James Witherspoon asked:




The United States bankruptcy code allows people and businesses who are in debt to file for debt protection and potentially discharge or reorganize the money they owe. Bankruptcy allows otherwise responsible people to overcome their debts and get on with their lives. Knowing the various chapters of the code and how they may (or may not) apply to you can be very important in weighing the decision to file for bankruptcy.

If you or someone you love is living with the pressure of heavy, unsustainable levels of debt, it may be beneficial to discuss your financial situation with an experienced bankruptcy attorney. He or she may be able to go over your case with you in greater detail, and give you the professional advice you need to make an intelligent decision.

The Types of Bankruptcy

The US Bankruptcy Code is divided into several chapters, each of which describes a different situation and condition. Some are available only for individuals or only for companies, while others are available for both private and public entities. They are:

· Chapter 7. Chapter 7 involves liquidation of property and is the most common form of debt protection in the United States. Both companies and private citizens can file for Chapter 7. Your non-exempt assets are put up for sale, with the money raised from this sale taken to pay off your creditors. Individuals can have their debts discharged, while companies which file for Chapter 7 are dissolved.

· Chapter 11. Chapter 11 is a reorganizing bankruptcy for corporations. A business drafts a plan to restructure and pay off its debts and a timetable of several years over which to do so. In most cases, it allows the business to keep some or all of its property.

· Chapter 12. Chapter 12 applies only to commercial fishermen and farmers and is tailored particularly for these individuals. An experienced attorney can tell you more about whether you are eligible.

· Chapter 13. Similar to Chapter 11, Chapter 13 allows for reorganization for individuals. An individual submits a repayment plan to the courts, which decide if it is feasible and responsible. An individual needs a relatively large, stable income to be eligible for this chapter.

An experienced bankruptcy attorney can help you determine if any of these options are right for you. To learn more about the process and whether or not you are eligible, please visit the website of the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC, today.

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Joseph Seagle asked:




In Bankruptcy cases, specifically Chapter 11 and Chapter 13, lien stripping is an effective tool in reducing the payments made to creditors. In Chapter 13, the debtors reorganize their debts into a repayment plan whereas Chapter 11 is for businesses and individuals whose debts exceed the limits in Chapter 13.

Lienstripping is referred to as the debtors’ ability to reduce an undersecured creditor’s claim by valuation of the underlying collateral. This is also known as bifurcation where the undersecured creditor’s claim is divided into secured portion and unsecured portion. The unsecured portion of the lien is stripped away from the collateral and becomes an unsecured claim. For example, if a debtor purchased a commercial building with a mortgage of $500,000 and the current value of the building is $300,000. The creditor’s lien is undersecured and can be bifurcated into $300,000 secured claim and a $200,000 unsecured claim. The debtor is only required to pay back $300,000 over the life of the loan and the remaining $200,000 can by discharged at the end of a successful plan. Under nonbankruptcy laws, the debtor is required to pay the entire amount since lienstripping is unique to bankruptcy cases. Lien stripping is not available in Chapter 7 cases which are used in discharging unsecured debts because liens ride through Chapter 7 cases untouched.

However, there are limitations as to what the debtor can do in valuing claims on the primary residence and vehicles financed within 910 days. Congress in its wisdom has prohibited individuals from modifying loans on their primary residence. If the debtors have one mortgage on their home, they cannot reduce the loan to the value of the house. However, the debtor is allowed to strip away a second mortgage that is not secured by the value of the house. For example, if the debtor has a first mortgage of $300,000 and a second mortgage of $100,000 and the house has a value of $250,000, then the debtor is allowed to strip away the second mortgage. In Chapter 13 cases, Congress applied another limitation to stripping liens on vehicles financed within 910 days of filing bankruptcy. A vehicle that has been financed longer than 910 days can have its lien reduced to the value of the collateral which allows the debtor to make reduced payments based on the current value of the vehicle and not the outstanding balance of the loan. The interest rate can also be reduced to the current market rate and the debtor is not required to pay the contract rate.

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Andrew Stratton asked:




Bankruptcy lawyers are legally licensed practitioners that assist individuals or businesses with the legal proceedings involved in filing for the same. They begin by guiding their client through the necessary steps in choosing the appropriate filing option, and then continue to assist the person with related paperwork, dealings with past debt collectors, keeping them informed of corresponding state laws. The most common type filed in the United States is Chapter 7, which is relatively quick and simple, but Chapter 13 is quite common if the debtor is employed or makes money some other way.

