When a debtor dies during a pending bankruptcy case, the case may or may not be dismissed depending on a few factors. The first factor is the bankruptcy chapter that controls the case. For a Chapter 7 case, the death of the debtor does not terminate the bankruptcy. For an individual bankruptcy case filed under Chapters 11, 12, or 13, the death of the debtor will affect the bankruptcy case, but does not necessarily terminate it.
During a Chapter 7 bankruptcy the court will continue the bankruptcy proceedings despite the death of the debtor. The reasoning is that all of the debtor’s assets, exemptions, and debts are determined at the time the case was filed, and the trustee is now in charge of liquidating any non-exempt assets. The participation of a debtor is not necessary. Bankruptcy Rule 1016 directs that “the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.”
Death of the debtor during a Chapter 11, 12 or 13 case poses different complications. Bankruptcy Rule 1016 states that “the case may be dismissed; or if further administration is possible and in the best interest of the parties, the case may proceed and be concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.” While dismissal of the bankruptcy is common in Chapter 11, 12, or 13 cases, the trustee may seek to continue the case per Rule 1016, the case could be converted to a Chapter 7, or the executor or administrator of the decedent’s estate may petition the bankruptcy court for a hardship discharge.
Since the bankruptcy discharge will only prohibit collection against the debtor personally, the question becomes, how will the debtor’s discharge affect the heirs to the estate? In most cases, an unsecured debt that is not a joint obligation will not pass to the decedent’s heirs. However, a creditor could obtain a judgment against the deceased debtor’s estate and attempt to collect from any available property. Consequently, the discharge is important to provide peace of mind and avoid any potential debt litigation or collection action.
The federal bankruptcy laws are very broad in scope and provide for benefits even under unusual circumstances, such as the death of a bankruptcy debtor. If you are struggling with debt you cannot afford to pay, speak with an experienced attorney and discover how the bankruptcy laws can help.
Showing posts with label bankruptcy cases. Show all posts
Showing posts with label bankruptcy cases. Show all posts
Monday, September 27, 2010
Wednesday, September 1, 2010
What If You Forget a Creditor?
Usually by the time a person visits a bankruptcy attorney he has been struggling with overwhelming debt for months if not years. Often the person’s creditors have not been paid for a considerable time. It is not surprising that occasionally a person will forget to list a creditor in the bankruptcy paperwork.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
Monday, August 30, 2010
Don't Be On Your Own During Bankruptcy
A person who files a bankruptcy case without an attorney is called a pro se debtor. “Pro se” is Latin meaning “for oneself;” in other words, you are on your own. Being on your own during your bankruptcy may save a few upfront dollars, but can cost you plenty in the long run. There are many negative consequences that are often unexpected and sometimes disastrous.
The savings pro se debtors receive is minimal and the risk is great. Attorney fees during bankruptcy are supervised by the United States Bankruptcy Court. The federal bankruptcy law allows an attorney to collect reasonable compensation for services rendered during a bankruptcy case. Consequently, bankruptcy attorneys charge similar fees in order to stay competitive, and attorneys must disclose their fee to the bankruptcy court.
When you are represented by an experienced bankruptcy attorney you receive several benefits. Your attorney brings years of experience and knowledge in areas including the Federal Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the bankruptcy court’s local rules, federal bankruptcy case law, and state and federal exemption and collection laws. Your attorney is also familiar with the bankruptcy judge, the bankruptcy trustee, and local creditor practices.
When you are represented, you will have counsel at the Meeting of Creditors with the bankruptcy trustee. The trustee assumes that a pro se debtor has made errors in the bankruptcy, and will grill the pro se debtor and scrutinize the bankruptcy case. When you are represented, your attorney helps you answer any trustee questions, and can file motions and responses via the court’s electronic filing system. When you are on your own you must mail or personally file documents with the court and must appear before the bankruptcy judge to reaffirm a debt.
The federal law guarantees open access to the courts and permits self representation in lawsuits, including bankruptcy proceedings. However, the benefit of having an experienced bankruptcy attorney at your side far outweighs any savings proceeding on your own. Consult with an experienced attorney and discover how the federal bankruptcy laws can help you.
The savings pro se debtors receive is minimal and the risk is great. Attorney fees during bankruptcy are supervised by the United States Bankruptcy Court. The federal bankruptcy law allows an attorney to collect reasonable compensation for services rendered during a bankruptcy case. Consequently, bankruptcy attorneys charge similar fees in order to stay competitive, and attorneys must disclose their fee to the bankruptcy court.
When you are represented by an experienced bankruptcy attorney you receive several benefits. Your attorney brings years of experience and knowledge in areas including the Federal Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the bankruptcy court’s local rules, federal bankruptcy case law, and state and federal exemption and collection laws. Your attorney is also familiar with the bankruptcy judge, the bankruptcy trustee, and local creditor practices.
When you are represented, you will have counsel at the Meeting of Creditors with the bankruptcy trustee. The trustee assumes that a pro se debtor has made errors in the bankruptcy, and will grill the pro se debtor and scrutinize the bankruptcy case. When you are represented, your attorney helps you answer any trustee questions, and can file motions and responses via the court’s electronic filing system. When you are on your own you must mail or personally file documents with the court and must appear before the bankruptcy judge to reaffirm a debt.
The federal law guarantees open access to the courts and permits self representation in lawsuits, including bankruptcy proceedings. However, the benefit of having an experienced bankruptcy attorney at your side far outweighs any savings proceeding on your own. Consult with an experienced attorney and discover how the federal bankruptcy laws can help you.
Tuesday, June 1, 2010
Who Will Know About My Bankruptcy?
Filing bankruptcy is a very personal process. Many clients worry that their friends and neighbors will learn about their bankruptcy. A common question is, "Who will know about my bankruptcy?"
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
2. The bankruptcy trustee;
3. Co-signors and co-debtors; and
4. You and your attorney.
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
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