There Are Options When Filing For Bankruptcy
If your financial circumstances do not allow you to pay all the debt you owe, bankruptcy can be a viable option for financial recovery. Before filing for bankruptcy, you might want to consider these other options for getting your finances back on track:
- Work directly with your creditors to reach a mutually beneficial debt settlement.
- Ask creditors for payment deferments, extensions, or reductions until you can get back on your feet.
- Carefully consider consolidating your debt into one loan with a single payment.
Consolidating debt comes with its own set of risks. A lawyer in your area can help you decide if these options will help relieve your current financial situation or if bankruptcy protection is a more viable option for you.
Personal Injury Lawyer Near Me
Why A Judgment Lien May Not Be Troubling
A judgment does not last forever. In the event that the judgment is considered a lien against your property, you may not be concerned if you dont intend to sell the property before the judgment expires.
Judgments expire in 10 years under both California and New York laws. In both states, however, the creditor can apply for an extension of the judgment to get 10 more years to collect the debt.
In addition, if youre in New York you have the option of going back to state court to seek a discharge of the judgment after a certain amount of time has passed since your bankruptcy discharge. Learn more about that here.
If you go through Chapter 7 bankruptcy and have a judgment but dont expect to need to sell your property within the time thats left for enforcement, you may decide to do nothing. Its a decision you need to make with your bankruptcy lawyer.
Why File For Chapter 7 Bankruptcy
So why might filing for Chapter 7 bankruptcy be better than just letting the house or car go through foreclosure or repossession? The answer is that it wipes out your obligation to pay the entire loan, including a deficiency balance.
Also, in some cases, it might prevent a tax obligation from being assessed because forgiven debt gets taxed as income. For instance, if you let your house go through foreclosure and the lender forgives the deficiency balance, you could receive a hefty tax bill at the end of the year. You can learn more about this type of tax liability by reading Tax Consequences When a Creditor Writes Off or Settles a Debt.
What Happens If I Have A Car Accident After Filing Bankruptcy
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In a Nutshell
While a property settlement from the insurance company may have to be paid to the trustee, any personal injury settlement youâre entitled to as a result of the accident is yours to keep. This article will explore what steps to take if you get in a car accident after filing a Chapter 7 bankruptcy.
Written byAttorney Andrea Wimmer.
This article will explore what steps to take if you get in a car accident after filing a Chapter 7 bankruptcy. Since the accident happened after your filing date, also called the petition date, the bankruptcy trustee will not be able to take any personal injury settlement you may be entitled to as a result of the accident. They can only to that if the accident happened before your case was filed and there are no exemptions to protect the personal injury settlement or award.
Discharging Debts In Bankruptcy
A bankruptcy discharge releases a debtor from being personally responsible for certain types of debts. So, after a bankruptcy discharge, the debtor is no longer legally required to pay any debts that are discharged.
The discharge prohibits the creditors of the debtor from collecting on the debts that have been discharged. This means that creditors have to stop all legal action, telephone calls, letters, and other type of contact with the debtor. This prohibition is permanent for the debts that have been discharged by the bankruptcy court.
You cannot discharge all debts in bankruptcy. Some of the most common debts that you cannot get rid of in bankruptcy are debts from child or spousal support, most student loans, most tax debts, wages you owe people who worked for you, damages for personal injury you caused when driving while intoxicated, debts to government agencies for fines or penalties, and more.
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Are Bankruptcy Filings Publicly Available
Bankruptcies are considered a public record, but that doesn’t mean everyone’s going to know about it. Bankruptcy proceedings are filed in a system called Public Access to Court Electronic Records, or PACER for short.
For the most part, it’s more common for attorneys and creditors to use this system to look up information about your bankruptcy. But anyone can register and check if they want to. The service charges 10 cents per page to access case information.
Another way people might find out about your bankruptcy is if your local newspaper publishes public notices.
Finally, employers, landlords and creditors may be able to see on your credit report that you’ve filed bankruptcy when you apply for a job, an apartment lease, or a loan or credit card.
Where Will I Live If I Lose My Home Through Bankruptcy
Stop worrying and asking, Will I lose my house if I file bankruptcy? Even if you do, all hope is not lost! You can still have a new home even after bankruptcy.
Some programs are available to help you on your road to recovery. State governments and nonprofits have home-buying assistance programs that you can tap into. These include the following:
- Federal Housing Administration loans
- Veteran Affairs loans
- United States Department of Agriculture loans
- State housing finance agencies
Debts That Can And Cant Be Discharged In Chapter 7 Bankruptcy
Chapter 7 should dismiss most of the debts you owe, but there are some hard-and-fast debts that cant be discharged in Chapter 7.
The list of non-dischargeable debts includes:
- Child support
- Student loans must prove undue hardship
- HOA fees if you surrender your home or condo
- Any other form of unsecured debt.
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records failed to explain satisfactorily any loss of assets committed a bankruptcy crime such as perjury failed to obey a lawful order of the bankruptcy court fraudulently transferred, concealed, or destroyed property that would have become property of the estate or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727 Fed. R. Bankr. P. 4005.
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In Chapter 7 Bankruptcy The Trustee Can Assume Or Terminate Unexpired Leases Or Executory Contracts Learn More
Updated By Cara O’Neill, Attorney
If you have an unexpired lease or executory contract when you file for Chapter 7 bankruptcy, the bankruptcy trustee assigned to administer your case might “assume” the lease or contract if it’s valuable. If not, you’ll be free to decide whether you’d like to continue under a personal property lease or discharge your obligation in bankruptcy.
In this article, you’ll learn what it means to assume a lease and how likely it is that the trustee will assume your lease.
