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What are some limitations of protection of bankruptcy?

September 13, 2012 Leave a comment

If you are considering filing for bankruptcy you have, no doubt, considered a number of the positive effects of filing for bankruptcy. To name a few: filing for bankruptcy can reduce or eliminate unsecured debt obligations, can provide peace of mind, and can get a debtor back on track financially. However, bankruptcy is not a solution for all types of problems. There are a number of things that bankruptcy cannot do, and it is equally important to consider these issues, along with the more positive aspects, when considering filing for bankruptcy.

First, filing for bankruptcy cannot eliminate the rights of secured creditors. Common examples of secured debts are mortgages and cars. Some credit cards, including Best Buy credit cards and many furniture store credit cards, are secured creditors. If you are unsure about whether a debt is secured you should speak with an attorney prior to filing your case. Basically, in the case of a secured creditor, the debtor with either have to pay the debt or surrender the property. You cannot keep the property and not repay the debt owed to the creditor. In a chapter 7 the debtor would need to be current at the time of filing to ensure that the creditor does not file a motion for relief to foreclose or repossess the property. In a Chapter 13 any back due payments owed to the creditor can be paid through the plan over a certain period of months. The debtor would have to continue making timely ongoing mortgage payments.

Second, there are a number of debts that are not dischargeable in a bankruptcy under any circumstance. These types of debts are excluded from discharge by the bankruptcy code. If you have question regarding the types of debts that you owe and whether they are dischargeable you should speak with an attorney. Common examples include, but are not limited to: child support, alimony, debts owed for certain criminal charges, and restitution payments.

Third, bankruptcy does not address debts incurred after filing your bankruptcy. In a chapter 13 debtors need permission of the bankruptcy court to incur any new debts. In a chapter 7 debtors may incur new debt after filing their case, but should be advised that this debt is not dischargeable and the debtor will need to make continuing payments on the new debts.

If you have questions about this, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney Today.

Frequently Asked Bankruptcy Questions

September 13, 2012 Leave a comment

1. What will this do to my credit?

Honestly, it depends. In many cases, if you are already behind your credit is already poor. Bankruptcy may or may not make it worse short term. Long term, all of those balances owed should soon reflect a zero balance and that will help you to improve your credit. There are other steps you can take, such as opening one small card after your bankruptcy and paying off the balance each month.

2. Can I list my utilities?

Yes. In fact, you are legally required to list each and every debt owed when filing for bankruptcy. This is true no matter the size of the debt, your ability to repay the debt, or to whom the debt is owed. However, when listing utilities, you should be aware that the utility companies may require a deposit to continue service. Further, you will be responsible for any debt incurred to the utility company after filing the bankruptcy.

3. I lost my driver’s license for my inability to pay damages form an auto accident? Will filing for bankruptcy help?

Yes, if you lost your licenses because you were unable to pay damages filing for bankruptcy will help. You need to make sure that you list the law suit where the damages were ordered in your schedules. After filing you can get your license back. However, there are some exceptions to this if the damages were caused while you were under the influence. If you questions about this you should speak to an attorney.

4. Will I have to go to court?

In most cases the debtor need only go to the meeting of creditors. This is an informal meeting between the bankruptcy trustee, the debtor, and any creditor that choose to attend. If you have an attorney he or she will attend with you. You will be asked questions about your assets, your debts, and your petition and schedules. There may be other hearings in your case, but you may not need to go. Your attorney can advise you about this.

If you have questions about these issues, or anything else related to bankruptcy, we strongly encourage you to consult with an attorney. Bankruptcy is a complex matter and can substantially affect your rights and responsibilities for years to come. We offer a free, no obligation consultation at a number of locations. Please, feel free to contact a St. Louis Bankruptcy Attorney Today.

Secured Debt and Bankruptcy

September 7, 2012 Leave a comment

Prospective clients often have a number of types of debt and issues leading them to consider filing for bankruptcy. One of the most commonly asked questions is whether a particular item or debt has to be included in the bankruptcy. The answer to this question is unequivocally “yes”. Any debt that is owed at the time of filing must be listed on the bankruptcy petition and schedules. A debtor cannot choose to exclude certain items or debts and repay those.

