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A Personal Bankruptcy Story.
This personal bankruptcy question was asked on a bankruptcy forum website in 2011, “We are a family of 10, and with possibly surrendering our house in a Chapter 13 bankruptcy, where do we find rental allowance?”
The Purpose of Using IRS Census Data.
Chapter 13 bankruptcy filers fill out Form 22C to provide the bankruptcy court with a statement of current monthly income and calculations for their plan of a commitment period for their disposable monthly income. When it comes to rental expenses, the United States Bankruptcy Court must use the Census Bureau, IRS Data and Administrative Expenses Multipliers as the sole source for determining what filers are allowed for such expenses in determining their plan on the form.
Cases filed after November 11, 2011 must use the state by state, and county by county figures for the family size listed in determining which expense is for rental allowance. These figures are found in Census Bureau Data shown as:
“Section II. IRS Data & General Information for Completing Bankruptcy Forms
4. Local Standards. Housing and Utilities and Transportation
a. Housing and Utilities Standards are derived from Census and BLS data, and are provided by state down to the county level. The standard for a particular county and family size includes both housing and utilities allowed for a taxpayer’s primary place of residence.
Housing and Utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone, cell phone, internet, and cable. The tables include five categories for one, two, three, four, and five or more persons in a household.”
The Purpose of the Means Test.
The Means Test is used to determine whether or not a person qualifies to file a Chapter 7 bankruptcy, but in a Chapter 13 bankruptcy, the Means Test can be used to determine how many years the filers plan must be approved, for up to 5 years.
Problems Can Arise.
A problem can arise in filing a form 22 C when a Chapter 13 bankruptcy filer has 5 or more family members who will be living in a rental house. The amount allowed is the same for 5 family members as it is for 10 family members. The debtor asking the illustrated question above revealed in his blog that he wondered how his family could live on the amount allowed in the Census Bureau data when his family is twice as large as a family of 5 that is provided for in a rental allowance.
Need for a Bankruptcy Lawyer.
Bankruptcy laws are not always written for every conceivable circumstance that can arise. That is why you might need a bankruptcy lawyer to help you with such circumstances should they arise in your case. Means tests, themselves, are complicated. You may need help for calculating the means test if you are over the median income for the area of the nation in which you live.
We can help you find a bankruptcy attorney in your area that can help answer any questions you have about a Means Test, a rental allowance, bankruptcy forms, or any other type of bankruptcy questions you have.
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Bankruptcy is considered a lagging economic indicator. Bankruptcy can reflect a specific economic time of hardship and how often these hardships happen. Bankruptcy can also indicate the kinds of economic things currently happening to you and a society, providing information that may help you correct your financial situation before it ever happens. Here are the top 3 economic things you can do to prevent bankruptcy.
Develop good work ethics early on in life.
Being on time for work, staying on task, being loyal to the people you work for, being honest in your dealings with your employers and customers, being present for work, being competent in the tasks given, being steady and reliable, keeping a clean hygiene, and keeping a friendly countenance are just a few of the economic things you can do to keep your job. These economic things should begin early on in your life.
All of these basic economic things do not go unnoticed, even in today’s economy. Loss of income is the number one cause of bankruptcy. If you consistently do not have one or more of these economic qualities, you will most likely lose your job.
Learn to budget your money.
One of the main economic things young adults fail daily in is not living within their means. America’s temptation is to live the American Dream before you earn the right to do so. The “push button” society you have grown accustom sets you up for economic failure. When you allow impatience to skew what you think is yours through the right of passage, wanting economic things right now might tempt you to take short cuts. These actions, inevitably, might drive you to poor work ethics and credit ventures.
When you live on credit, you had best be prepared to pay for your credit venture or experience bankruptcy. A budget provides you with the means to properly handle your existing income. One economic truth states when your expenses are more than your income, you will go into debt. Going into debt is one of the leading causes of bankruptcy. Budgeting income and the discipline to maintain a budget helps to prevent your going into debt.
