bankruptcy (Photo credit: ruminatrix)
One of the hardest bankruptcies to complete, the Chapter 13 can be your best option for keeping more assets in a bankruptcy filing. The onus of the responsibility for making a successful Chapter 13 work for you falls directly on your shoulders.
A Chapter 13, commonly called a wage earner’s plan, allows you to make a plan to pay back all or a part of your unsecured debts over a 3 or 5 year time frame. The length of the plan is determined whether you fall under the median income for a family of your size in the region of where you live.
Here are some things you might want to read about if you are planning to file a successful Chapter 13 type of bankruptcy:
-
You propose the payback plan in a Chapter 13, and the plan should be based on your monthly disposable income. Your plan has to be confirmed at a confirmation hearing held by the bankruptcy court before you begin payments. Your creditors can challenge the plan at the confirmation hearing if they feel it is not realistic.
-
Once confirmed by the bankruptcy court, the provisions of a confirmed plan bind the debtor and each creditor by bankruptcy law. (11 U.S.C. 1327)
-
After your plan is confirmed, you must make either make direct or payroll deduction payments to the trustee on a monthly basis. This will require you to live on a prolonged fixed budget over a period of time, and to succeed, you must be willing to be disciplined enough to make timely payments.
-
You cannot incur new debt during your pay back period without the consent of the bankruptcy court. Additional debt can compromise your ability to meet your plan commitments.
-
If you fail to make payments to the trustee in a timely manner, your Chapter 13 can be dismissed or converted into a Chapter 7 bankruptcy.
-
In addition to making your monthly payback payments to the bankruptcy trustee, for any secured assets you want to keep during the bankruptcy process, you must make timely payments on those assets as well. Any arrears on secured assets must be either paid in full at the beginning of your plan or built into your monthly payment plan.
-
Any post-filing domestic support obligations, student loans, and tax liabilities must be paid during the payment plan, unless special permission is given by the bankruptcy court for the debtor to suspend payments until the bankruptcy is over.
Almost two thirds of Chapter 13 bankruptcies fail. The reason many are dismissed is because they are converted to a Chapter 7, but others are dismissed because the filing debtors get behind on their payments. Many fail to complete a Chapter 13 because of a job loss.
The successful Chapter 13 filers are those who can learn how to live on a tight budget for a period of time and who are determined to do so. You are the only one who can make a Chapter 13 work for you. The bankruptcy lawyer you choose to help you during the bankruptcy process can also play an important role in determining whether or not you will have a successful Chapter 13.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Personal Bankruptcy Story
A 60 year old senior from Georgia blogged on a bankruptcy forum website today asking the question why shouldn’t he file for bankruptcy. Here are excerpts taken from his personal bankruptcy story: “My wife deserted me 1 1/2 years ago and my divorce was just finalized. She left me with $15,000 of credit debt I’ve been trying to pay down but I can’t. I can’t even afford to buy shoelaces (the ones I have on now have broken twice and I’m trying to use them till they break a 3rd time)… I have to use a FOUR WATT lamp at night to see in the dark (I don’t turn the lights on to drive up the electric bill) and don’t use the heater in the winter (usually 38-42 degrees in the house – the cat hates it!!). It’s really rough… Just found out I owe taxes for last year (already making monthly payments for the year previous (when she left me). The wife is no longer here to help me with the things she said she would…. Only way I see my way out of all this mess is filing bankruptcy. I do plan to keep making payments on the house and car (both paid off in 5 years) and would like to keep those assets…Why shouldn’t I file for bankruptcy?”
Seniors on limited income, unfortunately, are often good candidates for filing bankruptcy, especially when a tragic events like a divorce, a sickness, sudden loss of income, or a variety of other unexpected events occur.
In the illustrated case above, this male senior was counting on his wife’s income for their retirement years, but instead, the divorce left him not only with income insufficient to sustain his level of living but with debts he can no longer maintain payments on.
