Here is the abbreviated answer to my last blog.
Question: Will the credit card charges I made for holiday spending be discharged in bankruptcy?
Answer: If you used credit to make holiday purchases then you may want to delay your bankruptcy filing to make sure the debt is dischargeable. A creditor or the trustee may challenge the dischargeability of your debt if:
1) You had charges of greater than $550 on a single credit card for “luxury goods or services” within 90 days of filing; or
2) You took cash advances for more than $825 within 70 days of filing from all of your credit cards combined.
Luxury goods and services do not include goods or services that are reasonably necessary for support and maintenance of you or your dependents. Holiday gifts of food or diapers would not be “luxury goods.” A new flat screen TV or a new kitchen probably would be considered a luxury. Service on your car to allow you to get to work would not be a “luxury” service, but a taking your partner to a spa for the full pampered treatment would likely be considered a luxury expense.
If you spent too much on credit this holiday season, you may benefit from waiting until the applicable time period passes before filing for bankruptcy relief. However, if creditors are preparing to attach your wages or foreclose on your home you may not be able to wait. If you need bankruptcy advice, talk with your lawyer.
Happy Holidays!
Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended.
Saturday, December 26, 2009
Thursday, December 24, 2009
Using Credit Cards Just Before Filing
Question: I’m considering filing bankruptcy. When do I have to stop using my credit cards?
Answer: You should stop using your credit cards no later than when you decide that you will file bankruptcy and not repay the debt. However, the Ninth Circuit Court recognizes that you may change your mind or your circumstances may change any time up to the point in which you actually file bankruptcy. Therefore, you may be able to continue using your credit cards until just before your bankruptcy petition is filed.
Using a credit card when you have no intention of repaying the debt is an action done under “false pretenses, a false representation, or actual fraud.” In such cases the debt may be found to be “nondischargeable” and continue even after you receive a bankruptcy discharge.
In order to determine if a debt is nondischargeable a credit can file a lawsuit, an adversary complaint, against you in the bankruptcy court. The creditor will have to prove 1) that you intended to fraudulently obtain credit card debt and 2) that the creditor was justified in relying on your promise to repay the debt. The court will look at the “totality of the circumstances” surrounding the manner in which you incurred the debt, and then make a ruling.
Special Rules for Consumer Debt and Credit Card Advances
The following debts of an individual debtor are presumed to be nondischargeable:
1) Credit card charges to a single creditor totaling more than $550 for “luxury goods or services”* purchased on or within 90 days before your bankruptcy filing; and
2) Cash advances from credit cards totaling more than $825 on or within 70 days before your bankruptcy filing.
If you have a debt that is presumed to be nondischargeable the creditor will not have to prove that you intended to fraudulently use the card or that they relied on your promise to repay the debt. It will be up to you to prove that you reason for using the card was honest.
You may avoid the presumption of nondischargeability by providing evidence that you experienced a sudden change in circumstance or that you did not plan on filing bankruptcy until after the transaction took place.
*Luxury goods and services do not include goods or services that are reasonably necessary for support and maintenance of you or your dependents.
Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended.
Answer: You should stop using your credit cards no later than when you decide that you will file bankruptcy and not repay the debt. However, the Ninth Circuit Court recognizes that you may change your mind or your circumstances may change any time up to the point in which you actually file bankruptcy. Therefore, you may be able to continue using your credit cards until just before your bankruptcy petition is filed.
Using a credit card when you have no intention of repaying the debt is an action done under “false pretenses, a false representation, or actual fraud.” In such cases the debt may be found to be “nondischargeable” and continue even after you receive a bankruptcy discharge.
In order to determine if a debt is nondischargeable a credit can file a lawsuit, an adversary complaint, against you in the bankruptcy court. The creditor will have to prove 1) that you intended to fraudulently obtain credit card debt and 2) that the creditor was justified in relying on your promise to repay the debt. The court will look at the “totality of the circumstances” surrounding the manner in which you incurred the debt, and then make a ruling.