Continue to educate yourself and your family.
Developing a work skill is only part of the education process necessary to learn to provide for yourself and your family. Learning what you like and want to be early on in life is very important to you learning how to provide. You, like the rest of us, are not born with the skills to provide for yourself. Those economic things are learned like any other economic endeavor. Liking what you do to provide for yourself and family is very important in sustaining the desire to do so.
Things change on the economic horizons, and keeping up with the changes is important to your economic survival. That means there will always be a continuing education of learning about economic things and how they apply to your life. Those who do not keep up with the changing times, usually fall by the wayside. Those are the ones who have a harder time being employed. A loss of income can result in bankruptcy. Keeping up with times by keeping you and your family educated can help you prevent bankruptcy.
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A Chapter 7 is often called a liquidation bankruptcy because a bankruptcy trustee will take your non-exempt property and sell the personal property to pay off as many of your unsecured debtors by a priority list that he can. What unsecured debts not paid off will be discharged at the end of the bankruptcy process.
As part of your responsibility to the Chapter 7 process, you are required to list all of your personal property on different bankruptcy court schedules and put a current fair market value on each of the personal property listed. These schedules are part of the application process and give the trustee a working knowledge of what may or may not be liquidated.
A lot of filers stress out over what they think the current fair market value on property they list really is. They do not want to place values either too low or too high and bring it to the attention of the bankruptcy trustee. In effect, they mostly fear either getting into trouble or losing their property. Common sense can go a long way in helping to relieve those fears.
To help filers, a group of trustees from one particular state gave a worksheet to each filer that had this information about replacement values:
“HOW TO DETERMINE THE REPLACEMENT VALUE OF YOUR PERSONAL PROPERTY: You will need to know the replacement value of any personal property that you own when your bankruptcy case is filed, even if the property is mortgaged, pledged, or otherwise subject to a lien. The replacement value of property is the price that a retail merchant would charge for property of that kind, considering the age and condition of the property at the time the bankruptcy case is filed. You can find the replacement value for items on Craigslist, eBay or at a thrift store, such as Goodwill and the Salvation Army. The value of personal property that is subject to a valid lien or mortgage is the replacement value of the property as of the date the bankruptcy case was filed without deducting anything for the cost of selling or marketing the property.”
The trustees are making it clear replacement value can be something bought at a garage sale to replace your personal property if it is the same age and condition. No one really knows what used personal property will actually sale for, but an educated guess is most often as good as it gets.
Original costs are not much help in determining replacement value unless the item is less than a year old. Then, condition and depreciation still come into play. A bankruptcy court trustee in a Chapter 7 is looking for items on the schedules that are non-exempt and worth something to the bankruptcy estate. The trustees are usually not interested in trying to nickel and dime the estate to death.
So, if you have researched each item of personal property that might be liquidated in the Chapter 7, and you have made an educated guess at the age and worth of the item, you have really done all that is reasonable and expected by most bankruptcy court trustees.
One way to be more certain about how a particular bankruptcy trustee determines replacement values in personal property is to ask your bankruptcy lawyer who should be familiar with the local bankruptcy court and their customs.
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A pro se bankruptcy filer recently blogged in a bankruptcy forum website to ask how to reopen a bankruptcy after being dismissed for failing to fill out his paperwork properly. The situation raised some interesting questions including, “Can filing pro se in bankruptcy make you a serial filer?”
One observation made by a blogger in the forum was if you are going to file bankruptcy pro se you need to have access to PACER and stay on top of everything. PACER is the public access system to all that takes place in the bankruptcy courts. With a small fee, anyone can access PACER.
Making mistakes on paperwork is one sure way of getting your bankruptcy dismissed, and if you are not on top of things, you are going to make mistakes in your paperwork. Bankruptcy is one place the old adage “ignorance is no excuse of the law” can jump out and literally grab hold of your actions.
