Several courts have stated that the bankruptcy laws are meant to give an honest debtor a fresh start, but not a head start. It is important to understand that the bankruptcy laws in this country are very forgiving, but these laws require the debtor to make reasonable efforts to repay creditors. The debtor is obligated to disclose all income and assets to the bankruptcy court. From these disclosures the bankruptcy trustee, creditors, and the court are able to determine what, if anything, the debtor can afford to repay.
The debtor has a great responsibility to truthfully disclose income and assets to the best of his or her ability. The federal bankruptcy laws will relieve the honest debtor from the stress of overwhelming debt. However, the dishonest debtor can face serious consequences.
One consequence of failing to disclose income or assets is that the debtor may be denied a discharge. Section 727 of the Bankruptcy Code is designed to protect the integrity of the process and permits the court to dismiss the debtor’s case for dishonest acts like lying on the bankruptcy schedules, hiding assets, failing to maintain financial records, refusing to turn over records, and refusing to cooperate with the trustee. The court may deny the dishonest or uncooperative debtor a discharge under Section 727 and the debtor will remain liable for all debts. To make matters worse, any assets turned over during the case will still be administered by the bankruptcy trustee and the debtor may lose non-exempt property to creditors.
Another more serious consequence for the dishonest debtor is the prospect of being charged with bankruptcy fraud. The Federal Bureau of Investigation ordinarily investigates allegations of bankruptcy fraud, but other federal agencies may become involved including the Internal Revenue Service Criminal Investigation’s Bankruptcy Fraud Program. Most bankruptcy fraud is first discovered by the bankruptcy trustee, and is often the result of whistle blowing from neighbors, creditors, or ex-souses. The Department of Justice Trustee Program encourages individuals to report bankruptcy fraud.
In bankruptcy, honesty is the best policy. For an individual who needs relief from overwhelming debt, bankruptcy is a tremendous tool that gives real results. The promise of bankruptcy is a fresh start, but not a head start. Debtors who are dishonest during the bankruptcy process can lose the benefits of a bankruptcy discharge, and may be criminally charged with one or more federal crimes. If you need help with your debt problem, speak honestly and frankly with an experienced attorney and learn how the powerful federal bankruptcy laws can help you.
Thursday, August 19, 2010
Monday, August 16, 2010
Bankruptcy Can Help Build a Better Future
Pop quiz: What do Walt Disney, Mark Twain and Larry King have in common?
They each filed a personal bankruptcy and went on to have extraordinary success in life.
Bankruptcy is not a professional or financial death sentence. Just ask Donald Trump who has filed multiple Chapter 11 reorganization bankruptcies for his casinos. Bankruptcy is a financial tool that uses the federal law to protect the honest, but unfortunate debtor. Bankruptcy allows the debtor the opportunity to restructure finances and formulate a plan to repay or discharge debt. Bankruptcy provides the debtor a fresh start to a new financial future – one free of the pressures from debt collectors.
Here’s another question: What honor did Kim Basinger and Burt Reynolds receive after filing personal bankruptcy?
Each was nominated for an Academy Award in 1997. Basinger won an Oscar for best supporting actress for L.A. Confidential, and Reynolds was nominated for best supporting actor for Boogie Nights.
Bankruptcy can help you and your family build a more solid financial foundation. Henry Ford created another automobile company after his first company filed bankruptcy. It’s safe to say that Ford Motor Company would not exist today without the help of the federal bankruptcy laws. The same can be said for General Motors, which filed for Chapter 11 bankruptcy in 2009.
How can bankruptcy help you? The bankruptcy laws can stop a foreclosure sale, a pending lawsuit, and creditor harassment. Bankruptcy can protect your family assets and retirement accounts from creditors. Bankruptcy can eliminate debt or give you time to repay loans including delinquent car and home payments. The federal bankruptcy laws helped over a million people get relief during 2009, including celebrities Stephen Baldwin, Sinbad, and Bernie Kosar.
