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Personal Bankruptcy

Friday, March 29, 2019

Buying A House After Bankruptcy

It is no secret that filing for bankruptcy can harm your credit. However, compared to simply letting your accounts go past due for months on end, bankruptcy may actually be better for your credit over the long term because there are no repeated “dings” on your credit score. Getting the bankruptcy finished allows you to start fresh and begin to rebuild your credit rating.

Your credit score is closely examined when you enter the home buying process, which means  that filing for bankruptcy may affect your ability to purchase a home in the future. Even if your credit score is not significantly harmed,  a bankruptcy discharge will remain on your credit report for up to ten years. That type of history can make lenders nervous about your creditworthiness.  Nonetheless, it is possible to purchase a house after bankruptcy, but it may take some additional time and extra steps.


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Wednesday, February 27, 2019

What is an Administrative Claim in Bankruptcy?

Bankruptcy is a system of debt relief codified in federal statute with its own bankruptcy court. Filing for bankruptcy is a legal process which allows the filer to reorganize debt, repay debts, and potentially extinguish debts. For individuals, there are two types of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Chapter 7 bankruptcy is the traditional bankruptcy that comes to mind for most – by filing Chapter 7 bankruptcy, an individual may discharge existing debts. For secured property, the individual must either pay off the amount owed for the property or forfeit the property. For dischargeable debt, Chapter 7 bankruptcy is a way to eliminate it.  In essence, Chapter 7 bankruptcy is akin to starting over as you forfeit your non-exempt property (some property is “exempt” in that it is protected from forfeiture in bankruptcy).

Comparatively, Chapter 13 bankruptcy allows an individual to reorganize existing debt and potentially eliminate  some dischargeable debt. In Chapter 13 bankruptcy, the individual is seeking to reduce  monthly payments to a sustainable level.

In addition to personal bankruptcy,  there are several bankruptcy options available to business organizations to help reorganize and repay debts. Regardless of who is filing the bankruptcy, the bankruptcy and following proceedings will incur costs. Administrative claims, more formally known as administrative expense claims, are the expenses incurred after the bankruptcy has been filed but are deemed to be necessary for the bankruptcy, the continuance of the individual’s estate, or the continuance of the business organization, and generally must be approved by the court.


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Friday, November 9, 2018

Property Claims in Bankruptcy

Every debt that you have is classified a certain way under the bankruptcy code. Legislators have determined that some debts should be paid off before others because they are deemed more important. Likewise, some debts cannot be discharged at all because they are considered so significant that an individual should not be able to avoid these obligations by filing bankruptcy.

The order in which debts must be paid in bankruptcy is often referred to as “priority.” Some obligations are also explicitly considered priority status debts under the bankruptcy code. These debts must be paid before the debtor can make payments on other debts.


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Monday, September 24, 2018

Information You Need to Start the Bankruptcy Process

Filing for bankruptcy can be extremely complicated. Your attorney will need a complete picture of your finances to determine which type of bankruptcy will work best for you and whether you qualify for certain types of bankruptcy. Appropriate pre-bankruptcy planning will also depend on your current financial status and when certain obligations will come due.

To prepare for your filing, you will need to gather information and obtain specific paperwork regarding your assets, income, and debt obligations. Your attorney will be able to provide a tailored list necessary for your situation, but you can use the following suggestions to get this process started.


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Friday, August 17, 2018

Why would a bankruptcy petition be denied or a debt be considered non-dischargeable?

There are many reasons why a Chapter 7 Bankruptcy petition might be denied.  If filings are incomplete or deadlines are missed, the petition might be dismissed by the Bankruptcy Court.  Similarly, if a petitioner fails the Bankruptcy Means Test, a Chapter 7 claim may be denied.  In either of these scenarios, the objection would be to the entirety of the petition and no relief would be granted.  The Court may sustain an objection to a petition if the petitioner does not provide documents requested by a trustee, fails to complete required credit counseling, attempts to hide assets or commits fraud in the Bankruptcy petition.  While there are many other reasons for an objection, it would be impossible to provide an exhaustive list of possible objections.  It is important to remember that an attorney can help to guide a petitioner through the process without incident.