Chapter 13 is a type of financial rehabilitation designed for individual households with a steady income to repay all of their debt in specific payment plans, and it is also referred to as the Wage Earner Bankruptcy.

Chapter 13 allows the individual to keep possession of all assets, but the person is required to continue paying on his or her debts over time. This payment process usually lasts about three to five years. The amount of payment is dependent on various factors within the situation, including the debtor’s income and personal living expenses.

Bankruptcy lawyers handle the establishment of such payment plans, and make decisions in accordance with the law, which varies state by state. If their client’s monthly income exceeds the corresponding state’s median income, the payment arrangement will usually be set to exist for five years. If their client’s income drops below their state’s median earnings, the arrangement will be set for three years unless the federal court system states otherwise.

Although having the ability to start fresh financially is generally a huge relief for people struggling with debt collectors and monetary balance, filing for bankruptcy (regardless of the chapter) also has its negative aspects.

The most obvious disadvantage is the existence of such a drastic action recorded on the debtor’s credit report for up to ten years. The individual must seek permission from the court of the same if he or she wishes to obtain extra credit while the case is pending. Also, a person involved in actual bankruptcy proceedings will be less likely to be granted loans from a creditor as long as the information remains with the Credit Bureau. Lawyers that specialize in elimination of debt and related legal proceedings can help relieve their client of the stress of foreclosures, wage garnishing, harassing creditors, liens, and repossessions associated with financial crisis, while informing their client on both the benefits and possible negative results of Chapter 13.

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Arijit Roul asked:




The bad form of bankruptcy

If you find yourself in a situation whereby a chapter 13 bankruptcy is not working, then you might want to hire a bankruptcy lawyer or attorney to help you. They will probably advise you that the next step is to consider chapter 7 bankruptcy. Many people fear chapter 7 bankruptcy because it has the ability to ruin your credit rating for a minimum of ten years. The role of the bankruptcy lawyer or attorney will be crucial in this type of bankruptcy because of the implications that it can have for your life and those of the people around you. Chapter 7 is not a selfish decision to be taken lightly but one which you have to agree with your closest family members.

I once again have to emphasize that you should not be too ashamed of yourself just because you have had to resort to bankruptcy to deal with your immediate problems. Many people in the community may be in similar situations but they might not inform the general public. I am sure if the internet was allowed to publish all the credit histories of your neighbors, you would find some very interesting reading. I would advise that you accept your situation and visit the bankruptcy lawyer or attorney at the earliest opportunity so that they can give you detailed advice.

What happens under chapter 7?

The basic mechanics of chapter 7 is that you simply take your assets and liquidate them to try and pay off what you owe. Specific state laws may dictate that certain assets cannot be attached but again these are very restrictive. The upshot is that you will be in a lot of trouble. Your bankruptcy lawyer or attorney will be able to advise you on the jurisdiction within which you lie and any exemptions that you might be able to make. Under no circumstances should you consider going on your own. Remember that the creditors are not out to protect your interests. All they want is your money.

Chapter 7 bankruptcy is usually associated with individual couples who may not be able to meet their obligations. Therefore it is imperative that your spouse is aware of what you are doing. Your bankruptcy lawyer or attorney might remind you of this requirement if he thinks you are deliberately keeping the other party in the dark. The worst thing that can happen to a relationship is that you lose your assets as well as your love over bankruptcy.

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James R Brown asked:




Yes, and the meeting is called a creditors‘ or 341 meeting. This mandatory meeting allows the Trustee to pose any questions he or she has about your filed documents and your assets, expenses, income, and liabilities. The creditors‘ meeting is one of the most vital parts of your bankruptcy case.

While you may be imagining a scenario with your creditors bombarding you with questions, that isn’t the reality of the meeting. 99% of the time your creditors don’t even show up. Most creditors know that, unless there is fraud involved, they no longer have control of that debt. That is just one example of how powerful the bankruptcy laws are.

You will have to answer questions from the Trustee, though. Nonetheless, your court experience for your Missouri or Illinois Chapter 13 can be much smoother and easier if your bankruptcy attorney comes with you. A great bankruptcy attorney will prepare you for the questions that will be asked before you go to meet with the Trustee and accompany to the meeting itself.

Just remember, this isn’t a meeting you want to miss. If you don’t attend the first meeting, your case will be dismissed unless your attorney asks for a continuance. If you don’t attend your second meeting, however, there is no saving your case. You won’t be able to re-file again for 6 months.

