When To File An Adversary Proceeding: Chapter 13
In a Chapter 13 bankruptcy, when you can file an adversary proceeding also depends on the bankruptcy court rules where you live. Regardless of when you file, your student loan nightmare will not be complete if you win the adversary proceeding. That’s because you have to wait until you’ve completed the necessary Chapter 13 plan payments and earned your discharge order for your other debts before your student loans will be discharged.
If you are allowed to file the AP early in your case, you might get the proceeding over with sooner and obtain a decision on your student loans. The table below compares Chapter 7 and Chapter 13 bankruptcy.
|Comparing Bankruptcy Options|
|Varies by state|
Bankruptcy Exemptions In Nova Scotia
- No limit on clothes for you and your family
- No limit on fuel and food for your family
- Up to $5,000 in household furniture and appliances
- One motor vehicle up to $6,500
- All medical and health aids for you and your family
- Farm equipment, fishing nets, or other tools of your trade up to $7,500
- No limit on grain and seeds or livestock for domestic use by you and your family
For more information on bankruptcy exemptions in Nova Scotia, contact a local a BDO trustee near you.
Can I Keep My Home After Filing Bankruptcy
By FindLaw Staff | Reviewed by Maddy Teka, Esq. | Last updated May 19, 2021
The answer, like so many others in law, is that “it depends.” Most people that declare bankruptcy can keep their houses throughout the process, but some are not.
Keeping your home is often the biggest worry about filing for bankruptcy â and which Chapter to file for. This article will give you some useful information so you can know what to expect.
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How Do I Know How Much Equity I Have
You can calculate your homes equity by taking the value of your house, and subtracting the amount you owe on your mortgage and the currently owed property taxes from this value.
House value amount owed on mortgage currently owed property tax = Equity
In most personal bankruptcies, the home must be sold so that this equity value can go to your creditors.
Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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Let An Attorney Help You Keep Your Home After A Bankruptcy
The decision to declare bankruptcy often comes at an overwhelming time of your life. If you’re thinking about declaring bankruptcy, the chances are that you’re worried about how you can manage all your finances now and in the future.
If you’re caught in a financial tailspin a professional can help you identify the right steps to take, even if you’re facing the prospect of losing your home.
Contact a localÂ;bankruptcy attorney, who canÂ;help develop a personal plan to get your balance sheet back out of the red.
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Can You Continue Making House Payments After Chapter 7 Bankruptcy
It’s also important to be sure you can afford to continue paying the mortgage payment after a Chapter 7 bankruptcy. Losing the house after your case might put you in a worse financial position. Why? If the lender couldn’t sell the home for the amount you owe, you’d be stuck with a deficiency balance depending on the laws of the state you live in.
Worse yet? You’d have to wait eight years to file a second Chapter 7 bankruptcy, leaving the lender plenty of time to collect a deficiency balance using collection methods such as garnishing your wages or levying on a bank account.
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In Indiana What Property Can I Keep
In a chapter 7 case, you can keep all property which the law says is exempt from the claims of creditors. Indiana exemptions provides a list of the exemptions available for Indiana. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didnt file bankruptcy.
Why Do Some People Lose Their Home When They File Bankruptcy
There are a few cases in which a person might lose their home when they file bankruptcy. For example, filing bankruptcy does not discharge the secured lien a mortgage creates on your homes title. Therefore, if you cannot afford to pay your mortgage payments, you may need to surrender your home in bankruptcy.;
However, surrendering your home is not always a negative thing. If you cannot afford your home, surrendering your home through a bankruptcy case avoids a deficiency judgment.;
The money owed if a foreclosure sale does not pay the mortgage in full is called a deficiency. A deficiency judgment can follow you even after a foreclosure sale if you didnt file bankruptcy. In other words, you could owe the mortgage company more money even though it took your home. Filing bankruptcy gets rid of or avoids deficiency judgments.