Special Rules for Consumer Debt and Credit Card Advances
The following debts of an individual debtor are presumed to be nondischargeable:
1) Credit card charges to a single creditor totaling more than $550 for “luxury goods or services”* purchased on or within 90 days before your bankruptcy filing; and
2) Cash advances from credit cards totaling more than $825 on or within 70 days before your bankruptcy filing.
If you have a debt that is presumed to be nondischargeable the creditor will not have to prove that you intended to fraudulently use the card or that they relied on your promise to repay the debt. It will be up to you to prove that you reason for using the card was honest.
You may avoid the presumption of nondischargeability by providing evidence that you experienced a sudden change in circumstance or that you did not plan on filing bankruptcy until after the transaction took place.
*Luxury goods and services do not include goods or services that are reasonably necessary for support and maintenance of you or your dependents.
Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended.
Friday, April 17, 2009
Discharging Taxes in Bankruptcy
Question: I owe $40,000 in back taxes. Can these be discharged in bankruptcy? Also, I have applied for an extension on filing my 2008 tax return. Should I file the return before filing bankruptcy, or does it matter?
Answer: On your bankruptcy petition, creditors are listed as holding secured claims, unsecured priority claims, and unsecured nonpriority claims. Whether or not your taxes can be discharged will depend on where they must be listed and under which chapter you file. A creditor’s claim is a debt that you are alleged to owe.
Secured claims must be paid in their entirety. These claims would include taxes for which a lien has been placed on your real property. If, however, the lien impairs an exemption to which you are otherwise entitled your attorney may be able to avoid the lien,
Unsecured priority claims must be paid in their entirety under Chapter 7. These debts are dischargeable under a Chapter 13 full compliance discharge. A full compliance discharge occurs when you complete all plan payments, even if your Chapter 13 plan calls for less than 100% payment of priority claims. A full compliance discharge eliminates debts incurred to pay nondischargeable federal, state or local taxes. 11 USC § 523(a)(14). Government fines, penalties and forfeitures are also dischargeable under a full compliance discharge, excluding criminal fines under § 1328(a)(3).
Unsecured nonpriority claims must be paid at least to the value of your nonexempt property. In a Chapter 7 liquidation bankruptcy some of your assets will be exempt from being sold to pay your creditors. For example, there is presently a $525 exemption for each item of personal property. If you have a sofa that is worth $400 the sofa will be exempt. If the sofa is worth $900 then $525 will be exempt property and $375 will be nonexempt property. Unless, there is another statute to exempt the full value of the sofa at least $375 must be paid to creditors. The court is not concerned with whether you sell your sofa to acquire this amount or find the money elsewhere. The value of all your nonexempt property is what you will be required to pay your unsecured creditors under Chapter 7.
Creditors holding unsecured nonpriority claims in Chapter 13 must be paid at least the amount that they would have received in Chapter 7. This is called the Best Interests of the Creditor test. The amount that unsecured creditors will actually receive depends upon the percentage (also called the dividend) confirmed in the Chapter 13 plan.
Taxes are normally paid as priority claims, unless:
1) The income tax or sales tax is over three years old and meets certain other conditions, including no recent offer and compromise agreement with the taxing authority . § 507(a)(8)(A).
2) The property tax, whether or not assessed, was due over one year prior to the bankruptcy filing.
If the tax is not a priority claim then it will be paid the same dividend as other unsecured creditors.
Conclusion: If the $40,000 you owe in back taxes is over three years old, this amount can be listed as an unsecured debt and discharged in any chapter. If the debt is less than three years old, the amount must be paid in full in Chapter 7, but can be discharged under a Chapter 13 full compliance discharge.
In most cases you should file your tax return before you file bankruptcy. The tax is due when you file. Prepetition taxes can be placed on your petition and paid over time through a Chapter 13 plan. Postpetition debt is only payable through a Chapter 13 plan if the taxing authority files a proof of claim. If no claim is filed, the debt is not discharged even if you receive a full compliance discharge.