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, federal law defines a serial filer as the debtor who has committed a scheme to hinder, defraud, and delay the creditor by multiple bankruptcy filings.
How many times you refile before you are branded a serial filer is up to each individual federal bankruptcy court to decide. The area in federal law is a little gray.
That is why most of you who file bankruptcy need legal counsel in the form of a bankruptcy lawyer. A bankruptcy trustee or a law clerk is not there to help you file bankruptcy by telling you how to file. Each of those have a particular job to do in the bankruptcy process.
Some people have the ability to read the complicated bankruptcy forms, especially if they are filing a simple Chapter 7 bankruptcy. Others do not. Those who can fill out the forms without errors have no problem filing pro se in this most simple type of bankruptcy.
On the other hand, filing a Chapter 13 bankruptcy is a different proposition. Very few lay people have the ability to file pro se on the complicated bankruptcy laws associated with a Chapter 13. It would be very easy to make paperwork mistakes in this venue.
A dismissal of a bankruptcy for a deficient petition to file is not really an answerable event. You cannot restart your bankruptcy unless you make a Motion to Vacate Dismissal or a Motion to Reconsider. What bankruptcy judge is going to vacate or reconsider if you simply did not know what you were doing when you filled out your paperwork pro se? He most likely will suggest to you to get a bankruptcy attorney, someone who should know what they are doing when filling out the paperwork, and refile.
Make paperwork errors, get dismissed, and refile bankruptcy enough times, and you run the risk of being viewed as a serial filer. Contact us here today, and we will help you find a bankruptcy attorney in your area that can help you with all the paperwork associated with bankruptcy.
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A recent debtor online posed a question on a bankruptcy forum about releasing personal business information about their profit and loss statement to a collection agency. If you are asking a question about sharing a business profit and loss statement with a collection agency, then an assumption must be made your business is currently in default of a loan or you would not be talking to a collection agency to begin with. How much personal information, like your business profit and loss statement, should you share with a collection agency after defaulting on a debt and before bankruptcy?
Some people put off filing bankruptcy thinking a debt settlement might solve their current financial problems. Sometimes it does, but most often, a debt settlement only postpones the inevitable, especially if the underlying cause of the symptom has not been resolved in the first place.
The collection agency you are trying to resolve a loan issue with should determine whether or not you should share a business profit and loss statement and/or income tax information. Under no circumstance should you have to share personal identifying information to a collection agency other than your name and address.
Understanding the process of debt settlement is paramount in you making the right decision in settling a debt, whether or not you should settle in the beginning, and in determining how much information you give the collection agency for those debt settlement purposes.
When default of a debt is fresh, the original creditor often holds the debt for a certain period of time to see if you are going to catch up on your payments. They may send out notices threatening penalties, fees, and interest to entice you to pay your debt in full. During this time, you as a debtor have little or no chance at debt settlement.
After a while creditors will normally turn the debt over to their in house collection agency in order for them to collect the debt. If the creditor does not have an in house collection agency, they often will hire an outside collection agency to collect for a percent of what is owed. After these second handlers of the debt are brought into the picture, they are given certain criteria the make debt settlement a priority. By this time, the original creditor thinks getting a part of what is owed is better than nothing. You can expect to be threatened by lawsuits from the collection agency if you do not comply with the collection agency demands. You can also expect the original loan to be inflated by interest, penalties, and fees that have been added to bolster their settlement.
The last line of collection activity for a creditor is to write off the loan and sell the debt to junk debt buyers who buy the debt at pennies on the dollar. It is this latter group’s collection agencies who normally push the limits of harassment, and who will think nothing of using any kind of information obtained by a profit and loss statement to gain an advantage for attaching liens from a judgment on personal assets you still own. This group is the easiest to get a debt settlement from, but you will not need a profit and loss statement to get it, especially before bankruptcy.
At this time, filing for bankruptcy protection may be your only defense left against collection agencies, and common sense says you might need a bankruptcy lawyer to help you enough bank.