Another example of losing a home in bankruptcy would be in cases in which the bankruptcy exemptions do not cover all equity in the home. A Chapter 7 bankruptcy trustee could sell the house and use the equity not protected by exemptions to pay unsecured creditors. The Chapter 7 trustee pays the mortgage debt in full, followed by payment of the homestead exemption to the debtors, and the remaining proceeds pay unsecured creditors.;
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The Totality Of Circumstances Test
A few states use the “totality of the circumstances” test. It might seem that this is an easier standard to meet because it doesn’t consider whether youve made a good-faith effort to repay your loans, such as consistent attempts to obtain employment, maximize income, and minimize expenses. However, the totality of the circumstances test also includes an any other relevant facts and circumstances component that could be broadly interpreted.
Under either standard, the bar to clear is high, especially for federal student loans, for which the government specifically states that the burden of proof is on the debtor to prove undue hardship.
Get Help To Consider Debt Relief Options And If You Can Keep Your House In Bankruptcy
Between financial trouble and;, there are;debt relief options that most Canadians have never heard of. Finding ways to;keep your house, if at all possible, is important. Its your home and having to move makes a difficult situation that much harder. Our credit counsellors specialize in helping you explore all of the options to figure out what will work best for you to get you back on track as quickly as possible, while not jeopardizing your long-term goals entirely.
If youd like to explore your;debt relief;options, get some guidance and information, and see whats available to you, get in touch with us today by toll free phone at;,;, or;anonymous online chat. Our help is free, completely confidential, and judgement free. Were here for you and ready to help.
Fortunately, for many people who feel this way, there are other less severe options. Speak with one of credit counsellors to learn all your options. Theyll be happy to carefully review your whole financial situation with you and answer any questions you may have. Speaking with our certified counsellors is always free, confidential and without any obligation. Were here to help.
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Can I Erase My Student Loans By Filing Bankruptcy
Generally, student loans are not discharged in bankruptcy. In 11 U.S.C. sec. 523 there are two exceptions to this general rule:
Student loans more than 7 years old used to be dischargeable under certain circumstances, but this provision was removed by an appropriations bill passed in October of 1998.
Whether an exception applies depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.
Pros And Cons Of A Newfoundland Bankruptcy
The process of bankruptcy entails both its positive and negative outcomes. For a person who jumps into the conclusion in filing for bankruptcy, it is ideal that you acquire a broad understanding of its impact.
Filling for bankruptcy somehow will give you liberty against creditors and lenders. During this process, they can no longer collect payments for your debts, which means a relief on your end. Although you can lose some of your properties, you will still a few of it, which is enough to restore and back up your finances. Moreover, bankruptcy enables you to get a clean start as it eliminates all your unsecured debts.
Once you file for bankruptcy, know that it can scar your credit report fro 7 years or more. At this period, you are sure to struggle in getting a loan or worst if you want to get a new credit card. There might be some lenders that can extend credit but, rest assured that your interest will be higher. Furthermore, it might affect your credibility when seeking employment; some employers or companies will require looking at your credit history upon application.
Additionally, bankruptcy may seize your unprotected asset during the process. Any property that is not secured will be surrendered during the process. You can only get a few of it when your bankruptcy is discharged.
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So What Really Constitutes Undue Hardship
Those cases where borrowers have succeeded in having their student loans discharged are insightful. Specifically, a court might agree that repaying your loans would be an undue hardship if you cant maintain a minimal standard of living for yourself and any dependents, if the hardship will continue throughout the loans repayment period, and if youve sincerely tried to repay your loans before filing bankruptcy.
What does a court consider a minimal standard of living? Again, case law and some common sense can be a guide. It might mean:
- Your income has been below the federal poverty level for several years and doesnt show signs of improving.
- Youre on public assistance or dependent on a family member.
- You have a debilitating mental or physical illness or permanent injury.
- You have a child with a serious illness who requires round-the-clock care.
- Divorce reduced your family income with no hope of it returning to its previous level.
- Disability checks are your only source of income.
- You depend on public assistance to support your children.
- You support a spouse who was seriously and permanently injured in a car accident or who has developed a total disability.