The law now requires that where a tax return was required, a Chapter 13 Debtor must file tax returns for each of the four years prior to the bankruptcy filing. If you can not provide copies of the returns by the first day your Meeting of Creditors is scheduled, the law requires that your case be dismissed. § 1308.
Disclaimer: Handling taxes in bankruptcy can be a complicated process. Sometimes the advice of a tax professional will be required. This article is meant to give a brief overview of when taxes can be discharged in Chapter 7 and Chapter 13 bankruptcy filings. No attorney-client relationship is formed or intended.
Answer: On your bankruptcy petition, creditors are listed as holding secured claims, unsecured priority claims, and unsecured nonpriority claims. Whether or not your taxes can be discharged will depend on where they must be listed and under which chapter you file. A creditor’s claim is a debt that you are alleged to owe.
Secured claims must be paid in their entirety. These claims would include taxes for which a lien has been placed on your real property. If, however, the lien impairs an exemption to which you are otherwise entitled your attorney may be able to avoid the lien,
Unsecured priority claims must be paid in their entirety under Chapter 7. These debts are dischargeable under a Chapter 13 full compliance discharge. A full compliance discharge occurs when you complete all plan payments, even if your Chapter 13 plan calls for less than 100% payment of priority claims. A full compliance discharge eliminates debts incurred to pay nondischargeable federal, state or local taxes. 11 USC § 523(a)(14). Government fines, penalties and forfeitures are also dischargeable under a full compliance discharge, excluding criminal fines under § 1328(a)(3).
Unsecured nonpriority claims must be paid at least to the value of your nonexempt property. In a Chapter 7 liquidation bankruptcy some of your assets will be exempt from being sold to pay your creditors. For example, there is presently a $525 exemption for each item of personal property. If you have a sofa that is worth $400 the sofa will be exempt. If the sofa is worth $900 then $525 will be exempt property and $375 will be nonexempt property. Unless, there is another statute to exempt the full value of the sofa at least $375 must be paid to creditors. The court is not concerned with whether you sell your sofa to acquire this amount or find the money elsewhere. The value of all your nonexempt property is what you will be required to pay your unsecured creditors under Chapter 7.
Creditors holding unsecured nonpriority claims in Chapter 13 must be paid at least the amount that they would have received in Chapter 7. This is called the Best Interests of the Creditor test. The amount that unsecured creditors will actually receive depends upon the percentage (also called the dividend) confirmed in the Chapter 13 plan.
Taxes are normally paid as priority claims, unless:
1) The income tax or sales tax is over three years old and meets certain other conditions, including no recent offer and compromise agreement with the taxing authority . § 507(a)(8)(A).
2) The property tax, whether or not assessed, was due over one year prior to the bankruptcy filing.
If the tax is not a priority claim then it will be paid the same dividend as other unsecured creditors.
Conclusion: If the $40,000 you owe in back taxes is over three years old, this amount can be listed as an unsecured debt and discharged in any chapter. If the debt is less than three years old, the amount must be paid in full in Chapter 7, but can be discharged under a Chapter 13 full compliance discharge.
In most cases you should file your tax return before you file bankruptcy. The tax is due when you file. Prepetition taxes can be placed on your petition and paid over time through a Chapter 13 plan. Postpetition debt is only payable through a Chapter 13 plan if the taxing authority files a proof of claim. If no claim is filed, the debt is not discharged even if you receive a full compliance discharge.
The law now requires that where a tax return was required, a Chapter 13 Debtor must file tax returns for each of the four years prior to the bankruptcy filing. If you can not provide copies of the returns by the first day your Meeting of Creditors is scheduled, the law requires that your case be dismissed. § 1308.
Disclaimer: Handling taxes in bankruptcy can be a complicated process. Sometimes the advice of a tax professional will be required. This article is meant to give a brief overview of when taxes can be discharged in Chapter 7 and Chapter 13 bankruptcy filings. No attorney-client relationship is formed or intended.