The senior owes 5 years more payments on his house and car. The short time he owes on the house could indicate he has a great deal of equity in the home, depending on how big it is and where it is located in Georgia. Georgia homestead exemptions allow $10,000 in equity. For a car, the equity allowed is $3500. The state does not allow filers to use federal exemptions for assets, so their choice is dictated by state bankruptcy exemption laws alone.
Filing Bankruptcy
Filing bankruptcy is all about protecting what assets you can legally keep in order to make a fresh financial start. The senior in Georgia wants to keep his home and car. That might mean he will need to file a Chapter 13 bankruptcy in order to keep his house, again, depending on how much equity he has in the house.
More than likely, the senior qualifies for filing a Chapter 7 bankruptcy, but one of the advantages of filing a Chapter 13 over a Chapter 7 is that you can keep your house as long as you keep making the payments on time. With a lot more equity in the home than what is exempt, the trustee may liquidate the home to pay off the unsecured debts of the credit cards if the senior files a Chapter 7.
Without knowing all the exact financial particulars about any bankruptcy situation, it is impossible to determine which bankruptcy is right for any given filer and how much assets they can protect. That is why is so important for a potential bankruptcy filer, like the senior in the illustration, to seek out the help of a bankruptcy attorney who can answer any questions he may have about protecting his assets.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Bankrupt shop, signes. (Photo credit: Wikipedia)
One of the harder concepts for first time filers to grasp in Chapter 7 bankruptcy cases is the difference between a bankruptcy discharge and a bankruptcy close. Filing a bankruptcy is a process that has a beginning and an ending. Officially, a bankruptcy has not completely ended until the bankruptcy is officially closed by the bankruptcy court. This concept becomes very important when you have an asset case in a Chapter 7.
Since most Chapter 7 bankruptcies are no asset cases, the significance in the issue of the differences between discharging and closing a case rarely come up. In no asset Chapter 7 cases, the discharge is the primary event a filing debtor should be concerned with because it is the date a debtor can officially receive forgiveness of his unsecured debts, and it is the date the debtor can claim legally ownership back of his exempt assets. Officially, the trustee has abandoned all of the scheduled assets of the bankruptcy estate back to the debtor when he or she has filed the Report of No Distribution. This usually occurs within 60 days from the time of the 341 Creditor’s Meeting.
When you have an asset case in a Chapter 7, the closing of the bankruptcy becomes the most important event. The purpose of a Chapter 7 bankruptcy is for the bankruptcy court to take your non-exempt assets, liquidate them, and divide the proceeds up to pay your unsecured debts to creditors that have made official claims to the property. Many times, creditors do not make the claims necessary, and when they don’t, any assets remaining will go back to the filing debtor. Filing debtors must keep the assets as property of the bankruptcy estate until the assets have been officially abandoned.
The case trustee must submit to the US Trustee a Final Report, Distribution of the Estate Dividends, and a final account of Certification the Estate has been Fully Administered and Applications to be Discharged. The Final Report is normally due 60 days after the 341 meeting; the Distribution of Estate Dividends normally takes place within 30 days after the entry of the final order on compensation and expenses; and the Certification the Estate has been Fully Administered and Applications to be Discharged usually occurs within 125 days after the entry of the order of court allowing compensation and expenses. Therefore, all of these actions between the case trustee and US Trustee can technically take up to 215 days to complete, but exactly how long these processes take depends on how busy the bankruptcy court and trustees are.
Upon approval, the US Trustee will file the Certification the Estates has been Fully Administered and Applications to be Discharged with the bankruptcy court clerk. If within 30 days of that filing no objection has been filed by the United States Trustee or by a party in interest, the court shall enter an Order closing the case pursuant to 11 U.S.C. section 350 and FRBP 5009.
A Chapter 7 bankruptcy is not officially closed until you receive the Order closing the case. Understanding when a bankruptcy closes will only make a difference to you if you are waiting on what to do with assets you still currently possess.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
The average American citizen who has never faced filing bankruptcy before should become familiar with some of the basics about the process of filing. One of the most basic concepts about filing in the United States is understanding that the bankruptcy system is set up by Congress as established by the Constitution. Federal Courts, therefore, are used by the United States to hear all of these type cases.