As Abraham Lincoln (filed bankruptcy in 1833) once said, “The best thing about the future is that it comes only one day at a time.” If you are experiencing overwhelming financial difficulty, take the first step to a better future by speaking with an experienced bankruptcy attorney today.
They each filed a personal bankruptcy and went on to have extraordinary success in life.
Bankruptcy is not a professional or financial death sentence. Just ask Donald Trump who has filed multiple Chapter 11 reorganization bankruptcies for his casinos. Bankruptcy is a financial tool that uses the federal law to protect the honest, but unfortunate debtor. Bankruptcy allows the debtor the opportunity to restructure finances and formulate a plan to repay or discharge debt. Bankruptcy provides the debtor a fresh start to a new financial future – one free of the pressures from debt collectors.
Here’s another question: What honor did Kim Basinger and Burt Reynolds receive after filing personal bankruptcy?
Each was nominated for an Academy Award in 1997. Basinger won an Oscar for best supporting actress for L.A. Confidential, and Reynolds was nominated for best supporting actor for Boogie Nights.
Bankruptcy can help you and your family build a more solid financial foundation. Henry Ford created another automobile company after his first company filed bankruptcy. It’s safe to say that Ford Motor Company would not exist today without the help of the federal bankruptcy laws. The same can be said for General Motors, which filed for Chapter 11 bankruptcy in 2009.
How can bankruptcy help you? The bankruptcy laws can stop a foreclosure sale, a pending lawsuit, and creditor harassment. Bankruptcy can protect your family assets and retirement accounts from creditors. Bankruptcy can eliminate debt or give you time to repay loans including delinquent car and home payments. The federal bankruptcy laws helped over a million people get relief during 2009, including celebrities Stephen Baldwin, Sinbad, and Bernie Kosar.
As Abraham Lincoln (filed bankruptcy in 1833) once said, “The best thing about the future is that it comes only one day at a time.” If you are experiencing overwhelming financial difficulty, take the first step to a better future by speaking with an experienced bankruptcy attorney today.
Friday, August 13, 2010
The Bankruptcy Trustee is Not Your Friend
The United States Trustee Program is a component of the Department of Justice. The Trustee Program appoints and supervises local private trustees who administer Chapter 7 and 13 bankruptcy estates. One of the private trustee’s chief duties in Chapter 7 cases is to liquidate the debtor’s nonexempt assets and pay creditors with the proceeds. Similarly, in a Chapter 13 case the trustee must ensure that the debtor devotes all disposable income to debt repayment.
The trustee is not your friend, the judge, or your legal counsel. The trustee has no judicial power to make final decisions or issue orders regarding your bankruptcy case. While the private trustee is very skilled at bankruptcy law, the trustee is forbidden from giving the debtor legal advice.
On occasion a debtor will contact the trustee’s office with questions concerning the bankruptcy case. This is always a bad idea and often results in a negative outcome. Direct debtor contact is uncommon, so the trustee will identify and remember a debtor that personally contacts his or her office. The case may have been a “routine” bankruptcy case for the trustee, but after the debtor contact the case is squarely on the trustee’s radar. The trustee will assume there is a problem with the bankruptcy and scrutinize the case.
During a lawsuit direct communication with represented litigants is generally prohibited. Many trustees are also licensed attorneys, but may communicate directly with you while performing the duties of bankruptcy trustee. If you call the trustee, he or she will likely speak with you. And why not? You may inadvertently disclose something that is better left unsaid. What seems like an innocent and expedient communication may turn into an issue that you are unable to predict.
The bankruptcy trustee is not your friend. If you have questions concerning your bankruptcy, discuss your issues with your attorney. Your attorney can answer questions about your case, and is experienced in dealing with the bankruptcy trustee. Let your attorney represent you and do not complicate your case by communicating directly with the bankruptcy trustee.