Friday, January 30, 2009
Deficiency Judgments in Foreclosure
Question: My home was taken by the bank through foreclosure several months ago. Now, the junior lender on my home is asking me to pay them another $80,000. Wasn’t this loan wiped out when the senior lender foreclosed? What is a deficiency judgment? Do I need to file bankruptcy?
Answer:
When a lender forecloses on a property they may do so by judicial foreclosure, a legal action in court, or by nonjudicial foreclosure, the power of sale contained in a deed of trust or mortgage. A deficiency judgment is possible when the amount received in a foreclosure sale is not enough to pay off the amount owed on the mortgage loans. A lender who chooses nonjudicial foreclosure cannot receive a deficiency judgment. However, while a foreclosure sale will strip any junior lienholders of their security interest in the property sold, they will retain the right to sue the borrower in court for the amount owed.
This is so because the “one action rule,” described in CCP § 726, prevents the lender who foreclosed from using nonjudicial foreclosure to speed up the sale and then using the courts as a second method of recovery. The junior lender, on the other hand, did not choose the nonjudicial foreclosure route and is not barred from using the courts to try and collect on the debt.
This exception to the general rule that “no deficiency judgments are available when there is a nonjudicial foreclosure” does not apply when a single lender holds both the junior and senior liens. But when the single lender sells or assigns the liens to independent parties, the new buyer/assignee is ordinarily protected and could pursue a court action for a deficiency judgment.
If a junior lender wants to go to court to obtain a deficiency judgment they must do so within three months of the foreclosure sale. CCP § 580(a). If three months have passed since your foreclosure sale, the junior lender can no longer go to court to get a judgment and attach your other property. However, the debt remains and the junior lender can continue to try and collect the debt by contacting you. If you file bankruptcy the automatic stay would prevent all creditors from contacting you for a period of time and this debt would be removed if you receive a discharge in bankruptcy.
Tax Implications of Nonjudicial Foreclosure
When a lender uses nonjudicial foreclosure, the lender, in effect, forgives, or gives to the borrower, the necessary amount over the foreclosure sale price, to pay off their loan. This amount which is forgiven, or given, to the borrower may count as income to be reported on the borrower’s taxes. The Mortgage Forgiveness Debt Relief Act of 2007 excludes from gross income discharges of indebtedness on principal residences that occur on or after January 1, 2007, and before January 1, 2010 (extended through 2012). If you have lost a home to foreclosure you should speak with your tax professional.
Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended. The contents of Wikipedia articles are not controlled by the author.
Answer:
When a lender forecloses on a property they may do so by judicial foreclosure, a legal action in court, or by nonjudicial foreclosure, the power of sale contained in a deed of trust or mortgage. A deficiency judgment is possible when the amount received in a foreclosure sale is not enough to pay off the amount owed on the mortgage loans. A lender who chooses nonjudicial foreclosure cannot receive a deficiency judgment. However, while a foreclosure sale will strip any junior lienholders of their security interest in the property sold, they will retain the right to sue the borrower in court for the amount owed.
This is so because the “one action rule,” described in CCP § 726, prevents the lender who foreclosed from using nonjudicial foreclosure to speed up the sale and then using the courts as a second method of recovery. The junior lender, on the other hand, did not choose the nonjudicial foreclosure route and is not barred from using the courts to try and collect on the debt.
This exception to the general rule that “no deficiency judgments are available when there is a nonjudicial foreclosure” does not apply when a single lender holds both the junior and senior liens. But when the single lender sells or assigns the liens to independent parties, the new buyer/assignee is ordinarily protected and could pursue a court action for a deficiency judgment.
If a junior lender wants to go to court to obtain a deficiency judgment they must do so within three months of the foreclosure sale. CCP § 580(a). If three months have passed since your foreclosure sale, the junior lender can no longer go to court to get a judgment and attach your other property. However, the debt remains and the junior lender can continue to try and collect the debt by contacting you. If you file bankruptcy the automatic stay would prevent all creditors from contacting you for a period of time and this debt would be removed if you receive a discharge in bankruptcy.