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One bankruptcy filer recently wrote to a bankruptcy forum website and wanted to know if a secured debt, like a piece of furniture, could be kept after the debt had been charged off by the creditor and discharged in bankruptcy.
Any secured debt is bound by a lien on the property secured. Bankruptcy does not discharge liens, just the debt owed on the secured property. If the creditor who sold the furniture wanted to come and repossess the property, the bankruptcy filer would be legally obliged to turnover the property.
In unsecured debt, the debt can equally be charged off by the creditor who made the loan. A charged off debt is made by a creditor for tax purposes. Once a debt has gone into default, most creditors will charge off the debt for tax purposes after a given amount of time.
Charging off a debt normally occurs after a creditor has sent the debt for collections. A creditor will either send the debt to their collection department for collections, or they will send the debt to a collection agency for collections. In either case, when they give up on trying to collect the debt, they will write the debt off their books by charging off the debt.
For those of you who are facing bankruptcy, an uncomfortable problem can occur if one of your creditors decides to charge off your debt. A creditor, like a credit card company, will often sell the charged off debt to junk debt buyers, collection agencies which buy debt at pennies on the dollar. The creditor will get to charge off the difference in what they received for the debt and what was owed.
The new owners of the debt can often confound the bankruptcy process. Usually they will tack penalties, various fees, and interest on what you owe on the debt and begin their collections activities to collect. Since they are new, you may not have included the collection agency as a creditor on your bankruptcy schedules, commonly happening nowadays.
As a result, the collection agency will often contact you after the automatic stay of the bankruptcy court has been activated and even after the the debt has be discharged by a Chapter 7 bankruptcy. Although the new owners of the debt are bound by the automatic stay and discharge of bankruptcy, they still will often take liberties with the fact they have not been notified of the bankruptcy.
Fair debt collection and bankruptcy laws both prevent these collection agencies from illegally using these type of tactics in their collections, but unfortunately, it is up to you to provide your own consumer protection. That means you may have to consult with your bankruptcy lawyer who can help stop the collection harassment by the collection agency illegally contacting you.
If you have a creditor who has already charged off your debt, sent the debt to collections, and you are feeling the stress of their harassment, contact us, and we will help you find a bankruptcy attorney in your area who will help you understand how bankruptcy laws might alleviate the situation.
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One of the more common questions bankruptcy filers have about the bankruptcy process may occur long after you have closed your bankruptcy. “What can you do to prevent a creditor from continuing to contact you after bankruptcy?”
This illustration of a creditor calling after a bankruptcy actually occurred and was posted during a discussion on bankruptcy in 2011, “We filed a Chapter 7 bankruptcy in July of 2010, and it was discharged in January 2011. We owned 5 rental properties that we gave up in bankruptcy. The properties were financed by four different mortgage lenders. One of the lenders (names lender here but I removed the name) will not stop calling us since the bankruptcy was discharged…It has been 2 years since we made a payment on that particular house, but they will not leave us alone. They say the calls will keep coming until the house if foreclosed. They have even tried to get me to sell the house for them saying they would give me $2500 to do it. I rejected that idea and we do not want the house… Does the (bank) really have the right to keep calling us after the bankruptcy was final?”
From the sounds of what is going on with this particular discharged debtor, my guess is the mortgage lender may have sold its debt to a junk debt collection agency, a common practice. This would explain the appearance of a major bank illegally contacting you about a debt they know has been discharged through a bankruptcy. Most major banks have legal departments and are smart enough to know better than to harass a debtor after the debt has been discharged. It is illegal for a discharged creditor to contact you once a debt has been discharged through a federal bankruptcy court.
On the other hand, junk debt collections firms often take liberties with the law until they are formally informed to cease their collection actions. If the collection agency feels they can harass you enough to get something out of you, they will stay with you until you formally request they stop. Often, they may not be sure of a bankruptcy filing, and they might rationalize they were not mentioned on the creditor’s list in the beginning even if there was a bankruptcy filed. Because of this, many may erroneously feel the bankruptcy law may not apply to them. They would most likely be wrong to make that assumption.