The trustee is not your friend, the judge, or your legal counsel. The trustee has no judicial power to make final decisions or issue orders regarding your bankruptcy case. While the private trustee is very skilled at bankruptcy law, the trustee is forbidden from giving the debtor legal advice.
On occasion a debtor will contact the trustee’s office with questions concerning the bankruptcy case. This is always a bad idea and often results in a negative outcome. Direct debtor contact is uncommon, so the trustee will identify and remember a debtor that personally contacts his or her office. The case may have been a “routine” bankruptcy case for the trustee, but after the debtor contact the case is squarely on the trustee’s radar. The trustee will assume there is a problem with the bankruptcy and scrutinize the case.
During a lawsuit direct communication with represented litigants is generally prohibited. Many trustees are also licensed attorneys, but may communicate directly with you while performing the duties of bankruptcy trustee. If you call the trustee, he or she will likely speak with you. And why not? You may inadvertently disclose something that is better left unsaid. What seems like an innocent and expedient communication may turn into an issue that you are unable to predict.
The bankruptcy trustee is not your friend. If you have questions concerning your bankruptcy, discuss your issues with your attorney. Your attorney can answer questions about your case, and is experienced in dealing with the bankruptcy trustee. Let your attorney represent you and do not complicate your case by communicating directly with the bankruptcy trustee.
Monday, August 2, 2010
Lien Avoidance in Bankruptcy
Your bankruptcy attorney has many powerful to help you keep property while eliminating debt. One tool is lien avoidance, which is available to both Chapter 7 and Chapter 13 debtors. The general rule in bankruptcy is that debts secured by a lien must be paid or the property must be surrendered to the creditor. However, under certain circumstances, a lien can be legally avoided without losing the property.
The Bankruptcy Code identifies two different types of liens that may be avoided during bankruptcy: (1) a judicial lien; and (2) a non-possessory, non-purchase money security interest in household goods or tools of the trade. Furthermore, to qualify for avoidance the debtor must be able to apply a bankruptcy exemption (a legal allowance to the debtor to protect property from creditors) to the property securing the debt.
Clear as mud, right?
Let's make it a little clearer: first, judicial liens are judgments and garnishments caused by a court order or judicial process. If your property is subject to a debt imposed by a court order, it may be possible to avoid the lien during bankruptcy. Statutory liens, like tax liens, are not avoidable in Chapter 7, but may be avoidable in Chapter 13.
Second, a non-possessory, non-purchase money security interest is simply a lien that you gave a creditor against property that you owned prior to incurring the debt and did not acquire using money from the creditor. A typical example is a personal bank loan secured by your television and/or other household items.
Finally, to qualify for lien avoidance, the debtor must be able to apply a legal exemption to the property. For instance, if you own a television worth $500 used as collateral for a $1,000 personal loan, you may be able to apply a legal exemption to protect the television and avoid the lien against it. Once the lien is avoided, the status of the debt changes from secured to unsecured and is likely discharged at the end of the bankruptcy case.
Additionally, if the legal exemption does not protect all of the value of the property, the lien may be reduced to the extent the lien secures the property. Using the above example, if the television is worth $500, but the debtor is only able to exempt $250 of its value, the creditor's lien would be reduced in value from $1,000 to $250 (the amount of non-exempt equity in the television).
To avoid a lien the debtor's attorney files a motion with the bankruptcy court alleging that the creditor's lien is impairing the debtor's exemption. Typically these motions are uncontested and are granted without hearing.
It is important that you provide your bankruptcy attorney with documentation for all of your loans. Your attorney can avoid certain liens during the bankruptcy that will safeguard your property after your bankruptcy discharge.
The Bankruptcy Code identifies two different types of liens that may be avoided during bankruptcy: (1) a judicial lien; and (2) a non-possessory, non-purchase money security interest in household goods or tools of the trade. Furthermore, to qualify for avoidance the debtor must be able to apply a bankruptcy exemption (a legal allowance to the debtor to protect property from creditors) to the property securing the debt.