New Orleans - CBD: John Minor Wisdom United States Court of Appeals Building (Photo credit: wallyg)
General Information about the Federal Courts
District courts are the trial courts of the federal court system. They have jurisdiction to hear almost all categories of federal cases, including civil and criminal. The Federal Courts utilized to handle these cases are found in 94 federal judicial districts. The districts encompass 89 federal courts within the continental United States, Puerto Rico, the Virgin Islands, the District of Columbia, Guam, and the Northern Mariana Islands.
District Courts of Bankruptcy
Bankruptcy district courts are separate units of the federal court system having exclusive jurisdiction over these type of cases. There are 94 U.S. Bankruptcy Courts, one for every federal court.
The purpose for the federal courts is to help individuals, who cannot pay their creditors, get a financial fresh start through either liquidation of assets or paying their debts through a repayment plan. The same bankruptcy courts can also help various businesses through either liquidation of assets and/or a reorganization plan.
Federal bankruptcy courts are governed by Title 11 of the United States Bankruptcy Code. The greatest majority of cases filed in these courts are found in three main chapters of the Bankruptcy Code: a Chapter 7, a Chapter 11, and a Chapter 13. Bankruptcy cases cannot be filed in state court.
Bankruptcy Appellate Panels
Bankruptcy Appellate Panels are panels made up of three judges to hear appeals from bankruptcy court decisions and are units of the federal courts of appeals. They were established under the Bankruptcy Reform Acts of 1978 and 1994. These two laws set forth jurisdiction for appeals of bankruptcy decisions and authorizes the establishment of the panels. Bankruptcy judges serve actively as both appellate panel judges and district bankruptcy judges at the same time.
Appeals from orders of bankruptcy judges may be taken either to the U.S. District Court or the Bankruptcy Appellate Panel, depending if one has been established and the district has chosen to participate. Further appeals may be made to the court of appeals for that particular circuit. There are thirteen judicial circuits, each with its own court of appeals. The 1st, 6th,8th, 9th, and 10th circuits have Bankruptcy Appellate Panels. . The smallest court is the First Circuit with six judges, and the largest court is the Ninth Circuit, with 28 judges. Title 28 of the U.S. Code, Section 41 provides a list of the states that compose the circuits. The number of judges in each circuit is set forth in Title 28 of the U.S. Code, Section 44.
All of these federal courts provide evidence the bankruptcy process is serious federal business and exists to work out the complicated bankruptcy laws within the confines of the federal court system. Maneuvering through the system is not wise without the counsel of an experienced bankruptcy attorney to guide you.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Image via Wikipedia
No Mystery in State of Bankruptcy
There is certainly no mystery about a debtor going into the state of bankruptcy. When you start to become insolvent, you will know it. A common symptom for going into bankruptcy is that you do not have enough monthly income to pay for your monthly expenses. Not being able to pay your monthly expenses, you get financially behind and more financially behind until you realize that, soon, you won’t have any assets left that you own outright. On the other hand, bankruptcy success might be a mystery to some.
Bankruptcy Success Mystery in Personal Bankruptcy Story
An interesting, personal, and successful bankruptcy story I read this morning on a bankruptcy blogging website got me to thinking about how much of an antithesis “bankruptcy success” must seem to those who have never experienced financial bankruptcy. Certainly, the use of this metaphor must seem strange and mysterious to those who have been fortunate enough to always be able to pay their bills on time. After all, how can there be bankruptcy success?
The personal bankruptcy story inspiring the blog I read this morning was written in October of 2011. It comes from a former debtor who revisited the blogging site after having successfully completed and closed a bankruptcy in October of 2009.
The filer, forced into a Chapter 7 because of too much debt, wrote that the 2009 bankruptcy had gone smoothly during the bankruptcy process despite tithing 10% along the way, having to lose properties through foreclosures, and having their credit completely ruined.
