Tag Archives: personal bankruptcy question

Can You Use Your Credit Card for Necessary Living Expenses Right Before You File Bankruptcy?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “Going to see an attorney on Monday. Meanwhile, there is not enough money to sustain everything and get into a rental home. Is it a bad thing to use the credit cards right now for gas, food, etc.? Would that be fraud since it’s so soon before filing?”

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. The idea was to help control perceived abuses like certain types of fraudulent acts made by filers.

Bankruptcy fraud is a crime. While difficult to generalize across legal entities, common criminal acts under bankruptcy laws typically involve concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing. Falsifications on bankruptcy forms often constitute perjury.

Here are three important sections in the Bankruptcy Code dealing with fraud:

  • Section 547 basically states that a trustee can potentially confront any transfer of funds between a debtor and an insider, meaning a relative or close friend, if the transfer is related to a pre-existing debt and the payment occurred within twelve months of the bankruptcy filing. Preferential treatment, payments made within 90 days of the filing, might be confronted if perceived by the bankruptcy court to have been paid by the debtor to a creditor he or she favors.
  • Section 548 gives the trustee the power to confront any transfer of assets made in a fraudulent manner to anyone within the past 24 months before the bankruptcy filing. Here, intent comes into play in determining whether or not the act is fraudulent. Fraud is often hard to prove, but when there is proof, felony charges might be brought against the violator.
  • Section 727 of the Bankruptcy Code gives the Bankruptcy Court the legal authorization to deny a debtor a discharge in their bankruptcy case for certain fraudulent violations against creditors and the bankruptcy estate. To be denied the discharge, it must be proven the debtor transferred property within one year of the filing date with the intent of defrauding his or her creditors or the bankruptcy estate.

Can you use your credit card for necessary living expenses right before you file bankruptcy? Regardless of how honorable you might think your reason is for making such a transaction, if you think you are going to file bankruptcy while knowing the transaction may be discharged, the answer to the question is NO. The reason for this answer is because your intention is to use credit where you will be the beneficial recipient of the transaction knowing you will never legally have to pay the debt back.

The act of using your credit card in this manner can be viewed by the bankruptcy court as fraudulent. That is why many bankruptcy lawyers will advise you not to use your credit cards any once you decide to file.

If you live in or around the metropolitan area of Baton Rouge, Louisiana, contact us here today at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 

Are All State Debts Considered Non-Dischargeable Debts in Bankruptcy?

Filing for bankruptcy protection is primarily federal in nature and is governed by the Congress of the United States. The Constitution gives Congress the right to legislate bankruptcy laws. State bankruptcy laws are made to supplement the federal laws and to localize the process.

The bankruptcy system allows for the complete discharge or forgiveness of certain type debts, but there are some debts Congress feels should not be discharged from bankruptcy. As part of the Bankruptcy Code, section 523, the law specifies which debts cannot be discharged in bankruptcy.

This personal bankruptcy question about non-dischargeable debts was posted on the internet in 2011 in a bankruptcy discussion: “Are all state debts considered non-dischargeable debts in bankruptcy?”

Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of non-dischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit over payments, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

A slightly broader discharge of debts is available to a debtor in a Chapter 13 case than in a Chapter 7 case. Debts that can be discharged in Chapter 13 Bankruptcy but not in Chapter 7 Bankruptcy include debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings.

Are all state debts considered non-dischargeable debts in bankruptcy? The immediate answer to the question is no, but if the state debt deals with taxes, fines, or penalties, the answer can be yes.

As you should be able to see from the list provided by the US Bankruptcy Court website, bankruptcy laws can be complicated.

If you need relief from the stress of debt and you live in or around the metropolitan areas of Grand Rapids, Muskegon, or Holland, Michigan, contact us at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

 

 

What Happens to the Land I Own if I File Bankruptcy?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “If I file for bankruptcy and I have a piece of land that is paid for will I have to sell it?”