A major bank takes a huge risk and opens themselves up to a lawsuit for such behavior, and so do the junk debt collection firms that end up with these perceived debts.
Any collection efforts after a bankruptcy discharge, regardless who attempts the action, has a potential risk of violating two aspects of federal law. First, the bankruptcy laws prevent creditors from seeking any further collection efforts on a particular debt once the debt has been discharged. The creditor convicted of violating such is subject to penalties, fees and fines by federal law.
Secondly, if a collection agency has been formally notified in writing to cease and desist from all activities, they also become subject to the Fair Debt and Collection Practices Act. This act also provides penalties and fees for any convicted violations of the federal law.
The debtor in the illustration should either contact their bankruptcy lawyer or the bankruptcy court in which they filed for help in the matter.
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From the 1970s up until the current financial crisis, the timeshare industry has grown to be a financially hot industry for developers. Timeshares became a time honored way of developing resort property that was bought up all around the world by a wide range of development.
Instead of an independently wealthy person owning just one prime resort property in a particular place, creative sales has evolved to allow the common person to buy a portion of the property in the form of time.
When the industry was young, you could actually get a warranty deed for the time you owned, but this practice is not as common any longer. Most timeshares today are of the lease/right to use type, and are normally sold in week increments.
Where the week you might want to purchase falls on the calender year in relationship to the resort season usually determines how much you must pay for each week you actually purchase.
Since there must be an ongoing maintenance of the property, you will normally always have to agree to paying a maintenance fee in addition to the share of time that you own. Depending who is managing the property, all maintenance fees are subject to go up.
Maintenance fees are usually one of the soar spots for timeshare owners. The annual fee for a week’s share can often be as much as it would cost to stay in many places around the world at a discounted price for the same time.
Another soar spot with some timeshare owners today is the fact resale prices for timeshares has drastically fallen, especially for lease/right to use timeshares. Although these type timeshares can be traded to travel at cooperating resorts around the world, the economy has made the concept less attractive.
These facts are what has driven the question in the title for this article. What happens to timeshares if you have to file a Chapter 7 bankruptcy today?
With timeshare values dropping to pennies on the dollar in today’s market, unless you own the timeshare outright, a bankruptcy trustee in a Chapter 7 is not likely to want to liquidate it. If the share is owned outright, it is an asset, and more and more trustees are selling them for what little they can get out of them, especially if you do not exercise an exempted right to keep them.
If you have a warranty deed on the property, you will have association fees that can be severally affected by filing a Chapter 7 bankruptcy. The association fees up until the date you filed can be discharged in bankruptcy, but if you keep the property, the future fees cannot be discharged.
The same can be said for lease/right to use timeshares. You might want to be sure and check out the legal language of the contract you signed about maintenance fees before you file bankruptcy. If you still owe on the timeshares themselves, it is possible to have the amount discharged in bankruptcy if the note is unsecured. In this case, the maintenance fees will also go away.
Understanding the facts about timeshares are all good reasons you might want to consider consulting with a bankruptcy lawyer before you file a Chapter 7. Contact us today, and we will help you find a bankruptcy attorney in your area.
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There are as many different financial situations as there are people who own finances. No one’s financial circumstance is the same. Are there ever any financial circumstances where you should avoid filing for bankruptcy protection?
This personal bankruptcy question was asked during a bankruptcy discussion on the internet in 2011, “Everyone says BK will be a relief. But we have no income coming in and very little to sustain us. If we are going to end up on the street anyway, (no relatives) why should we bother to file? We could exist a little longer on what we would pay the attorney.”
Why bother to file bankruptcy? There are myriads of reasons why you might want to consider filing for bankruptcy protection, but there are only a few reasons you might want to postpone or avoid filing at all.