Clear as mud, right?
Let's make it a little clearer: first, judicial liens are judgments and garnishments caused by a court order or judicial process. If your property is subject to a debt imposed by a court order, it may be possible to avoid the lien during bankruptcy. Statutory liens, like tax liens, are not avoidable in Chapter 7, but may be avoidable in Chapter 13.
Second, a non-possessory, non-purchase money security interest is simply a lien that you gave a creditor against property that you owned prior to incurring the debt and did not acquire using money from the creditor. A typical example is a personal bank loan secured by your television and/or other household items.
Finally, to qualify for lien avoidance, the debtor must be able to apply a legal exemption to the property. For instance, if you own a television worth $500 used as collateral for a $1,000 personal loan, you may be able to apply a legal exemption to protect the television and avoid the lien against it. Once the lien is avoided, the status of the debt changes from secured to unsecured and is likely discharged at the end of the bankruptcy case.
Additionally, if the legal exemption does not protect all of the value of the property, the lien may be reduced to the extent the lien secures the property. Using the above example, if the television is worth $500, but the debtor is only able to exempt $250 of its value, the creditor's lien would be reduced in value from $1,000 to $250 (the amount of non-exempt equity in the television).
To avoid a lien the debtor's attorney files a motion with the bankruptcy court alleging that the creditor's lien is impairing the debtor's exemption. Typically these motions are uncontested and are granted without hearing.
It is important that you provide your bankruptcy attorney with documentation for all of your loans. Your attorney can avoid certain liens during the bankruptcy that will safeguard your property after your bankruptcy discharge.
Tuesday, July 27, 2010
Five Common Bankruptcy Mistakes to Avoid
The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate debtor. Bankruptcy balances the interests of the debtor to obtain his fresh start and the interests of the creditor to see that the debtor pays whatever he can afford. In some circumstances the debtor can complicate his bankruptcy case before he files.
Mistake #1: Paying an Insider Creditor
The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment. Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing. For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.
Mistake #2: Incurring Debt After Deciding to File
Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud. It could also be a criminal act.
Mistake #3: Transferring Property
Some people fear that they will lose property when they file bankruptcy. Some will give away or sell property to avoid losing it. In most cases your bankruptcy attorney can protect your property and you will not lose anything. However, once you have transferred an item it is no longer eligible for legal protections. For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy. If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.
Mistake #4: Cashing out Retirement
Most retirement accounts are entirely protected during bankruptcy. Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Sometimes the money is spent to pay off loans which can create preference issues. In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car).
Mistake #5: Failing to Be Honest
This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).
If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney. Your bankruptcy attorney can advise you on the best actions to take before bankruptcy and how to avoid common mistakes. Use the federal bankruptcy laws and protect your property.
Mistake #1: Paying an Insider Creditor
The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment. Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing. For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.
Mistake #2: Incurring Debt After Deciding to File
Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud. It could also be a criminal act.
Mistake #3: Transferring Property
Some people fear that they will lose property when they file bankruptcy. Some will give away or sell property to avoid losing it. In most cases your bankruptcy attorney can protect your property and you will not lose anything. However, once you have transferred an item it is no longer eligible for legal protections. For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy. If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.
Mistake #4: Cashing out Retirement
Most retirement accounts are entirely protected during bankruptcy. Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Sometimes the money is spent to pay off loans which can create preference issues. In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car).
Mistake #5: Failing to Be Honest
This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).
If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney. Your bankruptcy attorney can advise you on the best actions to take before bankruptcy and how to avoid common mistakes. Use the federal bankruptcy laws and protect your property.
Tuesday, July 20, 2010
Can Bankruptcy Stop a Rental Eviction?
A person’s financial situation is often desperate by the time a bankruptcy is filed. In some circumstances the rent is past due and the debtor is facing eviction. Fortunately, the bankruptcy laws can help many debtors stay in their homes, at least temporarily.
Generally, when you file a bankruptcy petition all collection actions are automatically stayed. The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties. If you are behind on rent payments, the bankruptcy automatic stays the commencement or continuation of an eviction action. The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date. Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you.
The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date. If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents. If you are not behind on rents at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing. However, you must account for any rent deposit on your bankruptcy schedules.
In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property. The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond. The court must hold a hearing within 10 days. If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue.
If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex. You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount. This filing stays the eviction process for thirty days. If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period.
Bankruptcy can stop an eviction and give you time to move or make arrangements to stay. If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.
Generally, when you file a bankruptcy petition all collection actions are automatically stayed. The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties. If you are behind on rent payments, the bankruptcy automatic stays the commencement or continuation of an eviction action. The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date. Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you.
The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date. If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents. If you are not behind on rents at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing. However, you must account for any rent deposit on your bankruptcy schedules.
In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property. The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond. The court must hold a hearing within 10 days. If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue.
If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex. You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount. This filing stays the eviction process for thirty days. If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period.
Bankruptcy can stop an eviction and give you time to move or make arrangements to stay. If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.
Thursday, July 8, 2010
Medical Treatment And Bankruptcy
It is no surprise that illness is a chief contributor to personal bankruptcy. In fact, a 2009 study released by Harvard researchers claims that 62% of all personal bankruptcies during 2007 were caused by health problems. Many individuals struggling with medical bills need relief, but worry about how a bankruptcy will affect their ability to receive medical care in the future.
Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay. This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition. In broad general terms, if you have an emergency medical condition, a hospital ER must treat you.
If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor. It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill. If you have insurance or other form of guaranteed payment, the hospital will likely treat you.
Individual physicians are more likely to deny services if you have discharged their bill. Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed. While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy. Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment).
If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney. In most cases there is no interruption in medical care or treatment. Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.
Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay. This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition. In broad general terms, if you have an emergency medical condition, a hospital ER must treat you.
If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor. It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill. If you have insurance or other form of guaranteed payment, the hospital will likely treat you.
Individual physicians are more likely to deny services if you have discharged their bill. Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed. While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy. Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment).
If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney. In most cases there is no interruption in medical care or treatment. Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.
Tuesday, June 29, 2010
Buying A Car During Bankruptcy
There are a surprising number of options for a debtor to retain possession of a vehicle during bankruptcy. Choosing the best option depends on several factors including your ability to pay and the condition of your vehicle. In some cases the best financial option is to surrender your vehicle back to the bank and purchase a different one.
Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan. Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors. The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble.
Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur. All lenders require a loan application and the criteria for approval can vary significantly. Some lenders will not approve a loan if you have had a prior repossession. Other lenders want a substantial down payment. New auto loans often want the bankruptcy discharged before approving the loan. In all cases your vehicle choice will be restricted to a newer vehicle with low miles.
During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case. The loan is not a part of the case and is not affected by the bankruptcy discharge. For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court. In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay.
If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney. There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle. Call today and get the information you need to drive your financial future.
Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan. Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors. The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble.
Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur. All lenders require a loan application and the criteria for approval can vary significantly. Some lenders will not approve a loan if you have had a prior repossession. Other lenders want a substantial down payment. New auto loans often want the bankruptcy discharged before approving the loan. In all cases your vehicle choice will be restricted to a newer vehicle with low miles.
During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case. The loan is not a part of the case and is not affected by the bankruptcy discharge. For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court. In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay.
If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney. There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle. Call today and get the information you need to drive your financial future.
Thursday, June 17, 2010
Are People In Need Avoiding Bankruptcy?