However, the Bankruptcy Code does allow debtors some options with respect to certain types of secured debts, including homes loans and vehicles. In a Chapter 7 Bankruptcy the debtor can choose to keep the loan by either reaffirming the loan or redeeming the collateral. When a debtor files for bankruptcy any pre-petition contract is null and void. A reaffirmation agreement, as a practical matter, is an agreement between the debtor and the creditor to assume the original contract under the original terms. This agreement would be signed post-petition. If a debtor chooses to enter into a reaffirmation agreement the debt is not discharged. Should the debtor fall behind on payments on the home or vehicle the creditor could foreclose or repossess the property. In the event that the property is foreclosed or repossessed the debtor may owe a deficiency balance to the creditor. Due to waiting periods between filing for bankruptcy the debtor may be without a remedy against collections efforts for some period of time.

Redeeming collateral is a bit different than redemption, but is certainly a viable option. Redemption is where the debtor pays of the loan in full post-petition. This may sound impossible; however, there are a number of lenders that specialize in redemption loans. In some cases the redemption loan has a better interest rate or terms, making it more favorable than the original loan. That being said, reaffirmation agreements are far more common than redemptions.

In a Chapter 7 a debtor also has the option to surrender collateral. Basically, a debtor can list property as being surrendered and walk away free and clear. Any deficiency from the resale of the collateral would be discharged in the bankruptcy. This option may allow the debtor a fresh start after filing for bankruptcy as there will not be any further payments or amounts owed. Should a debtor surrender property his/her attorney may be able to make a recommendation of where to consider obtaining an alternate vehicle, home loan, or rental agreement. While it is true that bankruptcy can, and likely will be, considered as a part of your eligibility there are a number of lenders willing to work with people that have filed for bankruptcy.

If you have questions about this, or would like a free consultation, contact a St.Louis Bankruptcy Attorney Today.

Co-Debtors and Bankruptcy

September 7, 2012 Leave a comment

Oftentimes prospective clients have a number of different types of debts to discuss at a consultation. In some cases a debtor has a debt with another person. This could be because the debtor has a co-signer or is a co-signer. This could also be a debt like a mortgage that was held by two people equally. What happens to that debt depends on the circumstances. If a debtor has any situation where there are joint debts he/she should speak with an attorney as rights to property and certain responsibilities regarding property are payment may be affected for both the debtor and the co-debtor.

If a debtor is filing a Chapter 7 case and wishes to discharge an unsecured debt, such as a credit card, or surrender a secured debt, such as vehicle, he/she may certainly do so. However, if there is anyone else listed on the debt the co-debtor’s responsibility is not discharged. It is imperative to understand that filing for bankruptcy only impacts the filing party’s responsibility on the debt. For example, if Person A has a vehicle that Person B is a co-signer for, and Person A surrenders the vehicle in the bankruptcy, Person B is still legally responsible for the debt. Person B could file for bankruptcy and discharge his own legal responsibility to repay the debt. It is for this reason that most often married persons are encouraged to file a joint petition. Discharging one spouse’s obligation to pay the debt does not substantially alter the household’s obligation to repay the debt. However, if married individuals do not have joint debt they may not need to file together.

If a debtor is the co-debtor on another debt, for example debtor has co-signed on a vehicle for his brother, the debtor must still list this property and this debt. The debtor may explain on their schedules that the vehicle is actually the property of his brother and that his brother makes all the payments, but it must be listed as the debtor would have in interest in the property. Most often, in cases like this, the debtor would simply surrender his interest. This does not affect the contract between the debtor’s brother and the lender, it would simply eliminate debtor’s obligation as a co-signer.

There are a number of complex legal issues and circumstances that affect co-debtors when filing for bankruptcy. If you have questions, or would like to set up a free consultation, contact a St. Louis Bankruptcy Attorney Today.

What Type of Bankruptcy is Right for Me?

August 30, 2012 Leave a comment

If you are considering filing for bankruptcy you probably have a number of questions. Often times people turn to the internet or friends for advice, and may get confusing and inconsistent answers. The best course of action is to meet with an attorney. Many attorneys offer free, no obligation consultations. This is a great way to sit down with a qualified professional to discuss your particular case, ask questions, and get advice. While you should meet with an attorney, here there are some things you may want to consider and things you will want to be prepared to answer.

In meeting with an attorney, he or she will help you determine whether you should file a Chapter 7 or a Chapter 13 Bankruptcy. One of the first considerations is your income. Chapter 7 Bankruptcies are commonly known as “straight discharge” and the debtor(s) do not make any payments to creditors. A chapter 13 is known as a “reorganization” and the debtor(s) will enter into a three to five year repayment plan.

To file a Chapter 7 Bankruptcy you must be under the median income for your family size. This is calculated by looking at your income for the six months prior to the month of filing. If you are married and living with your spouse both of your income amounts will be included, regardless of whether you are filing a joint petition. If your income initially appears to be over median, you may still qualify for a Chapter 7, as your attorney can further evaluate your case to determine if your expenses pull you under the median income. If you are over the median income you will need to file a Chapter 13.

However, there are a number of reasons debtor(s) may desire to file a Chapter 13 instead of a Chapter 7, irrespective of qualification for a Chapter 7. If debtor(s) are behind on a secured debt, such as a house or a car, the arrears can be put into the bankruptcy plan. A Chapter 13 can save a house from foreclosure or repossession. There are a number of debts that cannot be discharged through a Chapter 7, but could be paid back through a Chapter 13 Bankruptcy. This approach may help the debtor(s) address all issues at once and get back on a track to financial stability.

Each case is different and the law can be quite complex and difficult to navigate. If you would like to set up a consultation, please contact a St. Louis Bankruptcy Attorney Today.

What is a 341 Meeting?

August 28, 2012 Leave a comment

A 341 Meeting, also commonly known as a meeting of creditors, is an opportunity for creditors and the bankruptcy trustee to ask the debtor questions. The meeting is called a 341 meeting because it is provided for in Chapter 11, Section 341 of the United States Code. Section 341 provides that a meeting must be held within a reasonable amount of time after filing. Commonly these meetings are set for approximately one month after the bankruptcy petition is filed with the court.

Section 341 also provides guidance to the trustee about what to ask the debtors. Among these include that the debtor is aware of the legal consequences of seeking a discharge, whether the debtor qualifies, and if the debtor understands the effect of reaffirming a debt versus obtaining a discharge of the debt. The trustee will generally ask about a debtor’s real and personal property. If the debtor owns a home the trustee is likely to ask the value of the home and how the debtor came to the value of the home. The trustee will also ask how much is owed against the home. The same questions will likely be asked regarding motor vehicles. The trustee may ask if the debtor is employed in the same capacity that he was at the time of filing.

Depending on what is listed in your schedules the trustee may ask follow up questions. For example, if a debtor lists a transfer of property or a business the trustee may want to know about those assets. The trustee may ask any questions and it is his job to ensure that if there is any property or money that should be turned over that it is in fact turned over to the bankruptcy estate.

The meeting of creditors provides an opportunity for the debtor to testify on the record concerning his or her bankruptcy petition and schedules. If there are any errors or omissions that have not been addressed the debtor should certainly mention the issues at this meeting. If there are errors or omissions the debtor may still need to amend schedules, however, it is imperative that this is mentioned at the creditors meeting. The bankruptcy petition and schedules are signed under penalty of perjury and testimony at the creditors meeting is offered under penalty of perjury.

The section 341 meeting, or meeting of creditors, is a very routine hearing that occurs in every bankruptcy case. Your attorney will be present with you and likely will have advised you of what to expect in advance. If you have any questions, or would like to schedule a consultation, contact a St. LouisBankruptcy Attorney Today.