Tax Implications of Nonjudicial Foreclosure
When a lender uses nonjudicial foreclosure, the lender, in effect, forgives, or gives to the borrower, the necessary amount over the foreclosure sale price, to pay off their loan. This amount which is forgiven, or given, to the borrower may count as income to be reported on the borrower’s taxes. The Mortgage Forgiveness Debt Relief Act of 2007 excludes from gross income discharges of indebtedness on principal residences that occur on or after January 1, 2007, and before January 1, 2010 (extended through 2012). If you have lost a home to foreclosure you should speak with your tax professional.
Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended. The contents of Wikipedia articles are not controlled by the author.
Saturday, November 15, 2008
Lien Stripping
Question: I own a home that has declined in value and is now worth $515,000. I have a first mortgage in the amount of $480,000, a second mortgage in the amount of $50,000, and a third mortgage in the amount of $35,000. I want to keep my home. Is it possible, through bankruptcy, to eliminate my second and third mortgages since the house is worth less than I owe?
Answer:
The third mortgage can likely be eliminated, but not the second mortgage.
In bankruptcy, money that is owed to a creditor may be either an unsecured claim or a secured claim. Credit card debt is mostly unsecured claims. Debt for the purchase of a home or a vehicle is usually secured by a lien on the real estate or personal property, and thus is secured claims. Section 506(d) of the Bankruptcy Code states that “To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void…” So a lien on a credit card debt would be void; a lien on your home would not normally be void.
However, a creditor’s interest is secured only to the value of that interest in the property. It is unsecured to the remainder of the creditor’s interest. In the example, the first mortgage in the amount of $480,000 is completely secured because the value of the real estate exceeds the first mortgage. However, after the first mortgage is paid, there will remain only $35,000 for the second mortgage. This $35,000 will be the secured claim of the second mortgagee who will also have a $15,000 unsecured claim. The entire $35,000 third mortgage will be unsecured.
In 1992, the U. S. Supreme Court ruled that a Chapter 7 debtor cannot use Section 506(d) to avoid a lien on real property.[Footnote 1] Section 1322(b) of the Bankruptcy Code further protects mortgage lenders by disallowing a Chapter 13 debtor from modifying the rights of holders of claims secured by interests in real property that is the debtor’s principal residence. However, courts have ruled that Section 1322(b) does not prevent a Chapter 13 plan from modifying “wholly unsecured debts.”[Footnote 2] In the example, the second mortgage is partially secured so it cannot be modified. The third mortgage is “wholly unsecured” and can be listed on the Chapter 13 plan as an unsecured debt.
After a Chapter 13 plan has been confirmed, the debtor can convert the case to a Chapter 7 filing. Under Chapter 7, the unsecured debt can be discharged. The third mortgage would then be eliminated, but the first and second mortgages would continue as before. Eliminating the third mortgage seems fair, in this instance, since the mortgagee would receive nothing in the event of foreclosure. The restrictions on loan modification for loans secured by real property that is the debtor’s principal residence serves to increase the availability of home loans by offering some assurance to the lender that they will be repaid. It was not the intent of Congress to offer the same assurance to other lenders who supply funds for debt consolidation or home improvement.
Footnotes
1. Dewsnup v. Timm, 502 U.S. 410 (1992)
2. In re Phillips, 224 B.R. 871(Bankr. W.D. Mich. 1998)
Answer:
The third mortgage can likely be eliminated, but not the second mortgage.
In bankruptcy, money that is owed to a creditor may be either an unsecured claim or a secured claim. Credit card debt is mostly unsecured claims. Debt for the purchase of a home or a vehicle is usually secured by a lien on the real estate or personal property, and thus is secured claims. Section 506(d) of the Bankruptcy Code states that “To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void…” So a lien on a credit card debt would be void; a lien on your home would not normally be void.