That means it could be another six months before you can get protection from foreclosure, credit card debt help, and relief from your creditors. Can you imagine spending another 6 months in debt when you were so close to getting relief for you and your family?

Make sure your St. Louis or Wentzville Missouri attorney has a system in place to notify you of the original meeting or of any rescheduling. Obviously, missing your 341 meeting is a critical error.

If you are filing a Missouri or Illinois Chapter 13 by yourself, you will have to face the trustee and any questions by yourself. Most who file by themselves find this to be one of the most unpleasant parts of their bankruptcy. If you decided against getting a bankruptcy lawyer at a St. Louis law firm, do your best to prepare yourself by researching the process and making sure your schedules and means test are accurate.

Where should you look to start your research? Start with free information from reputable attorneys in your area.

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Joseph Stutzman asked:




Filing bankruptcy has become even more prevalent today than in the past. In 2009, during what some would argue was the biggest financial crisis this country has ever faced, more than 1 million Americans filed personal bankruptcy. Bankruptcy can stop foreclosure proceedings, stop those harassing calls from debt collectors, enable you to keep your car and give you a fresh financial start. Many people would not even have considered bankruptcy an option, but it is much preferable to being out on the street, which is what many Americans faced during this bleak time.

Having a bankruptcy lawyer is critical. Yes, you can file your bankruptcy by yourself, but when you are dealing with so many creditors and constantly changing laws, it makes much more sense to hire an attorney. Most bankruptcy lawyers will not charge you for the first consultation, charge lower rates than other attorneys and will often work on a payment system for you, seeing as how you will be much freer to pay your bills upon completion of your bankruptcy.

A bankruptcy lawyer can advise you on whether to file Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is a complete liquidation of assets which includes the sale of a debtor’s nonexempt property, the distribution of the proceeds going to his creditors. Chapter 11 bankruptcy is for a business wishing to stay in business and involves extending time to repay debts, adjustment of the debt amount and reorganization. This avoids total liquidation and is often preferable to Chapter 7. Chapter 13 is for the home owner and is often put in place when a Chapter 7 claim is found to be abusive of the chapter 7, 11 U.S.C. § 707(b).Chapter 13 allows homeowners to reaffirm with their mortgage companies and automobile creditors in order to keep a roof over their head and have a vehicle by which to gain or continue gainful employment.

Eligibility for each of these bankruptcy filings is complicated, and best guided by a bankruptcy lawyer. It is also best to seek out a lawyer that specializes in bankruptcies. They have the knowledge and the experience to get it done quickly and without error, getting you back on the road to a fresh start that much quicker. No, bankruptcy should not be considered an easy fix or your first choice for debt relief. It stays on your financial record for 7 to 10 years and if you start accepting all those credit card offers that come in after you file, then you will be right back where you started with no relief in sight for another 10 years-you cannot file again before that time. So, along with filing bankruptcy, you should make a conscious decision to do things differently after the bankruptcy is discharged.

The first step is to seek the advice of a reputable bankruptcy lawyer.

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Michael Russell asked:




Chapter 13 bankruptcy is provided for the wage earner who can use his income to pay his creditors over a specified time period. Chapter 13 is a reorganization of the debt owed to creditors with a payment schedule set up whereby the wage earner makes timely payments to the creditors over a three to five year payment period.

The court may not allow a filing of chapter 13, depending on whether or not a person’s income is sufficient to repay some or all the debt. It has to be established with the court that the income is steady income and is not too low. Thus, chapter 13 is not suited for everyone.

Also, there is a limit to the amount of debt a person is carrying to qualify for filing a chapter 13. Total secured debt must not exceed $922,975 and total unsecured debt must not be more than $307,675. Secured debt is backed up with collateral such as a home or a car; while unsecured debt is balances on credit cards, signature loans, medical bills, etc.

Before you can proceed with filing a chapter 13, you are required to complete a course in personal financial management. This credit counseling course has to be approved by the court trustee. There is a fee for this course, but if you are unable to pay, you will receive the counseling free of charge.

The court will determine how much of your debt you will repay and you must begin those payments within thirty days after filing. These payments are usually made to the bankruptcy trustee to be forwarded on your creditors. The court may require these monthly payments be automatically deducted from your wages and sent to the trustee. Three percent to ten percent of each monthly payment is collected by the trustee as their commission. It is absolutely imperative that these monthly payments be paid and be paid on time.

Under chapter 13, there are certain debts that must be paid in full. These include child support, alimony and some tax obligations. These debts are non-dischargeable and must be paid one-hundred percent.

