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Friday, February 08, 2008

Reopening a chapter 7 case

I receive several inquiries about reopening a chapter 7 case once the case is closed.

This is possible to do, however it is subject to court approval.
1. The debt must have been incurred before the date your case was originally filed.
2. The court charges an amendment fee of $26 to add on debt to a case.
3. There is also a reopen fee to reopen a case once it is closed, $260 for Chapter 7.
4. Your attorney may charge an additional fee to do the work for you.
5. This must be done by motion to the court, then the judge will rule on letting the case reopen.

Thursday, February 07, 2008

New updated median income figures for bankruptcy filers

Median income level for Illinois based on family size
Effective: 2/1/08



1 Earner
2 in Household
3 in Household
4 in Household
Illinois $44,673 $56,545 $66,607 $77,634


Each additional household member add $6900.
These figures are used in the means testing analysis for Chapter 7 and Chapter 13

Bankruptcy Audit's suspended

This is a bit of interesting news about the random audits performed by the Department of Justice. Previously 1 in 200 cases was audited for accuracy. These audits consisted of independent review of paystubs, tax returns, bank statements, real estate documents and other related items associated with a debtor's bankruptcy case.

From the UST website:


NOTICE REGARDING DEBTOR AUDITS

January 14, 2008
As mandated in Section 603(a) of Public Law 109-8, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the United States Trustee Program (USTP) established procedures for independent audit firms to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. Pursuant to 28 U.S.C. § 586(f), the USTP contracted with independent accounting firms to perform audits in cases designated by the USTP.

The FY 2008 Consolidated Appropriations Act, Public Law 110-161, provided no funding for debtor audits. As a result, the USTP has suspended its designation of cases subject to audit and has notified the independent accounting firms performing the audits. The Program is pursuing alternative sources of funding to permit it to resume the designation of cases subject to audit and, if successful, intends to reinstate the audits.

Pursuant to Section 603(a) of BAPCPA and 28 U.S.C. § 586(a)(6), in the spring, the USTP will make public information concerning the aggregate results of the debtor audits performed during fiscal year 2007.

Wednesday, February 06, 2008

More Bankruptcy Q&A

Here is another rapid fire list of Q & A from bankruptcy questions I have received recently.
If you have a specific question, feel free to contact me and I'll be happy to review your situation with you. Thanks


Subject: What does reach back mean?

Question: I was doing fine financially until I went to commission sales. I kept thinking I was going to make a lot more money than I did. In June 07 I took a cash transfer from my bank credit card to my checking (they offered to me) of 15,000.00. A week later I transfered 14,000.00 to my daughter for lapband surgery. That credit crd is now up to 22K and part of about 40K I am in debt and thinking about filing Chapter 7 on. Do I need to wait one or two years before filing so they wont go after her. I did not know I was going to be in such a financial pit and dont want my bad decissions to effect her.

Answer: Transfers/payments/gifts to insiders must be disclosed for a year in your bankruptcy paperwork.

Subject: repo

Question: Is there a law that clears you from being sued after a certain amount of years. I co-signed 8 years ago for someone on a car and now the bank is just trying to sue me for the difference.

Answer: Bankruptcy will discharge your responsibility for the debt.

Subject: chapter 7
Question: Hello. Thank you for your time. I filed a chapter 7 in October of 2005, discharged in February of 2006. I have a residence and a rental home (has already gone to sheriff's sale) which both were listed assets on the bankruptcy filing. Both mortgages had ARM's which adjusted after the discharge, and the loans were never reaffirmed. Although I kept the payments current until July/August 2007, the values dropped, I could not rewrite the mortgages and have decided to "walk-away." Is my understanding correct that, since these assets were discharged in my bankruptcy and not reaffirmed, I cannot be held responsible for any deficiencies? Thank you

Answer: True. If you did not reaffirm, you are not responsible for the mortgage balance and can walk away from the home.

Subject: Getting out of Bankruptcy
Question: I need to know how can refinance my home loan andget out of bankruptcy.

Answer: I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: Filing taxes post bankruputcy discharge

Question: I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home,car and personal belongings.

Answer: As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Can debt be discharged?

Question: I am a primary card holder on a credit card.My wife was put on as a authorized user only.She rang up 10,000 in debt on this card.She admits its all her debt.She plans on filing Bankruptcy alone{i am not filing}. Can this debt be disharged?

Answer: This would still be your debt, since you 'authorized' her to use your account. So, they could still collect on this, despite her bankruptcy.

Subject: Chapter 7
Question: I live in vancouver wa but work in oregon. I file for chapter 7 bankruptcy in Nov 2007 but the trustee is waitng to close /discharge the debt until I file taxes so he can garnish them. My question is can he garnish my child tax credit and/or my earned incom credit?

Answer: Each jurisdiction may be different, but in Illinois, we use one of the Illinois exemptions to protect Earned Income Credit. Talk to your attorney about the available exemptions for your refund.

Tuesday, February 05, 2008

Bankruptcy Questions and answers

Here is an updated bankruptcy question and answer session. As you can see there are many bankruptcy issues that can sway a case one way or another. Hold tight, here we go.

