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January 2015 Archives

What is a Cramdown and How Can it Help in a Chapter 13 Bankruptcy Case ?

One of the attractive features of a Chapter 13 bankruptcy reorganization is it allows you to get rid of cumbersome past debt while it enables you to stay current on upcoming payments due on property you will want to keep such as your home and car.  In these Chapter 13 cases, you can particularly get out from what are commonly referred to as “underwater loans”. These are loans where the amount still due on the loan exceeds the current value of the item purchased by the proceeds of that loan.   In this context, you can opt to “cramdown” the loan so you do not have to pay off so much principal.

What Information Will Be Used to Calculate Whether You I Qualify for a Chapter 13 Reorganization?

In a previous blog on this site, the topic of how to qualify for a Chapter 13 bankruptcy is discussed. This article identifies what specific information would need to be provided to the court to determine if you qualify. Bankruptcy courts provide a form which asks for the following information so the necessary calculations for that purpose can be performed:

How Do I know if I Qualify for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy cases are intended for individuals not businesses. But such individuals must qualify based on the size of their income as well as some other factors. In order to qualify for Chapter 13, you will have to show the bankruptcy court that you will have sufficient  income, after deducting certain allowed expenses and required payments on secured debts (such as a auto loan or home mortgage), to make the repayment obligations which the court will impose via a payment plan.

What is the Difference Between Chapter 13 Bankruptcy and Chapter 7 Bankruptcy?

Chapter 13 bankruptcies provide an attractive alternative for wage earners and home owners who are seeking relief from temporary financial difficulties. Not everyone can or should file a Chapter 13 case. There are certain requirements relating to income which must be met, i.e., the Debtor must have regular income.  Chapter 7 bankruptcy may be a preferable option for those who are willing to sell (or liquidate) their home (although often the home can be saved even in Chapter 7). Because of income requirements, Chapter 7 cases may serve as a better choice for those who have less income and want to get in and out of bankruptcy quickly.

New York Attorney General to Settle with Debt Collection Company

The Attorney General for the State of New York, Eric Schneiderman has announced that his office plans to settle a case against Encore Financial (“Encore”, a debt collection company which buys the debt of other companies in an effort to turn around and collect those debts). The New York Attorney General investigated the company because it had received numerous complaints that the company filed thousands of flawed debt collection lawsuits against state residents.

How are Attorney’s Fees Paid in a Chapter 7 Case and When?

With regard to Chapter 7 bankruptcy cases specifically, attorney fees owed to the Debtor’s counsel for services prior to filing the case must be paid before filing your Chapter 7 case. The reason for this is simple: once the Chapter 7 action is filed, any outstanding debts may be subject to discharge. Accordingly, bankruptcy attorneys, as a matter of practice, will either collect the anticipated before they file their client’s cases, or they will collect a retainer, pay themselves the amount owed on the filing date, and use the remainder to cover post filing fees.  Fees incurred after the filing date are not dischargeable in the Chapter 7 case.

What Action Can a Debtor Take after Bankruptcy Discharge Regarding a Forgotten Debt?

The essential goal for Chapter 7 bankruptcy debtors is to eliminate past indebtedness so as to get a fresh start financially. The debtor will have reached this point in his or her Chapter 7 bankruptcy case when certain specific debts are discharged. In some instances, however, a debtor may have forgotten about some past debt and omitted that debt from the schedule of debts which the bankruptcy court will require the debtor to file early in the case. If it is not listed on such schedule, the  debt will generally not be discharged.

Does Chapter 7 Bankruptcy Require Liquidation of Personal Property?

Chapter 7 bankruptcy actions give debtors who complete such a case a chance to get a fresh start financially by obtaining discharge of overwhelming debts which prevents such debtors from staying current with their monthly bills. These cases entail a process where the bankruptcy trustee appointed by the court uses funds gained from liquidating the debtor’s property to pay off the claims of creditors, primarily the secured creditors. The trustee may sell not only the home – or real property – owned by the filing debtor but also the personal property of the debtor.

What Types of Debt Can’t Be Discharged in a Chapter 7 Bankruptcy?

In the prior post in which the topic of bankruptcy discharges in Chapter 7 cases was discussed, it was mentioned that some debts cannot be discharged via bankruptcy. This means that debtors will have to pay some, if not all of certain debts. The following kinds of debt are not subject to discharge:

What is a Discharge in Chapter 7 Bankruptcy Cases?

The essential goal for Chapter 7 bankruptcy debtors is to wipe away past indebtedness so as to get a fresh start in handling one’s financial affairs. Technically speaking, the debtor will reach this juncture in his or her Chapter 7 bankruptcy case when certain specific debts are discharged. So what is a discharge in Chapter 7 bankruptcy cases?

How Do I Know if I Qualify for Chapter 7 Bankruptcy?

Not everyone who is insolvent or in some financial distress may necessarily be eligible for Chapter 7 bankruptcy. A debtor whose debts are primarily consumer debts (debts incurred for personal, family or household purposes) must have an income below certain levels (varying by state and family size) in order to qualify. A means test is employed to compare monthly income with debt to determine eligibility to file.  Persons whose debts are primarily business debts do not have to satisfy the means test to be eligible to file for chapter 7 bankruptcy.

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