There are basically two types of bankruptcies most individuals can file: Chapter 7 and Chapter 13 Bankruptcy.

Chapter 7 Bankruptcy, commonly called liquidation of assets, is normally the simplest and quickest form of bankruptcy. After filing Chapter 7 Bankruptcy, a bankruptcy court trustee will gather all your non-exempt assets, turn your non-liquid assets into cash, combine the new cash with other cash assets, and pay unsecured debts listed by court priority. This will be done until the money is gone or your debts are paid in full. If there is any money left, the money will be returned to you when the bankruptcy is closed.

A piece of land you own that has already been paid in full is considered an asset, and depending on your state, the asset may or may not be exempt from bankruptcy proceedings. State and federal laws include exemption status from the sale of your assets. This means you may keep any asset from bankruptcy proceeding if it is listed on a qualified exemption list. States are allowed by law to determine which set of exemptions you may use in a bankruptcy proceeding.

Any land you own not exempt in a Chapter 7 Bankruptcy most likely will be sold to satisfy the unsecured creditor’s claims against you. In Chapter 13 Bankruptcy, unsecured claims are handled differently.

Chapter 13 Bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their unsecured debts over three or five years. In Chapter 13 Bankruptcy if you can make the payment plan and catch up on all of your secured notes, you will be able to keep all your assets, including the land you already own.

The Chapter 13 Bankruptcy plan is based on disposable monthly income. Once you have made all payments for either the three or five years planned, any unsecured debt left will be discharged. You will then be allowed to keep what assets you have remaining as long as you have kept up with timely payments on the secured assets.

Determining what to do about assets and filing bankruptcy can become complicated, depending on where you live. Bankruptcy laws in general are complicated.If you need relief from the stress of debt and you live in or around the metropolitan area of New Orleans, Louisiana, contact us at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area to answer your bankruptcy questions.

 

Will Filing a Bankruptcy Discharge Homeowner Association Fees?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “I own a condo and owe approximately $13,000 in maintenance fees, will this debt be discharged by filing bankruptcy?”

The simple answer to the question the blogger has raised is yes, it is possible.

Unfortunately, with most bankruptcy laws, there can be complicated answers to even the simplest questions. Talk to a bankruptcy lawyer for more information.

Chapter 7 Bankruptcy, called liquidating your assets, is the simplest type of bankruptcy. It is this type of bankruptcy that maintenance fees, or homeowner association (HOA) fees as they are sometimes called, might be completely discharged if you do not have enough assets to liquidate and pay the debt. Discharging a debt means the debt is forgiven, but with any kind of HOA fees , the debt may be forgiven only up to the end of the bankruptcy discharge.

All HOA fees that become due post bankruptcy discharge cannot be discharged. As a matter of fact, you will be responsible for paying all HOA fees post bankruptcy discharge for as long as your name is on the title to the property protected by the HOA.

To get a layman’s glimpse at the complications of bankruptcy law, here is the exact language used in the bankruptcy code concerning HOAs:

The fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interestin such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case.”

Simply put in layman’s terms, you will owe all HOA fees that occur after your bankruptcy has discharged your debts.

A warning to those readers who are in an HOA: A title of a home or property is not transferred until a legal foreclosure has taken place. You can technically surrender a property and still own it. Just because you are not occupying the property, you have given up the keys, or you have told your lender you no longer want it does not mean you do not own it any longer. Only a legal transfer of title releases you from ownership and having to pay the HOA fees.

If you live in or around the metropolitan area of Sacramento, California, contact us at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.

How Filing Bankruptcy Can Protect Your Property from Repossession

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “How does bankruptcy protect property from repossession?”

The moment you file a bankruptcy, a judge will order all collecting actions to cease through an automatic stay. The automatic stay, applicable to all types of bankruptcy filings, means that the mere request for bankruptcy protection automatically stops certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment.