Although bankruptcy filings are climbing back to the all-time high of 2 million reached in 2005, there is a growing concern that many Americans in need of bankruptcy protection are not filing. A recent article in USA Today quotes Katherine Porter, associate professor of law at the University of Iowa who says, “[T]he filing rate doesn’t even begin to count the depth of financial pain.”
Are you hurting financially? Bankruptcy can help ease that pain.
Bankruptcy is a federal legal process for declaring an inability to pay your creditors. When you file bankruptcy you get immediate relief. The bankruptcy court imposes an “automatic stay” prohibiting creditors from taking collection action against you while the bankruptcy case is pending. The automatic stay is very powerful and stops lawsuits, wage garnishments, and even foreclosures. Its purpose is to give the debtor some breathing room and an opportunity to decide how to resolve an overwhelming debt problem.
There are typically two different types of bankruptcy cases: chapter 7 and chapter 13. In chapter 7 you eliminate debt without payment while chapter 13 is a repayment plan over three to five years. At the end of a bankruptcy case the court enters an order discharging eligible debts and permanently prohibits creditors from taking collection action against you.
In some cases certain debts are not discharged. The most common types are family support obligations, student loans, and taxes. However, bankruptcy offers significant relief by discharging other debts and freeing up money to pay the non-discharged debt. Chapter 13 can also be helpful by allowing payment of the non-dischargeable debt under the supervision of the bankruptcy court and without fear of lawsuits, wage garnishments, or other nasty creditor action.
The bankruptcy process is very efficient. For most chapter 7 debtors the case will last a few months and requires one meeting with the bankruptcy trustee. The cost of bankruptcy is very reasonable compared to the relief that is given.
If you are hurting financially, speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. There are many options available in the law and can give you real relief from overwhelming debt.
Are you hurting financially? Bankruptcy can help ease that pain.
Bankruptcy is a federal legal process for declaring an inability to pay your creditors. When you file bankruptcy you get immediate relief. The bankruptcy court imposes an “automatic stay” prohibiting creditors from taking collection action against you while the bankruptcy case is pending. The automatic stay is very powerful and stops lawsuits, wage garnishments, and even foreclosures. Its purpose is to give the debtor some breathing room and an opportunity to decide how to resolve an overwhelming debt problem.
There are typically two different types of bankruptcy cases: chapter 7 and chapter 13. In chapter 7 you eliminate debt without payment while chapter 13 is a repayment plan over three to five years. At the end of a bankruptcy case the court enters an order discharging eligible debts and permanently prohibits creditors from taking collection action against you.
In some cases certain debts are not discharged. The most common types are family support obligations, student loans, and taxes. However, bankruptcy offers significant relief by discharging other debts and freeing up money to pay the non-discharged debt. Chapter 13 can also be helpful by allowing payment of the non-dischargeable debt under the supervision of the bankruptcy court and without fear of lawsuits, wage garnishments, or other nasty creditor action.
The bankruptcy process is very efficient. For most chapter 7 debtors the case will last a few months and requires one meeting with the bankruptcy trustee. The cost of bankruptcy is very reasonable compared to the relief that is given.
If you are hurting financially, speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can help you. There are many options available in the law and can give you real relief from overwhelming debt.
Monday, June 14, 2010
Keeping A Credit Card During Bankruptcy
A credit card is a safe and convenient way to pay for life’s necessities. In some cases a credit card is required to purchase goods or services. Debit cards are often a poor substitute for a credit card as bank holds can tie up your account for days.
If you want to keep a credit card during your bankruptcy, there are a few things to know. First, the Bankruptcy Code requires that you list all of your creditors and debts owed on the date of the bankruptcy filing. Consequently, if a credit card has a zero balance on the date that you file bankruptcy, it does not need to be listed and the credit card company does not receive notice.
Second, the use of credit during a chapter 13 bankruptcy is prohibited without prior authorization from the trustee and bankruptcy court. Usually credit approval is contingent upon a written agreement or statement from the credit card company. Chapter 7 debtors do not have this restriction.