Obtaining New Credit After Filing a Chapter 7 Bankruptcy

August 24, 2012 Leave a comment

Debtors often ask when they can begin to obtain new credit after filing a bankruptcy. Almost invariably the debtor is told that he/she can begin obtaining new credit immediately after commencement of his/her bankruptcy proceeding. While this is true, there are a number of things the debtor may want to consider when considering what types of credit are right for him/her.

First, consider any existing financial obligations. The bankruptcy discharge eliminates many kinds of debts, however, most debtors still have certain bills to pay for things like housing and utilities. There are some types of debts that may not have been discharged at all, including domestic support obligations and certain debts to governmental agencies. Further, if the debtor reaffirmed any collateral he/she should consider that ongoing payment as part of the budget.

Second, the debtor should consider the offer. Debtors are likely to get a number of unsecured loan and credit card offers immediately after filing for bankruptcy, and most of the offers are laden with high interest rates and predatory terms. Theses offers come for a number of reasons. For starters, as the individual has just filed a bankruptcy the creditor knows that any debt the individual incurs cannot be discharged in bankruptcy for eight years. Further, the individual has already shown signs of financial difficulty and lenders make the most money from individuals who carry balances on their cards.

When considering the offer, look for a number of things. Look to the interest rate. However, keep in mind, a high interest rate only affects the individual if he/she carries a balance on the card. If the card is paid in full each month this should not present too much of a problem. Next, be wary of special terms or interest free periods. These are incentives to get you to obtain the card and if you still have a balance at the end of the introductory period you may be charged fees dating back to the original purchase date. This can be a huge blow to someone trying to get back on their feet. Be wary of accepting too many offers. This can be hard to manage and control and may actually hurt your credit more than it will help.

A debtor may want to consider a secured credit card, secured by a deposit or a bank account. These generally have low limits and in the event that the debt is not paid the creditor simply takes the money from the account. This is a very controlled way to work on re-establishing credit.

If you have questions about this, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney Today.

How Will Filing for Bankruptcy Impact My Credit?

August 24, 2012 Leave a comment

Many individuals filing for bankruptcy are curious as to how filing will impact his/her credit and when he/she will be able to begin improving their credit after filing. The answer is that it depends. The impact to a particular individual’s credit score largely can be impacted by a number of things. If the debtor has already missed payments or made incomplete payments there he/she may already have poor credit. Filing for bankruptcy may impact the score negatively some, but in some cases, filing for bankruptcy can actually improve credit if the credit is already poor. Filing for bankruptcy may improve an individual’s debt to income ratio and will stop any further reporting of late or missed payments. It is important to remember that filing for bankruptcy is a one-time hit to the debtor’s credit, where missed or late payments continue to impact the credit score every month.

For some debtors, particularly those who are current on payments, the impact to the individual credit score may be more substantial. In this case, the debtor may be considering whether it is worth it to file. Chances are, if the individual is struggling enough to consider bankruptcy is it probably worth the temporary setback to the credit score. Further, if the debtor is struggling he/she may fall behind in payments later and the damage could be even worse.

Once a debtor have has filed his/her bankruptcy the available options for rebuilding credit largely depend on the type of case and the creditor. If the debtor filed a Chapter 7 he/she may incur new debt immediately after filing if he/she would like as none of his/her post-petition debts would be discharged in bankruptcy. An attorney may be able to make recommendations specific to the debtor’s needs, i.e. a vehicle. If a debtor filed a Chapter 13 case and need to incur debt for some reason he/she will need to first obtain permission from the court. This is something the debtor should consult with an attorney about and the attorney will need information concerning the nature of the debt and the obligation to repay. It is imperative that a debtor does not incur new debt while in a Chapter 13 case without permission of the court.

If you have questions about how bankruptcy will impact your credit, or would like to schedule a free consultation with no obligation, contact a St. Louis Bankruptcy Attorney Today.