Bankruptcy law is a federal law; however, there are state laws pertaining to bankruptcy, so specific rules governing bankruptcy depends on the state of residence and filing.

The purpose of chapter 13 is to give a person a chance for a fresh start financially. It gives them protection from creditors by placing a hold on all asset and debt collections and provides the court time to work out a legal judgment that is accepted by all parties. However, there are consequences of bankruptcy in the form of poor credit and having to pay higher interest rates because of the bankruptcy on the credit report. Thus, bankruptcy filing should be thought through seriously and advice should be sought through an attorney.

There are alternatives to bankruptcy such as debt consolidation, out of court settlements or to just simply do nothing. If you have little income and property, then you are ’sue-proof’, which means if anyone were to sue you, they wouldn’t be able to collect anything anyway because you have nothing they can take. The law provides they cannot take your basic necessities such as clothing, food, household furnishings, etc. Most creditors will not bother suing someone knowing there is nothing for them to get. Instead, they will write off the debt, which does go on your credit report, but will be removed after seven years.

It’s important to weigh your options before making a final decision on whether to file a bankruptcy.

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Jon Arnold asked:




Only a few years ago, Congress made multiple huge changes to the bankruptcy laws which impacted how bankruptcy would be filed, and even who is eligible. For example, no longer can you file bankruptcy just because you are tired of paying your bills, but with the new laws, there is a defined set of procedures that must be followed for each chapter being filed, and your financial status will be evaluated under a microscope, where you must be approved before you can even file.

But one of the areas that was left pretty much untouched by the wide range of changes was Chapter 13 Bankruptcy. This chapter was originally constructed to prevent a home from being put on the foreclosure block. But with the massive number of foreclosures that are happening in the US today, it is unfortunate that many people still do not know that Chapter 13 Bankruptcy filing can still be used to prevent foreclosure on their home.

For the average consumer, there are three different types or chapters of bankruptcy that may be available to them, depending on their specific circumstances. The first one is Chapter 7 Bankruptcy, which is the most common type and is also sometimes referred to as a liquidation. Obviously the reason it is known as liquidation is because most of their debt is discharged by allowing the court-appointed trustee to liquidate all of their non-exempt assets. Even with this chapter, however, be aware that there are certain types of debts that cannot be discharged by going bankrupt.

Although it used more appropriate to be used by either businesses or people with substantial assets and income, another type of bankruptcy available to the consumer is Chapter 11, frequently also known as a business reorganization. This type does not wipe out debts, but rather it allows the person or business to reorganize its debt structure and make revised payments to the creditors, sometimes over a longer period of time, and sometimes also with a reduced interest rate. Creditors usually are willing to do this, since collecting their money over time and with interest is certainly better in their eyes than to have the debt wiped out completely via a different chapter.

The last type or chapter of bankruptcy available to the consumer is Chapter 13, frequently also known as the Wage Earner’s Reorganization. This type is the least expensive to file and is typically used by consumers who still maintain their ability to make their payment obligations, usually within three to five years. The total value of their assets which are classified as non-exempt is used as a basis and guideline for the amount that needs to be repaid over this period of time, as well as considering their level of income and any debts which cannot be discharged.

But what many consumers do not realize is that Chapter 13 Bankruptcy also allows property owners to stop foreclosure proceedings if they are behind on their mortgage payments. While the same can be said for the other chapters of consumer bankruptcy, Chapter 13 is particularly designed to permit the consumer to pay the delinquency in equal monthly payments for as long a period of time as 60 months (5 years). The mortgage lender has no choice but to agree to this, as long as all the other requirements and qualifications of this chapter are met.

The procedure to be qualified to file this chapter is more stringent than the others, since it involves a thorough examination of total debt and total income. No chapter of bankruptcy is any longer consider to be a “do-it-yourself” process with all the new legal requirements in place, so regardless of what chapter you are thinking about, it is strongly recommended that you consult with a qualified bankruptcy lawyer and ensure that both you and your property, combined with your specific situation, actually do qualify.

The biggest benefit that you can have with Chapter 13 bankruptcy, if you qualify and if you are facing foreclosure proceedings, is that it buys you time. That time can be used to make your current financial situation better, or it can also be used to find the right buyer for your property. If you move forward with this, keep in mind that the time you are granted with this is finite, and you need to start planning and take action NOW.

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Steve Bingman asked:




In bankruptcy Chapter 13 mortgage foreclosure is either stopped or at least temporarily avoided.
Here’s how.

