Tag Archives: Chapter 7

Eighth Circuit BAP Allows Strip Off of Wholly Unsecured Lien in Chapter 20 (7+13)

6 Sep

The Eighth Circuit BAP found that a chapter 13 debtor may strip off a wholly unsecured lien on his principal residence even where the debtor is otherwise not entitled to discharge. In re Fisette, 11-6012 (B.A.P. 8th Cir., August 29, 2011). In so holding the court joined the majority of Circuit and BAP courts that have held that the reasoning in Nobelman v. Am. Savings Bank, 508 U.S. 324 (1993) establishes the right to strip off wholly unsecured residential liens. Turning to the issue of whether ineligibility for discharge under section 1328(f)(1) precludes the otherwise permissible lien stripping, the court stated: “We hold that the strip off of a wholly unsecured lien on a debtor’s principal residence is effective upon completion of the debtor’s obligations under his plan, and it is not contingent on his receipt of a Chapter 13 discharge.” Unlike the courts that have found that section 1325(a)(5) precludes lien-stripping in a chapter 20, the Fisette court found that, pursuant to the statutory language, the requirements of section 1325(a)(5) were not applicable to a lien which was unsecured. The court concluded its analysis with a finding that the creditors whose liens were stripped would be entitled to distribution of the estate along with the other unsecured creditors.

Chapter 7 Bankruptcy

16 Oct

Chapter 7 is designed to erase consumer debts and bankruptcy statistics show is the quickest and most straightforward type of bankruptcy and works best for individuals with large credit card debts or medical bills. Gaining a better understanding of Chapter 7 bankruptcy will help you determine whether it is suitable for your circumstances.

Should You File For Chapter 7 Bankruptcy?

In determining whether to file for Chapter 7 an individual should evaluate their financial situation with an experienced bankruptcy lawyer. In assessing the viability of a Chapter 7 case, the amount of debt is not as important as the client’s inability to repay it. Whereas some debtors file for bankruptcy with a relatively small amount of debt, others wait until massive amounts of debt accumulate before filing. With the assistance of an experienced bankruptcy attorney, the client’s debt, income, expenses and assets will be examined to help determine whether Chapter 7 is advisable.

The Bankruptcy Code requires debtors to disclose all of their monthly income and expenses. In addition to wages earned, debtors must disclose all other sources of income and are subjected to a means test. If an individual passes the means test, they are presumed to qualify for Chapter 7. Debtors who do not qualify for Chapter 7 pursuant to the means test may still be able to file for a Chapter 13 bankruptcy.

How a Chapter 7 Bankruptcy Works

The bankruptcy process begins with a petition filed in bankruptcy court that triggers an automatic stay which prohibits further collection efforts of creditors. While the court appoints a trustee to liquidate assets to pay existing creditors, most assets are subject to existing liens or are be exempt from liquidation. Generally, things like household goods, clothing and personal items are fully exempt. Property which is particularly valuable, such as oil paintings, coin collections, or rare items may have higher value than what can be protected under the exemption rules. In those circumstances, the debtor could be required to turn over the property to the trustee or offer to buy the trustee out of his interest in the non-exempt property. Once the trustee collects any nonexempt assets and pays creditors from their proceeds, any remaining debt is discharged, subject to certain limitations such as secured debt, taxes, Student loans, alimony and fraudulent acts.

If the debtor is concerned about losing certain assets in a Chapter 7 bankruptcy, he or she may be able to reaffirm certain assets, which permits them to keep the property outside of the bankruptcy by entering into a reaffirmation agreement if the debtor has sufficient disposable income and is relatively current on payments and the creditor agrees to reaffirm.

While filing for bankruptcy is often a difficult decision to make, debtors overwhelmingly feel relieved after they have filed for bankruptcy. At the McCandless Law Firm, we are committed to providing personalized service and our team of professionals want to help you get a fresh start. Southern California (909)890-9192 in Northern California(925)957-9797 today in Southern California (909)890-9192 in Northern California(925)957-9797today to arrange a free office consultation.

