00:08.030 Sean Murray: Okay, getting technical here. 00:08.030 --> 00:09.440 Johny Fernandez: Yeah. A little technical here. 00:09.450 --> 00:12.029 Sean Murray: Asking the tough questions now, what are the 00:12.087 --> 00:15.721 bankruptcy dismissal versus a bankruptcy discharge, I will say 00:15.780 --> 00:18.711 from my my non lawyer perspective, the reason that 00:18.769 --> 00:22.286 it's important to know these things, whether you're a broker 00:22.345 --> 00:25.803 or an underwriter is because it could have an impact on the 00:25.861 --> 00:29.261 financial standing of the applicant, or of the borrower or 00:29.320 --> 00:32.895 the customer, whatever they are at that point in time. If the 00:32.954 --> 00:36.236 the bank all right, so if you were broke, you file for a 00:36.295 --> 00:39.870 bankruptcy, right. And then what essentially is happening is, 00:39.929 --> 00:43.621 you're trying to negotiate with all of your creditors, for them 00:43.680 --> 00:47.373 to take less than what they're owed, that's what's happening in 00:47.431 --> 00:50.831 bankruptcy, you don't have enough to pay everybody, right. 00:50.890 --> 00:54.700 And so you're going to a formal, organized legal process for them 00:54.758 --> 00:58.392 to all get something or they're all kind of, you know, they're 00:58.451 --> 01:02.144 all kind of accepting together, what they're each going to get, 01:02.202 --> 01:05.367 and a lot of it is based upon what type of credit they 01:05.426 --> 01:08.708 extended to you. So like the the people who lent against 01:08.767 --> 01:12.049 collateral will be first and like the unsecured lenders, 01:12.108 --> 01:15.742 like, you know, would be would be our last in line. But if the 01:15.801 --> 01:19.435 bankruptcy goes as planned, and you are truly, you know, truly 01:19.493 --> 01:23.010 so, you know, broke, right, and you you follow all the rules 01:23.069 --> 01:26.761 that are required of you during the bankruptcy process, you can 01:26.820 --> 01:30.454 get the bankruptcy discharged, essentially, that would be a an 01:30.513 --> 01:34.088 agreement an actual agreement for those lenders to take those 01:34.147 --> 01:37.664 creditors to take less money, right. And so, anything beyond 01:37.722 --> 01:41.122 that, you're you're free and clear, you don't owe anything 01:41.181 --> 01:44.873 more to those creditors beyond what was agreed, agreed upon, in 01:44.932 --> 01:48.449 that bankruptcy process. If you're a lender, that could be a 01:48.507 --> 01:52.024 good thing, because though that applicant no longer owes any 01:52.083 --> 01:55.658 money to those creditors. On the flip side, it could indicate 01:55.717 --> 01:59.292 this is the type of person who leverages themselves too much, 01:59.351 --> 02:02.633 and is likely to get into trouble and declare bankruptcy 02:02.692 --> 02:06.209 again, although you have to wait, you have to wait a certain 02:06.267 --> 02:09.726 period of time before you can declare bankruptcy again, you 02:09.784 --> 02:13.360 can't just constantly you can't just declare bankruptcy every 02:13.418 --> 02:16.818 year. Yeah. But I think the question was, you know, what's 02:16.876 --> 02:20.159 the difference? So the other the other side of it is the 02:20.217 --> 02:23.500 bankruptcy dismissal. A bankruptcy dismissal if you're a 02:23.558 --> 02:26.841 broker, or an underwriter could actually be worse than a 02:26.899 --> 02:30.534 discharge, because it means that the bankruptcy process itself 02:30.592 --> 02:33.757 failed? Yeah. For whatever reason, maybe maybe the the 02:33.816 --> 02:37.098 person in bankruptcy didn't follow the the rules, right? 02:37.157 --> 02:40.674 Maybe they were hiding money on the side, they weren't being 02:40.732 --> 02:43.722 honest they weren't being straightforward. Or maybe 02:43.780 --> 02:47.414 they're not actually bankrupt. Yeah. And they were just trying 02:47.473 --> 02:51.224 to, you know, trying to cut you know, cut their creditors out of 02:51.283 --> 02:54.624 all the money that they're making. So a bankruptcy can be 02:54.683 --> 02:58.258 dismissed, can be dismissed. And the problem with that is, if 02:58.317 --> 03:01.482 you're a underwriter, you now have to worry about this 03:01.540 --> 03:04.881 particular applicant, still owing all that money to their 03:04.940 --> 03:08.457 creditors, while and not being able to, right? But not being 03:08.515 --> 03:12.091 able to get out of it. So they are still high risk. You know, 03:12.150 --> 03:15.549 it goes back to what we were talking about before. If your 03:15.608 --> 03:18.949 applicant had a recently dismissed bankruptcy, that would 03:19.007 --> 03:22.348 be probably a red flag and something that would make them 03:22.407 --> 03:26.100 high risk because they tried to get out of the debt. Yeah. They 03:26.158 --> 03:29.675 failed, they still owe it now they're coming to you. Now you 03:29.734 --> 03:33.368 have to decide if this is the risk you know, you you'd want to 03:33.426 --> 03:33.720 take.