| When you file for Chapter 7 bankruptcy you are | | | | the bankruptcy filing. The law does not give that |
| required to list all debts and property you own. In | | | | power to the person who filed for bankruptcy - |
| addition, you are required to list all executory | | | | only the trustee. |
| contracts. But what is an executory contract? | | | | What happens if the trustee doesn't do anything |
| An executory contract is nothing more than an | | | | with the cell phone contract? Section 365(d)(1) of |
| agreement between two parties to do something | | | | the U.S. Bankruptcy Code says that if the trustee |
| in the future. For example, your apartment lease | | | | does nothing within 60 days after the date of the |
| is an executory contract because it obligates you | | | | filing of the case then the contract is to be |
| to continue to pay rent to your landlord for a | | | | considered as rejected. |
| period of time into the future. You have to pay | | | | What happens to the contract if it's rejected? |
| later, not now. And the landlord accepts that | | | | Essentially nothing. Your cell phone carrier will |
| payment stream from you down the road. | | | | continue to keep your service active for so long |
| But apartment leases are not the only things that | | | | as you continue making payments. |
| fall under this category. Other types of | | | | Early termination of a cell phone contract after |
| agreements include car leases and even cell phone | | | | rejection. Rejecting the contract means you are |
| contracts. Remember, the cell phone contract | | | | no longer personally liable for any fees and |
| requires you to keep paying for service each | | | | charges (except usage and monthly fees while |
| month for a set period of time into the future. | | | | you're using the phone). So if you file for Chapter |
| When you file your case, that contract becomes | | | | 7 bankruptcy, use the phone for 6 months |
| the property of the bankruptcy estate. The | | | | post-bankruptcy and then terminate your |
| trustee, therefore, has control over whether to | | | | contract, the company can't hold you liable for |
| keep the contract in force or reject it. When an | | | | those early termination fees. |
| executory contract is rejected, it becomes null | | | | One thing you need to remember to make this all |
| and void - without any penalties or early | | | | work is... you must list the contract on your |
| termination fees. | | | | bankruptcy schedules, as well as the name and |
| Who has the power to deal with the unexpired | | | | address of the cell phone provider. To be safe |
| cell phone contact? Section 365(a) of the U.S. | | | | and ensure that the provider gets proper notice, |
| Bankruptcy Code states that the trustee may | | | | you may want to list every single address you |
| accept or reject the executory contract but only | | | | can find for the cell phone company on your |
| if all payments are up to date as of the time of | | | | schedules as well. |