The main reason you may want to postpone or avoid filing for bankruptcy protection is that you do not have any non-exempt assets for creditors to get, and you live in a non-garnishment state. This means you are virtually collection proof.
Many elderly citizens who live on social security and in states with liberal exemption laws fall into this category. Social security benefits cannot be garnished in most circumstances, and assets that are exempt from liquidation in bankruptcy proceedings are not prime targets for collectors.
The one thing bankruptcy can do for collection proof debtors that are not in the category of the elderly is to provide the automatic stay which prevents collection agencies from attaching or seizing exempt assets. That means you can postpone or avoid filing for protection as long as a creditor has not gotten a lawsuit judgment against you.
The main reason you may want to file bankruptcy sooner, even though you appear to be collection proof like the debtor in the illustration, is because filing can be a positive step forward in alleviating a negative condition. If you do not file, you can almost be guaranteed you will continue to dread getting your mail or answering the phone. Collection efforts normally do not stop just because you are collection proof, but filing can stop the negative effects of collections through the use of the automatic stay and the discharge of bankruptcy.
Filing bankruptcy is how you start rebuilding your financial life, and can be a positive step in the direction of improvement. Once you have been relieved of the stress that can be associated with collection activities, you will more likely be able to focus on the more important things concerned with the financial business of making a living, like getting a job.
You do not necessarily need a bankruptcy lawyer in order to file bankruptcy, especially if you do not have the means to pay one, but depending on the complexity of your particular situation and the amount of assets you have, consulting with a bankruptcy lawyer can be a wise decision.
If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Springfield, Massachusetts, contact us here today at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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This personal and real bankruptcy story was posted on the internet in 2011 during a bankruptcy discussion, “We own property with our home on it and an apartment building for two that we allow our kids going to school to stay rent free. We still owe $100k on the property but never have missed payments of $1300 per month. We also owe $30k in credit card debts due to health reasons. The original debt was $19k but we have not been able to pay anything for the past two years, and the debt has grown. We have no extra cash after our pay check because all our money is spent on living expenses. We can pay everything but the credit card payment. No cash reserves left. Collections are now after us, and we am being summoned to court over these issues. Can they force us to kick our kids out of the rental apartments since they are on our personal property? Will filing a Chapter 7 bankruptcy help us?”
Before this couple considers filing any bankruptcy, they need to consult with a bankruptcy lawyer who can help them determine whether or not they qualify for filing a Chapter 7 bankruptcy. If their income is at or below the median income for a family their size within the state they reside, they will automatically qualify for a Chapter 7, but if their income is more, they will have to take the Means Test to see if they qualify. If they do not qualify for a Chapter 7, then they may want to consider if another type bankruptcy might work for them instead.
The ways that filing a Chapter 7 bankruptcy might help this couple is through the bankruptcy court’s automatic stay and the discharge of the unsecured credit card debt. According to their story, the credit card debt is causing all their current financial problems.
The bankruptcy court’s automatic stay occurs the moment you file for bankruptcy protection. The stay, applicable in all types of bankruptcies, automatically stops and brings to a cessation certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. The automatic stay should potentially stop the lawsuit of the collections agency and the couple’s need to be summoned to court.
Filing and completing a Chapter 7 bankruptcy would have the effect of potentially discharging all of the unsecured credit card debt if all of the couple’s assets, like their homestead and rental property, fall under bankruptcy exemption categories. An exemption is where an asset is exempt from bankruptcy liquidation to satisfy unsecured debt. Exemptions are determined by either state or federal bankruptcy exemption laws.
Whether or not this particular couple should file a Chapter 7 bankruptcy depends on the complicated exemption laws as administered in their state. The possibility exists they may be better off filing a Chapter 13 bankruptcy if their exemptions are not enough to cover their homestead and rental property in which they and their children live.
Bankruptcy laws are often complicated. Contact us today, and we will help you find a bankruptcy attorney in your area that can help you with your questions on bankruptcy law.
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