What Happens To Your House When You File For Bankruptcy
I want to file for bankruptcy but do not want to include;my car or my;house. Is that possible?
Bankruptcy is a complicated process that gives consumers a;chance to deal with;debt they cant afford. But it can also ruin;peoples credit and put them at risk of losing their property.
Figuring out how much of your assets can;be seized;depends on the type of bankruptcy you file and the total worth of those belongings.
Through the most common form of consumer bankruptcy,;Chapter 7, people are essentially saying that they dont have the disposable income to make debt payments and want to have that debt eliminated. As part of the process, consumers may have their assets seized and sold off to pay;off at least a portion of their debts.
However, not all of their property can be seized. Some assets including cash, your home and your car are exempt from the bankruptcy, based on how much they are worth. Exemption amounts vary from state to state, but generally, any assets with equity;lower;than the exemption amount cannot be seized. Retirement accounts, such as 401 plans and pensions, also are protected from being seized during bankruptcy, though some people with a traditional IRA or Roth IRA may find that the exemption for retirement savings is capped at nearly $1.3 million.
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What Happens If I Jointly Own A House
If you own a house with another person or people, your trustee becomes the owner of your share. You will no longer have any legal capacity to deal with the house. The co-owner won’t be able to deal with the property without your trustees consent.
If the co-owner is also bankrupt, they may have:
- the same trustee or
- another trustee .
If the co-owner is not bankrupt and wants to keep the house:
- they can submit an offer to your trustee to purchase the share you owned before you became bankrupt.
Some things to consider when proposing an offer:
- It should reflect what the trustee would get from selling the property on the open market.
- Your trustee doesn’t need to accept the offer simply because it is from a co-owner.
- Your trustee has a duty to seek the best financial benefit for creditors.
If all parties are not able to agree, your trustee may take legal action to proceed with the sale. If the court grants permission to sell the house, the trustee can use the proceeds to pay the sale costs. The trustee will divide any remaining money with the co-owner based on their share of ownership.
The co-owner may be liable for any outstanding debt owing to the secured creditor after the sale. You and the co-owner may wish to seek independent legal assistance regarding your legal standing.
Keeping Your Home In Chapter 13 Bankruptcy
The good news about filing for Chapter 13 bankruptcy is that its designed to allow you to keep your house. With Chapter 13, you, the bank and your creditors all decide on a repayment plan that takes three to five years, but your assets are not sold off. Once the plan is completed, your unsecured debt is discharged. The trick, of course, is making it to the end.
The plan that is worked out with the court and your creditors will include a way to catch up on and pay your mortgage if you can afford it.
Under a Chapter 13 repayment plan, if youre behind on your mortgage the plan will work out how you pay the past due payments over the three to five years, but you also must make the current monthly payments.
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If I File Bankruptcy Will I Lose My House
The first question anyone contemplating bankruptcy asks is either “Is bankruptcy right for me?” or “Will I lose my house?” We answered the former above and now we’ll delve into the latter. Actually, the house question is probably asked more commonly.
And, we have good news.Many folks are able to keep their house and bankruptcy. The best test is whether you can make up any back payments and make current and future payments as well.
- If you can make the mortgage payments, you likely can keep your house.Remember that you need to be able to make your real estate tax and homeowners’ insurance payments as well.
- There is more good news: Second and third mortgages that are no longer secured by the value of the property can be discharged and make keeping your house easier.
Chapter 7: If you file a Chapter 7 bankruptcy, your home state may offer exemptions that protect the equity in your house up to a certain amount. Some states protect just a few thousand dollars of equity and other states protect 100% of home equity – other states are somewhere in between and some states provide a choice between home state and federal exemptions.
- See our How to Find a Bankruptcy Attorney article that references your state to determine how much equity you can protect.
- If you live in New York, go to How to Find a New York Bankruptcy Attorney.
Never give up your house without getting good advice.
In Chapter 13 bankruptcies, so long as you can make all house payments, you can keep your house.