Depending on what type of bankruptcy you file, you can possibly stop the repossession of your property. As long as a bankruptcy is pending, and your secured creditor has not been successful in having the automatic stay lifted by petitioning the bankruptcy court, you can maintain possession of the property without fear of the creditor coming to take the property. A violation by the creditor during an automatic stay can bring severe consequences.

There are basically two types of bankruptcies most individuals can file: Chapter 7 or Chapter 13 Bankruptcy.

In Chapter 7 Bankruptcy, commonly called liquidation of your assets, a bankruptcy court trustee will sell your non-exempt assets to pay your unsecured debts. Any unsecured debts not paid during a Chapter 7 Bankruptcy and not exempt from discharge will be discharged.

Secured debts (house or car) can possibly be reaffirmed during Chapter 7 Bankruptcy if you decide you want to keep the property. A reaffirmation agreement is just a renegotiated contract to pay the creditor an agreed upon amount for the property that is secured. Also, in some cases, the secured property may be “crammed down” to the current market value of the property so that if you have the money, you can buy the property for that amount.

In Chapter 7 Bankruptcy, if you cannot come to an understanding with the secured creditor by the time the bankruptcy closes, the property may then possibly be repossessed whether or not you are behind on the payments.

Chapter 13 Bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts over three or five years. During Chapter 13 Bankruptcy, you can keep all your assets, including secured assets, but you can keep your secured assets only as long as you make your payments, keep them current, and pay them on time.

Filing for bankruptcy can give you temporary and sometimes permanent relief from a repossession, depending on how you respond to your situation, but to maximize your efforts, consult with a bankruptcy lawyer.

If you need relief from the stress of debt and you live in or around the metropolitan areas of Fort Worth or Arlington, Texas, contact us at www.bankruptcyhome.com . We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.

Can You Add Ongoing Medical Bills to Your Bankruptcy?

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “What if I file bankruptcy and then have a bad accident or illness soon thereafter and accumulate a lot of bills again, can I add those bills to my bankruptcy?”

The answer to the debtors question depends on the type of bankruptcy you file.

There are basically two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13. A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts over three or five years.

When you file a Chapter 7 bankruptcy, if the medical services were provided before you filed, then those unsecured debts are part of the bankruptcy. Under that situation, they will be discharged.

Unfortunately, if you file a Chapter 7 and a medical bill occurs after you file, then that debt is NOT a part of the bankruptcy. You, as the debtor, will have to pay the debt.

Although you do not know when medical bills will occur, unexpected bills are a good reason you want to be as careful as you can about filing a bankruptcy.

Once you file a Chapter 7, it will be another 8 years before you can file another Chapter 7, or four years to file a Chapter 13. That means you will be facing a minimum of four years to deal with your creditors apart from bankruptcy protection.

Therefore, if you select not to, or you cannot pay the creditors, they have the freedom to go after you through a lawsuit. A successful lawsuit by your creditors can result in a judgment that will allow them to possibly garnish wages, attach liens, seize assets, or foreclose on your property.

In a Chapter 13 bankruptcy, a debtor’s disposable income is part of the bankruptcy estate and is used for paying monthly payments to accommodate the plan you devise for paying back your creditors.

Because a Chapter 13 is an ongoing plan, you can amend the schedules of the plan as you move along the three or five year span.

That means you can add ongoing medical bills to your payment plan. They will be prioritized and placed in the order of payments, and any unpaid unsecured debt may be discharged. However, there may be other consequences to a Chapter 13 if you do add post petition debt.

The added expenses may place an undue hardship on you so that you are not able to meet the reorganization payment schedule. If this occurs so that you begin to miss payments, your plan may be dismissed, and you would be back where you started.

On the other hand, adding medical bill expenses can possibly help you pass the Means Test. If that is the case, you may want to consider converting to a Chapter 7. Converting to a Chapter 7 can have the advantage of having the medical expenses discharged even though you added them post filing.

Let us contact a bankruptcy attorney to help you make an informed decision about bankruptcy and your ongoing medical bills.