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Monday, July 2, 2018

What are the different chapters of Bankruptcy?

Chapter 7

Chapter 7 bankruptcy is filed by individuals and businesses unable to pay their existing debts. It is the simplest and quickest form of bankruptcy available. Unsecured debts, including credit cards, medical bills and personal loans, are discharged in a Chapter 7 bankruptcy. Certain debts, including mortgages, car loans, student loans, and child support arrears, may not be discharged.  An individual is allowed to protect certain assets from being liquidated and disbursed to creditors in a Chapter 7 bankruptcy. A business that files for Chapter 7 must liquidate all of its assets.  Not everyone can qualify for Chapter 7 bankruptcy protection.


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Tuesday, June 19, 2018

What is the difference between a reorganization and a liquidation?

When a person declares bankruptcy, it must be clear whether the petition asks the bankruptcy court to discharge the debts listed therein or asks to reorganize the debt. An individual files for reorganization under Chapter 13 of the bankruptcy code, while a business uses Chapter 11. Both businesses and individuals may file for a discharge under Chapter 7 of the bankruptcy code.

In liquidation, a bankruptcy trustee collects the assets of a debtor, sells them to make them liquid, and distributes the money among the creditors to pay off as many of the debts as possible. Once this is done, the debts owed are discharged, which means they are permanently canceled. Creditors usually receive much less than they are owed, if they receive anything at all. If an individual asks the bankruptcy court for a discharge, the consequences are limited to the individual’s credit. He or she will likely continue living his or her life normally afterwards, though the assets she or he retains afterwards are limited to those exempt from the bankruptcy. A business, on the other hand, must be dissolved after discharges are granted. It must close its doors, fire all of its employees, terminate pension plans, and cease operations. If a company is large enough, a bankruptcy trustee might sell an entire division to help appease creditors.

A  reorganization is completely different. An individual in reorganization must consolidate his or her debts and work with the bankruptcy trustee to establish a budget to repay creditors over time under more favorable terms. An individual can keep assets that would otherwise be sold and businesses can continue operating normally. In order to qualify, a bankruptcy petitioner must make enough money to pay the debts under a reasonable repayment plan. Even though creditors will receive more money under a reorganization than under a discharge, it will take longer for them to receive any money, and some debts will be cancelled in whole or in part.

Only an attorney is qualified to assess the factors in each person’s unique case can provide advice on whether a liquidation or reorganization is better equipped to resolve that person’s situation.


Thursday, April 26, 2018

Five Common Bankruptcy Myths

For those who are facing insurmountable debts, filing for Chapter 7 or Chapter 13 bankruptcy may be the only option. However, there are many misconceptions about the process. Let's take a look at five common bankruptcy myths.


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Tuesday, March 13, 2018

Can I be discriminated against for filing bankruptcy?

Filing for bankruptcy can have long lasting consequences, not the least of which is that it will cause damage to your creditworthiness, making it harder for you to borrow money. At times, some individuals may also find that they are being discriminated against because of a bankruptcy filing. That's the bad news. The good news is that in many instances, this form of discrimination may be illegal.


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Wednesday, December 20, 2017

What Is a No-Asset Bankruptcy?

When an individual petitions the court for a bankruptcy filing under chapter 7, that individual gives an impartial bankruptcy trustee the right to take possession of his or her assets. Those assets are subsequently sold off and the proceeds distributed among the petitioner’s creditors. This is an attempt to fairly compensate those creditors before discharging the balance of petitioner’s debts. State and federal laws allow bankruptcy petitioners to exempt their personal possessions up to a certain value from collection and sale. If a petitioner exempts an asset, it will continue to belong to the petitioner even after the bankruptcy is completed and the debts of the petitioner are discharged. This allows people going through bankruptcy to keep assets like automobiles, family heirlooms, tools necessary to make a living, clothing, retirement plans, and even a reasonable amount of liquid money.


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