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How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities a schedule of current income and expenditures a statement of financial affairs and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling evidence of payment from employers, if any, received 60 days before filing a statement of monthly net income and any anticipated increase in income or expenses after filing and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
Which One Should I Choose
Chapter 7 is, by far, the more popular form because its cheaper, quicker and effective at relieving responsibility for debt if you qualify! And thats a big if. You must pass a means test, meaning your disposable income is under the median income in your state. If you dont qualify for Chapter 7, you can always fall back on Chapter 13.
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The Chapter 7 Bankruptcy Discharge
At the end of the bankruptcy process, all of your debts are wiped out by the court, except:
- debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise, and
- debts that the court has declared nondischargeable because the creditor objected .
Find out more about what you can wipe out with the bankruptcy discharge.
Contact A Bankruptcy Attorney In Cary Nc For A Free Consultation
At Sasser Law Firm, we have three board-certified bankruptcy specialist attorneys and over 20 years of experience practicing exclusively in bankruptcy law. Our bankruptcy attorneys in Cary, NC are prepared to answer questions you have about the bankruptcy process, such as What happens when I declare bankruptcy? or What do you lose in bankruptcy? They strive to be as helpful and objective as possible whether that means filing for bankruptcy or not.
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Making Changes To Your Bankruptcy Forms
Your bankruptcy forms are signed under penalty of perjury. When you file, you’re declaring that the information in your bankruptcy forms is true and correct to the best of your knowledge. If you accidently leave something out or make a mistake, you’ll need to make changes to your forms.
This is done by filing an amendment with the court. You might need to file an amendment because you forgot to list an asset or a , you need to add information that was originally missed, you change your mind about signing a reaffirmation agreement, or the trustee requests that forms be amended.
How Will A Chapter 7 Affect My Credit
Generally, a Chapter 7 bankruptcy remains on a persons credit report for up to 10 years from the date the case was filed, while negative accounts stay on your credit report only 7 and a half years. If you are considering bankruptcy, your credit might already be in bad shape. Check your credit report for free by going to www.annualcreditreport.com. A bankruptcy notation on your credit report warns future creditors that you did not pay your debts as agreed. Restoring credit after a Chapter 7 can take some time and effort.
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Chapter 13 Tools For Car Loans
In a Chapter 13 case, you can reduce the principal of the car loan, reduce the interest and catch up on arrears.
Reduce principal: In Chapter 13 you can “cram down” a car loan, but only if you took the loan out more than two and a half years ago. To do this, we find the current value of the car. Then we can reduce the principal of the car loan from the current balance, to just the value of the car. So if you owe $9,000, and the car is worth $5,000, cram down reduces the balance of your loan from $9,000 to $5,000.
Reduce interest: For many car loans in Chapter 13, you can reduce the interest rate on the car loan from an exorbitant rate to something more reasonable. In past cases we have reduced interest rates to somewhere between 4 and 6 percent, typically. This can be a big help for subprime car loans.
Catch up on arrears: In Chapter 13, if you’re behind on a car loan, you can use bankruptcy to force the lender to accept catch-up payments. So if you’re $1,000 behind on the car, you can take those arrears and stretch them over a three-to-five year period, pay a small monthly payment to catch up , and then resume making your regular monthly payments. This is a good option if you’re facing repossession.
If you’re struggling with a car loan or facing repossession, and don’t know what to do, you have plenty of options inside or outside bankruptcy. Get in touch with a lawyer to learn more about the tools available.
Executory Contracts During Chapter 7
An executory contract is a legal term referring to a contractual agreement in which both parties are obligated to perform in consideration for a benefit . Executory contracts do not include at will contracts such as an employment agreement or a personal service contract.
Chapter 7 bankruptcy permits the debtor, or the trustee, to assume or reject an executory contract. A debtor must decide if they want to remain bound by their executory contracts prior to the courts issuance of a bankruptcy discharge which usually happens about 90 days after filing.
A car lease is an example of an executory contract. If the debtor rejects a car lease, they surrender the car to the leasing company and have no further personal liability. If the debtor wants to assume the lease, the debtor can keep the property if they make the lease payments. If the debtor subsequently defaults in lease payments, the leasing company can take back the car.
Assumption of an executory contract is not the same as a reaffirmation of the lease, so the leasing company may not sue the debtor for the balance of payments due under the lease following default.
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The Trustee Will Sell Non
If you have non-exempt property, the trustee will try to auction or sell those assets to pay creditors.
If, however, there is no exempt property, the trustee will inform the bankruptcy judge where the judge will likely enter an order discharging your debt. The trustee will also notify creditors advising them that there are no assets to pay.
Florida Bankruptcy Means Test
The Florida bankruptcy means test is a complex formula to determine eligibility to file Chapter 7 bankruptcy. Debtors whose household income is under their states median income, and debtors whose debts are primarily business-related debts, are exempt from means test qualification. Bankruptcy debtors whose gross household income is above median income must pass the means test to file Chapter 7 bankruptcy.
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Student Loans In Chapter 7 Bankruptcy
Student loans are not dischargeable in Chapter 7 bankruptcy unless the debtor can demonstrate that loan payments impose undue hardship. To eliminate a student loan under the undue hardship exception, the debtor must file a separate motion with the bankruptcy court and appear before the bankruptcy judge with evidence of hardship. As a practical matter, it is difficult for bankruptcy debtors to demonstrate undue hardship unless the debtor is physically unable to work.
Most bankruptcy courts use the Brunner test in determining hardship. Under this test, to discharge student loans in bankruptcy, the debtor must show: