Does The Home Have Equity
If the home that you are on title to doesn’t have any equity , then the trustee will not be interested in it.
If the trustee sells the home, he or she would have to use the proceeds to pay off the liens on the property before paying your unsecured creditors. If the home has no equity, the trustee will typically abandon it. But if there is equity, the home may be at risk in bankruptcy unless you can exempt its equity.
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.
Can You Exempt The Equity In The Home
Exemptions protect your property in bankruptcy. In a Chapter 7, they allow you to keep a certain amount of assets by shielding them from the trustee. In Chapter 13 bankruptcy, they allow you to pay less to your unsecured creditors in your repayment plan.
How much property you can exempt in bankruptcy depends on the exemption laws of your state. To protect the equity in their homes, most debtors use a homestead exemption . But you can typically only use the homestead exemption to protect the equity in your principal residence . If you are on the deed to someone else’s home and it’s not your principal residence, you likely won’t be able to use the homestead exemption.
Some states offer debtors a wildcard exemption that can be used to protect any type of property. If your state has a wildcard exemption that allows you to exempt the equity in the home, the trustee can’t go after it. Otherwise, the trustee can argue that it’s fair game for your creditors.
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How Do I Apply For Bankruptcy
The unfortunate reality of bankruptcy is that it will cost some moneymore if you hire legal help, which you probably should . All filings have to go through U.S. bankruptcy courts, where the cost to file is $335 for Chapter 7 and $310 for Chapter 13. However, you can ask the court to either waive your fee or let you pay with monthly installments. You’ll also have to take debtor education courses if you file on your own.
And that’s just the beginning. There’s a list of documents you’ll need to take care of, as well as the specific repayment proposal you need to submit for Chapter 13. That proposal gets reviewed by a court-appointed trustee, who contacts your creditors before approving your submission. Overall, neither filing is an easy process to handle on your own, and even minor mistakes on your end could be a setback for your case.
So, whether you file for Chapter 7 or Chapter 13 bankruptcy, it’s typically a good idea to hire a lawyer to help you petition. A bankruptcy attorney’s price depends on the nature and complexity of your filing, with Chapter 13 filings on the pricier end, but the price tag doesn’t necessarily mean a lawyer is out of the question for you. Discuss payment plans with potential attorneys, check out local pro-bono lawyers and legal aid offices, or use an online tool like Upsolve to cover your bases when it comes to bankruptcy.
You Received A Discharge In Your First Chapter 7 Bankruptcy
If you have filed a Chapter 7 bankruptcy, which typically discharges all debts that are able to be discharged, and you received a discharge, then you will not be permitted to file another Chapter 7 Bankruptcy Petition for a period of 8 years from the date of the initial filing of the first case before you are eligible to receive a Chapter 7 Discharge in a second Chapter 7 Bankruptcy case.
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You May Make Surplus Income Payments
When you file for bankruptcy, you must do the following:
- disclose to the LIT information about all of your assets and liabilities
- advise the LIT of any property that was sold or transferred in the past few years
- surrender all your credit cards to the LIT
- attend the first meeting of creditors
- attend two counselling sessions
- advise the LIT in writing of any address changes
- if required, attend an examination at the Office of the Superintendent of Bankruptcy and
- assist the LIT as needed in administering your estate.
You may be required to make additional payments to your LIT for distribution to your creditors.
In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.
Each month during the bankruptcy process, you must submit a copy of your pay stubs and proof of other income to the LIT. The LIT then calculates your surplus income.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the OSB annually. The larger your family, the more you are allowed to keep the more you earn, the more you are required to contribute.
In other words, if your household income exceeds the level set by the OSB, then you must make additional payments to your LIT during your bankruptcy.
What Happens To Secured Debts
A secured debt is a debt a creditor secures with an asset. A mortgage can be a good example here. When you buy real estate and finance that house with a bank loan, you are giving the bank the right to initiate foreclosure proceedings if you fail to comply with the mortgage terms.
In a Chapter 7 case, creditors can foreclose the property even after you file for bankruptcy if you don’t pay your secured debts. You can, however, keep the property if you make an agreement with the lender to continue making monthly payments on your loans.
In Chapter 13 cases, you can retain your property if you continue to make payments through the Chapter 13 payment plan.
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How The Automatic Stay Protects You In A Bankruptcy
When a Chapter 7 or Chapter 13 bankruptcy case is filed, protections afforded by theautomatic stay are immediately put into place. Essentially, the automatic stay halts repossession actions, foreclosures, garnishments, and collection activity while the filerâs case remains active. Similarly, the automatic stay prohibits creditors from sending collection letters and making collection calls demanding payment. This safeguard allows the bankruptcy court time to evaluate the merits of a Chapter 7 or Chapter 13 bankruptcy case while granting the debtor relief from collection action and creditor harassment.
Why Would Someone Request A Dismissal Of Their Own Case
Perhaps you want your case dismissed due to a change in circumstances, such as discovery or inheritance of a valuable asset that will allow you to avoid bankruptcy or youâve successfully negotiated a real estate loan modification. Alternatively, you may need to refile because youâve incurred significant debt since the time you submitted your bankruptcy petition, perhaps due to an accident or significant medical diagnosis. If you hope to get your case dismissed, you can file a Motion for Voluntary Dismissal. However, itâs important to understand that this process isnât straightforward. This bankruptcy process is subject to various conditions and you may run up against barriers that prevent the success of your motion.
Your motion is more likely to succeed if youâve filed for Chapter 13 bankruptcy, partially because the court recognizes that a lot can change during a 3-5 year repayment period. Chapter 7 voluntary dismissals are much less likely to succeed because filers must demonstrate that they are making the motion in good faith. Courts rarely grant Chapter 7 voluntary dismissal motions.
Note that if you do submit a motion for voluntary dismissal, you may be barred from refiling for bankruptcy for a minimum of 180 days and a maximum of several years, depending on your circumstances.
Talk To A Bankruptcy Attorney
How your legal ownership interest in someone else’s property will be treated in bankruptcy can be extremely complicated. Whether you lose the home will also depend on how your court treats these types of cases. Because you are putting another person’s house at risk, you should talk to a local bankruptcy attorney before filing a case.
What Happens After Filing For Bankruptcy In 2021
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
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Proudly Serving Clients In Communities Throughout Southwestern Pennsylvania
From offices in Greensburg, Schimizzi Law, LLC provides bankruptcy and debt relief* services for individuals and families in Westmoreland County and communities throughout southwestern Pennsylvania. Call toll free or contact us by email to arrange an initial consultation with an experienced Greensburg bankruptcy attorney today.
You Will Attend A Meeting Of Creditors
The first thing the trustee will do will be to call a meeting of creditors. This is also called the 341 creditors meeting. During this meeting, the trustee will ask you, under oath, about your assets and debts. Creditors can attend this meeting and ask you questions. But usually, it will be just you and the trustee.
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When Is A Bankrupt Discharged
There will be an automatic bankruptcy discharge for a first-time bankrupt nine months after they became bankrupt unless the trustee recommends a discharge with conditions or it is opposed by either a creditor, the trustee or the Superintendent of Bankruptcy. In addition, if you have surplus income of more than $200 per month, your bankruptcy will be extended to 21 months in the case of a first bankruptcy.
What Can You Do If You Can’t Find A Licensed Insolvency Trustee
If you are unable to get an LIT to accept your file, or if you cannot afford to hire an LIT, the OSB’s Bankruptcy Assistance Program may be able to help, provided that you:
- have contacted at least two LITs and tried to obtain their services
- are not, and have not recently been, involved in commercial activities
- are not required to make surplus income payments and
- are not in jail
A creditor is harassing me daily. What should I do?
Although the regulations differ slightly across Canada, there are limits on what creditors and collection agencies are allowed to do. For example, they cannot make telephone calls of such a nature or frequency that they amount to harassment of you or your family. In addition, there are certain times when they are not allowed to call.
Tips for dealing with collection agencies If you feel you are being harassed, contact either an LIT or a qualified and experienced credit counsellor. They can help you by serving as an intermediary between you and your creditor.
and we will send you some information and a list of LITs who participate in the program.
Does Pennsylvania Have A Homestead Exemption
The State of Pennsylvania does not offer any specific exemptions for homeowners filing a Chapter 7 bankruptcy. That means your home could be liquidated to pay off your debts if you use the State exemptions.
Protections for Spouses
Spouses enjoy some limited protections with regards to their marital home. Pennsylvania allows couples to own their home in tenancy by the entirety. This is a special kind of property title where both spouses are treated as owning 100% of the home.
If a house is owned in tenancy by the entirety, debts owed by a single spouse cannot be settled by liquidating the home. Only joint debts can be used as grounds to liquidate the marital home. That means if a house is owned as tenants by the entirety and only one spouse owes $50,000 in credit debt, the house can be completely protected.
Legal Title Vs Equitable Interest
In general, legal title represents the legal ownership interest a person has in a piece of property while an equitable interest refers to the beneficial ownership interest in that asset.
In some cases, the “real owner” of the property may hold only a beneficial interest but not legal title. A common example is an asset that is held in trust for the benefit of someone else . If an asset is held in trust, the trustee typically has legal title to the property but can’t use or take the property for his or her own benefit.
If you believe that you only have a legal interest in the home , you may be able to argue that the home should not be used to satisfy your creditors. But in many cases, this bare legal title argument may not work .
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The Basics Of Bankruptcy Law
Bankruptcy proceedings are governed under federal law, Title 11 of the United States Code, and go through the federal court system. This ensures that the rules of bankruptcy are similar throughout the country. However, there are Pennsylvania laws, if they are elected, regarding the property you are allowed to keep during bankruptcy. Depending on your situation, you may rely on the Pennsylvania or federal property exemptions. Your Pennsylvania bankruptcy lawyer will discuss these options with you.
If you live in Central Pennsylvania, then your bankruptcy will be under the jurisdiction of the Middle District of Pennsylvania Bankruptcy Court. This court has two locations, one at the Max Rosenn U.S. Courthouse in Wilkes-Barre, PA and another at the Ronald Reagan Federal Building in Harrisburg, PA. If you live in Perry County, then your case will take place in Harrisburg.
If you have any questions regarding federal Bankruptcy law, or where your bankruptcy case would take place, do not hesitate to call a New Bloomfield attorney at our firm for more information. .
Are There Any Options Other Than Filing For Bankruptcy
Bankruptcy should be your last resort and last resort only there are other less drastic options to consider. Debt settlement is one of them. This is a negotiation between debtor and creditor where they agree on a reduced balance to be paid off, after which the account is closed, Gonzalez says.
Another option is a debt management plan. This is an agreement between the debtor and the creditor to modify the terms of the outstanding debt, such as fees or interest reduction for a certain period of time. This should allow you to pay back the amount owed, and help you regain control of their finances, Gonzalez says.
You can also try consolidating your debts or even asking a family member for help. While improving your finances may seem hopeless, it can be done. Get inspired by the story of this couple who paid off $78,000 in debt in two years.
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Filing A Chapter 13 Bankruptcy After A Chapter 7 Bankruptcy
If your Chapter 7 Petition was properly discharged, but you have come into new financial difficulties which necessitate the filing of another bankruptcy case, you can immediately file a Chapter 13 Bankruptcy petition even on the day after you have received your Chapter 7 discharge.
Under these circumstances, you will not be eligible to receive a discharge in the Chapter 13 case. In order to get a discharge youll need to wait at least four years from the date of the initial Chapter 7 filing in order to receive a discharge in your new Chapter 13 case.
Take Bankruptcy Course 2
Bankruptcy law requires that you also complete a second credit counseling course within a specified time-frame of filing your case. Itâs best to do so soon after filing your case, and before your scheduled 341 meeting. Make sure you take the course through a credit counseling agency thatâs been approved to offer it for Pennsylvania bankruptcy cases.
When done, youâll get a certificate of completion which needs to be officially processed by the clerk just like when you first filed your Pennsylvania bankruptcy forms. Some credit counseling providers will file the certificate for their clients. If yours doesnât, make sure you mail a copy to the clerkâs office as soon as possible after getting it.