Reaffirmation Agreements and Bankruptcy

August 16, 2012 Leave a comment

There are a number of reasons people file for a Chapter 7 Bankruptcy. Most commonly, the debtor is unable to repay their debt and would like a fresh start. The goal in a chapter 7 is to obtain a discharge of debts. However, for certain types of debts, the bankruptcy code does allow the debtor the potential option to keep property and continue making payments. These types of property include both vehicles and houses. If a debtor wishes to keep property he/she has a few different options. The debtor may redeem or reaffirm the debt owed on the property.

Reaffirmation is an agreement to keep paying under the original terms of the contract. If a debtor chooses to reaffirm a debt, and that reaffirmation is ordered by the court, that debt is not discharged. The debtor will remain responsible for the entire amount owed. In the event that the debtor is unable to make payments and the property is repossessed or foreclosed the debtor could be vulnerable to collection, law suits, and garnishment efforts. Before deciding to reaffirm a particular debt the debtor should consider a few things. First, the debtor should make sure that this is a debt he or she can afford in the future. Discharge of other debts may make the debtor more able to afford payments. The debtor should also consider whether he or she wants to continue making the payments. Considerations may include whether the property is actually necessary and what the interest rate on the note is. If you are concerned about replacing a vehicle after filing for bankruptcy your attorney may be able to make some suggestions.

If you are represented by an attorney for your reaffirmation the reaffirmation is considered effective as soon as the agreement is filed with your signature, your attorney’s signature, and the creditor’s signature. If you are not represented by an attorney there will be a hearing on the reaffirmation agreement and a judge will determine if the reaffirmation is in your best interest. Judges often consider the interest rate, whether there is any equity in the property, the debtor’s ability to repay the debt, and whether the property is reasonably necessary.

If you do not wish to reaffirm your debt, or a judge does not approve your reaffirmation, you do still have some options. You can continue to pay the debt and it is not likely that the creditor will repossess or foreclose on the property. The creditor is required to honestly and accurately report to credit bureaus.

If you have questions about this, or would like to schedule a consultation, contact a St. Louis Bankruptcy Attorney Today.

Lien Stripping and Bankruptcy

August 16, 2012 Leave a comment

There are a plethora of reasons a debtor may consider filing for bankruptcy, under Chapter 7 or Chapter 13 of the Bankruptcy Code. In many cases people are looking for a straight discharge and do not want to pay back creditors. To qualify to file for a Chapter 7 Bankruptcy, the procedures most commonly associated with the straight discharge, the debtor must meet income guidelines for the debtor’s family size. However, even if a debtor qualifies based on income for a Chapter 7 there numerous factors to consider before deciding under which chapter the debtor should file for bankruptcy. Deciding how to file you bankruptcy is something you should speak with an attorney about. There are a variety of issues that can come into play and your rights, both now and in the future, are affected by your bankruptcy proceedings.

If a debtor has more than one mortgage on real property it may be possible to strip the lien. This is only possible if the second or third mortgage is wholly unsecured. This happens when a debtor owes more on the first mortgage than the value of the property. That leaves the second mortgage as wholly unsecured. If the second mortgage is not wholly unsecured it cannot be stripped.

The first step for the debtor to take is to get an appraisal. That way the debtor, and his attorney, is sure before proceeding that the second mortgage is wholly unsecured. From there, an adversary proceeding would need to be filed. One that information is obtained your attorney can file the appropriate documents and notice the creditor and all appropriate parties. The creditor will be given time to respond to the adversary proceeding. If the creditor does not respond the motion can be granted without further proceedings. If the creditor does respond the matter will be set for a hearing and both sides will be permitted to present their case.

Often times debtors ask if there is anything else that can be done. Currently, in the Eastern District of Missouri, there are not any judicial remedies, other than lien stripping, available. A debtor may be able to pursue various other remedies, like loan modification and refinancing. While the debtor may need permission of the court to pursue these remedies, the court will not mandate that the creditor agree to such remedies.

If you have questions about this, or would like to speak with an attorney about lien stripping or a free consultation, please contact a St. Louis Bankruptcy Attorney Today.

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