Things You Must Do Prior to Filing Bankruptcy

16 Oct

Stop using your credit cards and don’t incur any additional credit.
Once you have made the decision to file bankruptcy, you should not use your credit cards nor incur any additional credits from that point forward. Any recent purchases or advances can be held as still due and owing after you file bankruptcy. The rational is that you never intended to pay those debts back and is similar to fraud. If you’re seeking a fresh start, do your best to insure that you will in fact receive that fresh start. The credit card issuers are very aware of attempts to run-up the charges on credit cards. This also applies to cash advances. If you take a cash advance too close to filing bankruptcy, you are likely to see an objection from the credit card issuer. The objection comes in the form of an adversarial complaint. If the creditor is successful in their objection, the amount of the recent advance(s) will be held due and owing after your bankruptcy case.

Take the required credit counseling briefing
Before a Chapter 7 bankruptcy case can be filed, a person must take a credit counseling briefing from an approved credit counseling agency. This credit counseling briefing can be done on the internet or by telephone. The entire briefing typically takes less than one hour and at the time of this writing, costs approximately $50.00. The credit counseling briefing requires the debtor to provide information as to their monthly income and expenses as well as a listing of their creditors. This briefing must be completed within 180 days prior to filing bankruptcy.

File your taxes
You must file your most recent year’s taxes to qualify for Chapter 7 bankruptcy relief. Although this seems like a simple requirement, you would be amazed at the number of individuals who have not filed their most recent taxes. A copy of the return will be forwarded to your assigned bankruptcy trustee after your case is filed. You must also provide your most recent tax return to any creditor who requests it.

Provide your most recent paychecks
You must provide the most recent 60 days worth of paycheck stubs at the time your case is filed. These will be forwarded to your assigned bankruptcy trustee or may be filed with the clerk of the bankruptcy court. This measure is in place to make sure that the amount listed on the petition for monthly income is in fact accurate. If a person receives income from a source other than employment, evidence of that income must be provided just as if a paycheck stub. Once you are aware that you are likely going to file bankruptcy, keep copies all of your paycheck stubs in an organized manner.

Get Your Paperwork in Order
Collect all statements from bill collectors. Go online and get complete addresses of creditors who may have stopped billing you. Check the balances at financial institutions where you bank. Look at your recent tax returns to provide your gross income over the past three years. Basically, get to know your assets and liabilities and have them written out and organized for your lawyer to prepare your case. Gather a listing of all of all of your debts.

The more complete you can be in providing a list of your creditors, the less problems or headaches you will have from creditors after your bankruptcy case is over. Once you know that you are going to file, start to save all correspondence that arrives from creditors, collection agencies or others who are trying to collect on a debt. The disclosure requirements have become more stringent so you want to make sure that your have forwarded all of your creditor information to your attorney. If you are unsure of exactly who you may owe, you may want to consider acquiring a copy of your most recent credit reports. Each year you may request a free copy of your credit reports from the three major credit bureaus reporting companies. Those are TransUnion, Equifax and Experian and they can be obtained by going to www.annualcreditreport.com. Even if you are unaware of the creditors listed on your reports, provide those to your attorney anyway. When you seek credit, after your filing, for a mortgage, auto loan, or personal loan, you want to be able to show that all of the items on your credit report were listed and discharged in your bankruptcy case. The rule to remember is to list everybody and their grandmother on your bankruptcy petition and schedules. This way you can be assured that you are not leaving anyone out of the bankruptcy.

Check and review your petition for accuracy
Your attorney will prepare your bankruptcy petition and schedules primarily based upon the information and disclosures that you have provided. The petition and schedules will then need to be reviewed and signed by you. Do not take this step lightly. You are verifying that the information is true and correct to the best of your knowledge and that all of your assets and liabilities are listed. This is the time to double check the itemized list of creditors shown on the petition and schedules with your known list of creditors. You also want to make sure that your home, vehicle or other assets are properly listed and exempted to the full extent of the chosen law. Remember, your petition and schedules are a legal document signed under oath. Take the time to insure that they are true and accurate.

Pay your attorney or make payment arrangements
Most attorneys will want to be paid in full before they file your case. If they don’t, there is a chance that their fees may be discharged in the bankruptcy. All attorneys’ fees come under the scrutiny of the United State’s Trustee’s office and the bankruptcy court judges. They will monitor whether the fees charged in a Chapter 7 bankruptcy case are excessive. They will also determine whether or not the attorney had collected fees from his client when the debt was discharged. A debtor should be aware that there might be additional fees charged for filing amendments to the petition and schedules and for missed court dates. It is a good idea to get the attorney fee issue out of the way as early as possible. It is often the main reason why in certain circumstances, a case never gets filed.

%d bloggers like this: