Buying a Vehicle before Filing Bankruptcy

While having reliable transportation is important for most American families, it can be critical for a debtor in Chapter 13 bankruptcy. The average Chapter 13 case lasts three to five years, and during that time the debtor is prohibited from incurring additional debt without court approval. While it is possible to get court approval for a different vehicle during the …

Payments held by Chapter 13 Trustee

When a debtor’s Chapter 13 bankruptcy case is terminated early, the first question asked is, “What happens to my money that the trustee is holding?” The answer depends on whether the Chapter 13 plan was confirmed prior to a dismissal, or whether the case is converted to a Chapter 7. Unconfirmed Chapter 13 Case If the debtor’s Chapter 13 Plan …

Cram Down a House

“Cram down” is lawyer-speak for a bankruptcy court reducing a secured interest to the value of the property. For instance, if a bass boat is worth $2,000 and there is a $4,000 balance owed to the bank, the bankruptcy court can cram down the secured interest to $2,000. The remaining $2,000 is now unsecured and paid at the same rate …

Assumption of a Lease vs. Reaffirmation

A reaffirmation agreement continues the personal liability of a debtor in secured property after the bankruptcy discharge. A reaffirmation agreement must be approved by the bankruptcy court before it is effective. Essentially, if the debtor purchases a vehicle with financing, and wants to keep it after bankruptcy, he will be asked to execute a reaffirmation agreement by the lender. According …

File a Proof of Claim in Your Chapter 13 Case

Once the Chapter 13 bankruptcy plan is confirmed, the trustee will pay allowed claims. The first step for a creditor to obtain an allowed claim is to file a proof of claim in the case. But Section 501(c) of the Bankruptcy Code also allows the debtor to file a proof of claim if “a creditor does not timely file a …

Sales Tax, Trust Fund Tax, and Bankruptcy

Contrary to popular myth, bankruptcy does not discharge every financial obligation. Congress has identified a few debts that, in fairness, should not be discharged in a bankruptcy case. Some of these debts are enumerated in Section 523 of the Bankruptcy Code, including debts for fraud or embezzlement, domestic support obligations, and student loans. Some of these debts are never dischargeable, …

Report: Many States Put Families at Mercy of Debt Collectors

No state adequately protects families from debt collectors, according to a new report from the National Consumer Law Center (NCLC). The report, entitled No Fresh Start: How States Let Debt Collectors Push Families into Poverty, examined state exemption laws which control what assets and income a judgment creditor can seize to satisfy its judgment. The authors concluded that no state …

Bankruptcy Options After Vehicle Repossession

If your vehicle has been repossessed, you may be able to get it back by filing bankruptcy, if you move quickly. Section 542 of the Bankruptcy Code requires that entities in possession of “property of the bankruptcy estate” are generally required to turn the property over to either the trustee (in Chapter 7) or the debtor (in Chapter 13). Section …

Bankruptcy Options After Vehicle Repossession

If your vehicle has been repossessed, you may be able to get it back by filing bankruptcy, if you move quickly. Section 542 of the Bankruptcy Code requires that entities in possession of “property of the bankruptcy estate” are generally required to turn the property over to either the trustee (in Chapter 7) or the debtor (in Chapter 13). Section …

Bankruptcy and School Expenses

The main purpose of the bankruptcy means test is to prevent wealthy debtors from filing for Chapter 7 Bankruptcy. Debtors who earn more than their state’s median income for their family size must complete the means test to determine eligibility. The means test deducts reasonable and necessary expenses from average income. If there is sufficient “disposable income” after these expenses …