Before the bankruptcy was closed, the former debtor opened a small business for herself that has been doing well ever since. She did not take a paycheck until the spring in 2011. Her children moved out of the house they were renting, so in the summer of 2011, her and husband moved to a smaller house they rented for less. Since the bankruptcy gave them a fresh start, the couple have been able to now “save for retirement, have sinking funds, have an emergency fund, and can go do fun things every week.”
The debtor further blogged “We purchased a new car with 0% financing without any questions, and other than that, we are now living on a cash basis. My husband did get two small credit cards to rebuild, but we pay the balance monthly and hope to drop these soon as they both have annual fees. I just got approved for a Capital One card with no annual fee, and 0% interest until who cares when, because I won’t be carrying a balance!”
Practical Application for Bankruptcy Success
This blogger’s bankruptcy success story is not as unusual and mysterious as it may seem. Actually, it is a more common story about filing bankruptcy than the stories you might most often hear about, especially when complexities seem to be the rule rather than the exception.
The practical application for you having a bankruptcy success story like this one is to have a bankruptcy attorney help you file your case. That is exactly what the blogger did in this particular bankruptcy case, and that is no mystery.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Image via Wikipedia
Federal Rules of Bankruptcy Procedure Changed
Most every year it is necessary to make changes to the set of rules that determine how bankruptcy cases proceed. These rules are formally call the Federal Rules of Bankruptcy Procedure. The newest bankruptcy rule changes took place this past December 1, 2011.
An advisory committee made up of federal judges, bankruptcy attorneys, and others annually identify rule issues that need to be addressed by Congress. This past year’s committee meeting resulted in seven amendments to the rules being amended that would affect various types of bankruptcy cases depending on the type of bankruptcy.
Rule Amendments for Individual Bankruptcy Cases
This blog will deal only with one new rule and two amendments for individual bankruptcy cases, and primarily how they might affect a Chapter 13 or Chapter 7 bankruptcy.
Amended Rule 3001(c) (2), is an amendment dealing with proofs of a claim made by a creditor. Penalties for non-compliance with this rule can include barring the creditor from presenting the omitted information in any contested matter, and an award of reasonable attorney’s fees and expenses. This added subdivision prescribes additional supporting information to be filed with a proof of claim when the filing debtor is an individual. They are:
-
The additional supporting information requires the creditor to provide an itemization of interest, fees, expenses, and other charges incurred by the debtor prior to the petition and included in the claim.
-
The creditor is to include a statement made as to the amount necessary to cure any default on a claim secured by interest in the debtor’s property before the petition was filed. The official Form “B10-Attachment A” must accompany the statement if the secured interest in the debtor’s property is the debtor’s principal place of residence.
-
An escrow statement must be included if one exists for the principal place of residence as of the petition date.
New Rule 3002.1, is a new rule related to any claims secured by the debtor’s principal place of residence in a Chapter 13 case in which the debtor is attempting to cure a default and maintain payments of a home mortgage over the course of the debtor’s plan.
The basic components of this new rule are that the rule requires the holder of the mortgage to notify the debtor, debtor’s counsel, and the trustee at least 21 days prior to the new mortgage payment, requires an itemized notice to be given within a 180 of any post-petition changes in fees, expenses and charges, and to fill our the proper paper in a timely fashion that will adhere to this rule. The rule allows for sanctions to be placed against the creditor in non-compliance.
Amended Rule 4004(b), is an amendment to allow a creditor with a basis for revocation under USC 727(d) to seek an extension of time to file an objection to a debtor’s discharge after the deadline for filing such has already expired.
The laws quoted in this article are not all inclusive nor intended to be used for legal advice. You need to consult with a bankruptcy attorney to get the full meanings of how these law changes might apply in your particular situation.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Image via Wikipedia
Filing a Pro Se bankruptcy is often successful when filing a no asset Chapter 7. You can file Pro Se successfully if you can comprehend what you read and follow legal directions. The challenge of filing your own Chapter 7 bankruptcy without a lawyer becomes harder the more non-exempt assets you own, but the challenge of filing any kind of Chapter 13 Pro Se can end up being nothing more than a suicidal attempt if it gets dismissed.