Third, a payment on a credit card within 90 days before your bankruptcy filing may be considered a preference payment. The bankruptcy trustee may seek a court order compelling the credit card company to turn over any pre-filing payments.
Fourth, credit card companies conduct regular checks of their cardholders’ credit and your bankruptcy filing may result in the card issuer closing your account, reducing your credit line, or increasing your interest rate. These actions may also occur if you choose to reaffirm your debt with the credit card company. After reaffirming the debt the card may be cancelled and you are stuck with a non-discharged credit card balance.
Fifth, intentional failure to list a credit card with a balance can result in dismissal of your bankruptcy case. The bankruptcy court expects you to be entirely truthful concerning who you owe, regardless of your intention to pay the debt.
Sixth, consider obtaining credit after your bankruptcy discharge. Many debtors are offered unsecured credit cards shortly after their bankruptcy discharge. Many creditors consider a recently discharged debtor a good credit risk because the debtor is unable to receive another bankruptcy discharge for several years, and likely has a good debt-to-income ratio. Many post-discharge credit card offers carry high interest rates and fees, so choose wisely.
Secured credit cards are another credit option after bankruptcy. A secured credit card requires a security deposit placed with the credit card company who then issues a credit line secured by the deposit. Many banks and credit unions offer their customers secured credit cards at reasonable interest rates.
If you are interested in keeping a credit card during bankruptcy, consult with your bankruptcy attorney. Your attorney can discuss your options and help you decide on the best way to maintain a credit card account during and after your bankruptcy.
If you want to keep a credit card during your bankruptcy, there are a few things to know. First, the Bankruptcy Code requires that you list all of your creditors and debts owed on the date of the bankruptcy filing. Consequently, if a credit card has a zero balance on the date that you file bankruptcy, it does not need to be listed and the credit card company does not receive notice.
Second, the use of credit during a chapter 13 bankruptcy is prohibited without prior authorization from the trustee and bankruptcy court. Usually credit approval is contingent upon a written agreement or statement from the credit card company. Chapter 7 debtors do not have this restriction.
Third, a payment on a credit card within 90 days before your bankruptcy filing may be considered a preference payment. The bankruptcy trustee may seek a court order compelling the credit card company to turn over any pre-filing payments.
Fourth, credit card companies conduct regular checks of their cardholders’ credit and your bankruptcy filing may result in the card issuer closing your account, reducing your credit line, or increasing your interest rate. These actions may also occur if you choose to reaffirm your debt with the credit card company. After reaffirming the debt the card may be cancelled and you are stuck with a non-discharged credit card balance.
Fifth, intentional failure to list a credit card with a balance can result in dismissal of your bankruptcy case. The bankruptcy court expects you to be entirely truthful concerning who you owe, regardless of your intention to pay the debt.
Sixth, consider obtaining credit after your bankruptcy discharge. Many debtors are offered unsecured credit cards shortly after their bankruptcy discharge. Many creditors consider a recently discharged debtor a good credit risk because the debtor is unable to receive another bankruptcy discharge for several years, and likely has a good debt-to-income ratio. Many post-discharge credit card offers carry high interest rates and fees, so choose wisely.
Secured credit cards are another credit option after bankruptcy. A secured credit card requires a security deposit placed with the credit card company who then issues a credit line secured by the deposit. Many banks and credit unions offer their customers secured credit cards at reasonable interest rates.
If you are interested in keeping a credit card during bankruptcy, consult with your bankruptcy attorney. Your attorney can discuss your options and help you decide on the best way to maintain a credit card account during and after your bankruptcy.
Tuesday, June 8, 2010
Making Your First Chapter 13 Payment
In a Chapter 13 bankruptcy case the debtor proposes a plan to pay back creditors. That plan is composed of monthly payments to satisfy all or part of the creditors' claims over three to five years. Monthly payments are made to the Chapter 13 Trustee, who then pays your creditors.
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
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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