First, just in case you are not familiar with a Chapter 13 bankruptcy, it is a bankruptcy court approved payment plan where the debtor (the person filing bankruptcy) pays a bankruptcy trustee each month and then the trustee pays the debtor’s creditors.

There are several aspects of a Chapter 13 bankruptcy that work to help people facing mortgage foreclosure. The first aspect is actually applicable to all bankruptcies. It is called the “automatic
stay”.

By law, whenever anyone files bankruptcy, regardless of the type of bankruptcy, there is an immediate “automatic stay” (automatic temporary stopping) of most civil proceedings against the person filing bankruptcy. What this means is that if someone is facing mortgage foreclosure and the person files bankruptcy, the mortgage lender has to immediately stop its’ foreclosure action until it gets permission for the bankruptcy court to proceed.

In a Chapter 13, the bankruptcy court will not lift the “automatic stay” and grant the mortgage lender permission to proceed with a foreclosure until the debtor (the person filing bankruptcy) fails to make his payments to the bankruptcy trustee. As long as the debtor pays the monthly payments to the trustee and pays his regular mortgage payments, the “automatic stay” will remain in force and the mortgage lender can not do anything.

The second aspect of a Chapter 13 that works in favor of people facing foreclosure is that it allows a debtor to pay mortgage arrearage over time, normally 3 to 5 years. In most foreclosure cases, a person has not paid his monthly mortgage payment for several months and the mortgage lender demands full payment of the delinquent monthly payments (arrearage) in lump sum before the lender will consider stopping foreclosure. Most people cannot pay the lump sum.

In a Chapter 13 bankruptcy, a debtor can pay the arrearage over time. He does not have to pay it all at one time. Spreading the lump sum over time means paying smaller monthly payments until the total arrearage is paid. A creditor can object to the amount to be paid each month towards the arrearage, but once the bankruptcy court approves the payment plan, the creditor can not do anything except take the payments.

A third aspect of a Chapter 13 bankruptcy that helps people facing mortgage foreclosure is that unsecured creditors may be paid a portion or all of what is owed to them. What this is really doing is reducing the amount of debt that a person has to pay back each month. By paying unsecured creditors less each month, there is more money available with which to pay a secured creditor such as a mortgage lender. Therefore, it should be easier for a debtor to pay his monthly mortgage payment.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

This article may be republished, but the wording must not be changed and the author links must
remain active.

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Jeena Cho asked:




Part of our job is to educate those clients that come to meet with us regarding myths surrounding bankruptcy. This seems to be the case particularly for Chapter 13. What most clients do not realize is that Chapter 13 can be a very powerful tool in dealing with debt that is otherwise not dischargeable in Chapter 7.

Taxes

If you owe non-dischargeable tax debt, Chapter 13 can be a great option to have up to 5 years to repay the debt interest and penalty free. This allows you to repay the IRS on your terms – not theirs.

Curing arrearages on mortgage and cars

Chapter 13 is a good option for those clients that are behind on their home or car payments. Chapter 13 will allow you to “catch-up” and make up those payments during your plan. If you financed your vehicle more than 910 days ago, we can also “cram down” your vehicle, meaning, you only have to pay back an amount equal to the current fair market value. Regardless of when you’ve purchased your vehicle, Chapter 13 will allow you to lower your interest rate on vehicles (generally between 5-6%).

Lien Strip

This is probably one of the most compelling reasons to file for Chapter 13. If the fair market value of your home is less than the value of your first mortgage, hence leaving your second mortgage wholly unsecured, Chapter 13 allows you to “strip” the second mortgage. After completion of your Chapter 13 plan, you can keep your property subject only to the first mortgage. For example, let’s assume Bob has a home with a first mortgage of $400,000 and a second mortgage of $200,000. The current fair market value is $300,000. He can file for a Chapter 13 and strip the second mortgage. After 5 years, he will be left only with the first mortgage on his home.

One of the most common misconceptions about Chapter 13 is that the Debtor will be required to pay back all of his or her debt. Not true. Most often, the Debtor will end up paying as low as 0 – 5% of the unsecured debts (such as credit cards, medical debt, etc.) How much you will end up paying into the plan will depend on several factors including: 1) income, 2) expenses, 3) unexempt assets, 4) secured property, and 5) priority debt.

Disclaimer: The information contained in this newsletter is informational in nature and not legal advice. You should consult with a lawyer about your specific circumstances.

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