As an example of one such attempt, a Pro Se filer recently came to a bankruptcy forum website asking multiple questions about what needed to be done now after filing a Chapter 13 petition with the bankruptcy court. The bankruptcy court clerk gave the filer a list of missing items on the petition. These items included the Chapter 13 plan, notice of available chapters signed by debtors, verification of the creditor’s mailing list, and a state of related cases required by local bankruptcy rule 1015-2.
The filer opined through his blog the most important missing item on the clerk’s list must be the Chapter 13 plan, asked if there was a form for it, and whether of not the plan could just be a narrative write-up. The Pro Se filer also asked how hard it would be to get an extension to file the missing forms.
Depending on the bankruptcy court in which you file, all of these missing items listed by this illustrated Pro Se filer can be issues resulting in a dismissal of the Chapter 13. A dismissal at this point would likely be based on the filers stated lack of compliance with 11 USC 521, the Filers Duties.
Completing a Chapter 13 bankruptcy is successful in the United States only about 30 percent of the time. One of many reasons a Chapter 13 might not be successful is because filers make errors in filling out the complicated paper work necessary for a completion of this type of bankruptcy.
Filling out the paperwork without errors gives a bankruptcy court the needed information required to help guide the filer through the bankruptcy process and toward a successful conclusion. Although there is a process for correcting paperwork errors, correcting the errors can often be harder than properly filling out the forms in the beginning. Those who have been trained and have the experience in both bankruptcy law and procedures are often the most successful in bringing a Chapter 13 to completion.
The bankruptcy system, like most legal court systems, is not very forgiving when it comes to ignorance of its laws. It is not likely a bankruptcy court will extend a 521 dead line without a good cause for doing so.
As to the question the Pro Se filer raised about the Chapter 13 plan being a narrative, experience within the bankruptcy system would have taught him that many bankruptcy courts recommend using their own “Model Plan” to help the filer in making their plan.
What the Pro Se filer should understand is that all the missing items that were listed are equally important in helping him finish a Chapter 13 plan. An experienced bankruptcy lawyer would most likely have avoided those particular mistakes and prevented the filer’s petition from a dismissal, or looking at it from another angle, dead on arrival for his attempt.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Bankruptcy (Photo credit: phil dokas)
A Personal Bankruptcy Situation Spawns Question
The wife of a married couple, considering filing bankruptcy, recently blogged on a bankruptcy forum website making this statement and asking this question in the blog: “I have an LLC which generates close to no money, I am an officer in my brothers company and I am listed as a trustee on my mothers property. How will all this play into personal bankruptcy, and will the bankruptcy court trustee go after my mother’s property and my brother’s business?”
This debtor, looking into filing a Chapter 7 bankruptcy, shared these facts about her personal bankruptcy story:
-
both husband and wife are in serious debt;
-
their home was foreclosed on in 2007;
-
the second mortgage remains on credit report as a bad debt;
-
they owe deficiency on the home;
-
total debts including house is about $14,000;
-
They owe on 2 cars they want to keep because of work and small children; and
-
the husband has tax lien from before marriage of $11,000.
Assuming the blogger and husband qualify to file a Chapter 7 bankruptcy, the debtor has asked a good question with three parts.
Part 1- How will all of the facts play into personal bankruptcy?
Determining whether to file a Chapter 7 bankruptcy jointly or individually should be one of the main concerns for this couple. If the woman files individually, the husband will be viewed by the bankruptcy court like any other relative under some circumstances. Knowing if the couple reside in a community property state and how their assets are owned, individually or jointly, will help them determine whether they should file jointly or individually to protect the couple together or the husband as a relative.