However, a creditor’s interest is secured only to the value of that interest in the property. It is unsecured to the remainder of the creditor’s interest. In the example, the first mortgage in the amount of $480,000 is completely secured because the value of the real estate exceeds the first mortgage. However, after the first mortgage is paid, there will remain only $35,000 for the second mortgage. This $35,000 will be the secured claim of the second mortgagee who will also have a $15,000 unsecured claim. The entire $35,000 third mortgage will be unsecured.
In 1992, the U. S. Supreme Court ruled that a Chapter 7 debtor cannot use Section 506(d) to avoid a lien on real property.[Footnote 1] Section 1322(b) of the Bankruptcy Code further protects mortgage lenders by disallowing a Chapter 13 debtor from modifying the rights of holders of claims secured by interests in real property that is the debtor’s principal residence. However, courts have ruled that Section 1322(b) does not prevent a Chapter 13 plan from modifying “wholly unsecured debts.”[Footnote 2] In the example, the second mortgage is partially secured so it cannot be modified. The third mortgage is “wholly unsecured” and can be listed on the Chapter 13 plan as an unsecured debt.
After a Chapter 13 plan has been confirmed, the debtor can convert the case to a Chapter 7 filing. Under Chapter 7, the unsecured debt can be discharged. The third mortgage would then be eliminated, but the first and second mortgages would continue as before. Eliminating the third mortgage seems fair, in this instance, since the mortgagee would receive nothing in the event of foreclosure. The restrictions on loan modification for loans secured by real property that is the debtor’s principal residence serves to increase the availability of home loans by offering some assurance to the lender that they will be repaid. It was not the intent of Congress to offer the same assurance to other lenders who supply funds for debt consolidation or home improvement.
Footnotes
1. Dewsnup v. Timm, 502 U.S. 410 (1992)
2. In re Phillips, 224 B.R. 871(Bankr. W.D. Mich. 1998)
Saturday, November 1, 2008
The Automatic Stay
When a bankruptcy petition is filed in court most collection activities against the debtor must cease. Section 362 of the Bankruptcy Code 11 U.S.C. is known as the “automatic stay.”
The automatic stay applies to:
1) Creditors, who are prevented from going to court or continuing any judicial or administrative proceedings against the debtor to collect a debt. A creditor cannot try to obtain possession or control over any property held by the debtor or to create or enforce a lien against property of the debtor. The automatic stay exists only for claims against the debtor that arose before the debtor filed for bankruptcy.
2) Proceedings in the U.S. Tax Court concerning a tax liability; and
3) Residential Housing. A landlord is preventing from trying to obtain possession of residential rental property during the stay, but not from obtaining commercial property. Foreclosure on a mortgage is normally stayed, except when the action is by the Secretary of Housing and Urban Development to foreclose on a property consisting of five or more units.
The automatic stay does not apply to:
1) Criminal Proceedings, against the debtor;
2) Domestic Support Obligations, such as civil actions concerning the establishment of paternity; the establishment or modification of domestic support obligations; child custody or visitation; the dissolution or marriage; or domestic violence. The division of property in a dissolution of marriage case is stayed and so is the collection of domestic support obligations from property of the debtor, except with respect to withholding of income under a judicial or administrative order or a statute.
The stay does not apply to cases where a state withholds, suspends, or restricts the use of driver's licenses, professional and occupational licenses, and recreational and sporting licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support proceedings. Overdue support owed by a parent may still be reported to any consumer reporting agency and a tax refund may still be intercepted. A medical support obligation owed to a state under Title IV of the Social Security Act is not stayed.
Relief from the Stay
The automatic stay will normally continue until the bankruptcy case is closed or dismissed, or when a discharge of debt is granted or denied. However, if the debtor had previously filed a bankruptcy case in the preceding year which was dismissed then the automatic stay will terminate after 30 days. The automatic stay may also be terminated on the motion of a party of interest after notice and a hearing, or when the court grants such relief to avoid irreparable damage to a party of interest.
This article is only an introduction to the automatic stay. A bankruptcy attorney can protect your rights and represent you in adversarial proceedings, such as when a creditor tries to gain relief from the stay.
The automatic stay applies to:
1) Creditors, who are prevented from going to court or continuing any judicial or administrative proceedings against the debtor to collect a debt. A creditor cannot try to obtain possession or control over any property held by the debtor or to create or enforce a lien against property of the debtor. The automatic stay exists only for claims against the debtor that arose before the debtor filed for bankruptcy.
2) Proceedings in the U.S. Tax Court concerning a tax liability; and
3) Residential Housing. A landlord is preventing from trying to obtain possession of residential rental property during the stay, but not from obtaining commercial property. Foreclosure on a mortgage is normally stayed, except when the action is by the Secretary of Housing and Urban Development to foreclose on a property consisting of five or more units.
The automatic stay does not apply to:
1) Criminal Proceedings, against the debtor;
2) Domestic Support Obligations, such as civil actions concerning the establishment of paternity; the establishment or modification of domestic support obligations; child custody or visitation; the dissolution or marriage; or domestic violence. The division of property in a dissolution of marriage case is stayed and so is the collection of domestic support obligations from property of the debtor, except with respect to withholding of income under a judicial or administrative order or a statute.
The stay does not apply to cases where a state withholds, suspends, or restricts the use of driver's licenses, professional and occupational licenses, and recreational and sporting licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support proceedings. Overdue support owed by a parent may still be reported to any consumer reporting agency and a tax refund may still be intercepted. A medical support obligation owed to a state under Title IV of the Social Security Act is not stayed.
Relief from the Stay
The automatic stay will normally continue until the bankruptcy case is closed or dismissed, or when a discharge of debt is granted or denied. However, if the debtor had previously filed a bankruptcy case in the preceding year which was dismissed then the automatic stay will terminate after 30 days. The automatic stay may also be terminated on the motion of a party of interest after notice and a hearing, or when the court grants such relief to avoid irreparable damage to a party of interest.
This article is only an introduction to the automatic stay. A bankruptcy attorney can protect your rights and represent you in adversarial proceedings, such as when a creditor tries to gain relief from the stay.
Tuesday, October 14, 2008
Considering Bankruptcy? You're Not Alone.
The decision to file bankruptcy is a hard one to make. You're wondering how it will affect your future finances, but also what the decision will have on your reputation. Perhaps, you are considering the moral and ethical dimensions. If you are a person in recovery then you might be wondering if you will need to one day make amends and repay the debt that is discharged through bankruptcy. If you are in over your head, then bankruptcy might be the best option for bringing balance back to your financial life.
In the United States, over one and a half million families file consumer bankruptcy cases each year. Even large municipal governments, like Orange County California, have filed for bankruptcy.
Bankruptcy is one way to level the playing field between creditors and debtors. When a debtor is behind in payments, the creditor might charge a late fee and increase the interest rate. This can make it even harder for a debtor to catch up. Creditors sometimes are willing to negotiate better terms for a debtor to avoid a complete discharge of the debt through bankruptcy.
While it is possible for a debtor to file bankruptcy on their own ("pro se"), the 2005 Amendments to the Bankruptcy Code created new requirements that must be met. Improper filing may affect your rights. Assistance from a licensed and insured attorney is more important than ever. You can contact me at (323) 822-9422 or by email at link@link-schrader.com
In the United States, over one and a half million families file consumer bankruptcy cases each year. Even large municipal governments, like Orange County California, have filed for bankruptcy.
Bankruptcy is one way to level the playing field between creditors and debtors. When a debtor is behind in payments, the creditor might charge a late fee and increase the interest rate. This can make it even harder for a debtor to catch up. Creditors sometimes are willing to negotiate better terms for a debtor to avoid a complete discharge of the debt through bankruptcy.
While it is possible for a debtor to file bankruptcy on their own ("pro se"), the 2005 Amendments to the Bankruptcy Code created new requirements that must be met. Improper filing may affect your rights. Assistance from a licensed and insured attorney is more important than ever. You can contact me at (323) 822-9422 or by email at link@link-schrader.com
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