Learning and understanding what their state’s exemption laws are will help the couple determine whether or not they are an asset case. Once learned, they can then make a decision on how they want to proceed.
Part 2 – Will the bankruptcy court trustee go after the mothers property?
Just because your are a trustee of the property which belongs to a relative does not necessarily mean a bankruptcy court can come after the property. The executor or trustee of an estate has certain legal rights that have been determined by prior laws, mostly state.
Unless the trustee of the property has a personal interest in the estate like an inheritance or fee for administering the property, there will be nothing for a bankruptcy court trustee to go after. The property of the mother will remain hers until the property of the estate has been legally adjudicated.
Part 3 – Will the bankruptcy court trustee go after the brothers business?
The answer to this question all depends on what type of business it is and whether the filing debtor owns assets in the business. You can serve as an officer in certain types of business without owning assets within a company, but a bankruptcy court trustee might come after your assets if you own an interest in the company of a relative you are currently serving as an officer.
Before this debtor files a Chapter 7, she should consult with an experienced bankruptcy attorney to help her answer all three parts of the question she raised.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
Image by Getty Images via @daylife
A Question Raised Through Bankruptcy Discussion
Finishing a Chapter 13, a type of bankruptcy for wage earners, has historically showed statistics very little success. National statistics for those who actually finish a Chapter 13 plan to pay unsecured debt ranges between 10 and 33 percent.
When a bankruptcy Chapter 13 filer cannot finish the plan, for whatever reason, the bankruptcy court handling the case immediately stops the progress of the case through dismissal. Many debtors seeking answers on bankruptcy forum websites have asked why so many cases of Chapter 13 bankruptcies have been handled through a dismissal?
Various Answers are Submitted to the Question Raised
For the most part, sometimes in a Chapter 13 bankruptcy case, something will happen during the bankruptcy to change the overall scheme of the plan. Most often than not, the Chapter 13 bankruptcy filer that has his or her Chapter 13 ended with a dismissal will still finish the bankruptcy by converting it to a Chapter 7 bankruptcy. This fact skews the high statistical analysis of dismissal for Chapter 13 filings.
Here is a list of some of the most common occurrences that may happen to cause a Chapter 13 to be regarded by a bankruptcy court for dismissal:
-
A loss of income is the number one cause of having a Chapter 13 dismissed and converted to a Chapter 7.
-
A change of mind by the filing debtor who wants to keep his or her home, is another often occurring event that can cause a dismissal. One of the advantages for filing a Chapter 13 is to keep your home. If the debtor, after filing bankruptcy, decides the home is too underwater to keep, he may change his mind about the bankruptcy and decide to give the property back to the mortgage lender.
-
A lack of discipline can cause a dismissal of a Chapter 13. When you default on your payment plan, the bankruptcy court trustee can have the bankruptcy dismissed. Chapter 13 plans realistically look at allowing you the basic sustenance for living, and they do not leave much room for a lavish lifestyle until the plan payment period is concluded. If you cannot discipline yourself to that kind of budget, odds are you will ultimately default on the Chapter 13 payment plan, like you may have done with your creditors who brought you to a bankruptcy situation in the first place.
-
You may have had unrealistic expectations when presenting your pay back plan to the bankruptcy court. Here you, and whatever legal counsel you had helping you, may have made an unrealistic goal for the plan, not allowing enough to realistically live on. The decision to file an unrealistic plan might cause you as much stress as you had while making bill payments prior to filing bankruptcy. In devising such plans, these type plans often end in default when the debtors keep getting behind.
A Chapter 13 is Not Necessarily for Everyone
A Chapter 13 is not necessarily for everyone, but it does meed a certain need for those who are bankrupt, employed and desire a fresh new start. If you are considering filing bankruptcy, you may wish to consult with an experienced bankruptcy attorney who can help provide you with legal answers to your questions and the experience to help you make a Chapter 13 plan you can live with until you finish the plan.
Ready to find out today if Bankruptcy is right for you?
Complete the short form below and get answers now!
« Newer Posts