Chapter 7 and Lump sum SSDI payment


Question
My daughter applied for SSDI over 2 1/2 years ago. Her husband left her 2 years ago. Their divorce comes up in March. She just received a lump sum payment from Social Security for her disability. She has not paid any of her credit cards, etc. for the past two years however I have been paying her car payment; titled jointly. I have been paying all her expenses the past two years with the agreement she pay me back when she got her settlement. She is planning on filing Chapter 7. Does she have to disclose the lump sum payment of social security disability? She owes me $8k of the $15k she received. What effect will that have on her filing? Also what happens to the car since it is in her husband's name also? She would like to keep it. Thank you.

Answer
Yes, she would disclose it. Her attorney will use state exemptions to protect it. She should not pay you, as the trustee in the case can then come after you for the funds.
For a cosigned debt, she can choose to reaffirm the debt so she can keep the car, and should continue to make the regular payments on it.
She should talk to a local bankruptcy attorney to get state specific advice.

Subject: Motion for Deficiency

Question
I live in Ohio. Filed Ch.7. Surrendered our condo to the trustee, he abandoned the property,it went into foreclose and sold at auction. I recently received a notice for motion of deficiency filed by the condo association, which by the way was listed in the original filing. Do I owe this money? What happens if I don't go to the hearing?
Thank you
Answer
If you listed the debt in bankruptcy, then the bankruptcy discharged your obligation for this debt. I assume this is a state court motion, where they may be asking for $ from the lender, as they usually have a condo association lien on the property.
IF it is a bankruptcy motion, you should speak to your attorney.

Subject: chapter 7 and tax refund

Question
i live in wisconsin a few years back i was involved in a car accident. the womens attorneys sued for 85,000 and it was granted. i want to file chapter 7 since i really have no assets at all to get rid of this judgement.i still desperately need my tax refund which should be significant w/2 children.is it better for me to file my taxes before or after i file for bankruptcy?should i anticipate them taking a portion or all?i am extremely stressed about this due to having to pay for child care. thank you very much.
Answer
Each state has exemptions to protect assets. You should meet with a local bankruptcy attorney to advise you how to protect your assets and when is the best time to file a case. Car accident debts are normally dischargeable, unless there was DUI/DWI or intentional injury.

Subject: Filing taxes post bankruputcy discharge

Question
I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home,car and personal belongings.
Answer
As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Getting out of Bankruptcy

Question
I need to know how can refinance my home loan and get out of bankruptcy.
Answer
I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: chapter 7 questions

Question
My wife and I recently filed chapter 7(with an atty).I would like to know if I can talk to a lender about the terms of my loan.To be more specific,We own an RV and wish to keep it.However,I/we are not going to "reaffirm".The main reason is I know that the bank doesn't want it and I don't want to be responsible in the future if I cant continue to pay.At the present time we are current on our payments and are continuing to pay.Is it reasonable to ask them to reduce the loan amount or interest rate to help us as long as we continue to pay?.............more important,........Is it legal?

Thank you in advance for your time and help.Please be advised that your answer may generate more questions.I/we ahve talked with our attorney about alot,however he is on his honeymoon at this time and unavailable.
Answer
If you do not reaffirm, then there is no negotiation with the lender. The reaf may have better terms for you. if not reaffirmed, the lender has the right to the items back. IF you pay for them, it would be up to the lender if they will agree to let you keep the items if you are current. Since the RV may have some resale value, you need to speak to them directly about the options available if you do not want to reaffirm. They are under no obligation to let you keep the RV, even if you are current, if you don't sign the reaffirmation.

Subject: Chapter 7

Question
Went in for a consultation for chapter 7 but new questions arise after the consultation.
1. Been in SC for a year now planning on moving back to GA in a couple of months. Should I go ahead and file it now in SC or wait?
2. The lawyer told me to list my assets. Do I have to list my furniture/TV(I do not want to lose it)?
3. The lawyer also told me something about Chapter 722(something about car loan) do you know what kind of car I can get?
4. Should I file taxes before or after I file?
5. If I do list assets will a trustee actually come out to see it?
Answer
1. You would need to still file in SC for 90 days after you move.
2. List all assets, and your attorney will use the state exemptions to protect your assets so that you can keep them.
3. 722 is where you can buy your car for fair market value as opposed to paying off the balance of the loan. They can help you finance something after bankruptcy too.
4. Check with your attorney to see what portion of the refund may be protected.
5. Rarely does a trustee investigate assets. You sign the papers under oath, so be sure to list all of your assets.

Subject: chapter 13

Question
I have about 22,000 in unsecured debt. All very high interest rates (cc's and 3 personal loans). I tried consolidating part of my debt into a personal loan of 10,000 6 months ago. The consolidated loan is 24% revolving and in 6 months i only managed to bring down the total 100.00 dollars, and now I am even farther in debt and can't make ends meet. My minimum payments are 700 dollars monthly. I make 37,000 a year and own my home and don't want to lose it. I will need a care within 3-5 years. If I take the chapter 13 route, what would I expect to lower my payments too monthly and will the recent 10,000 unsecured loan (it was deposited in my account, however no luxuries were purchased with it, it was used for repayment of personal debt), affect my filing. I can't go on like this, I can not even barely make these payments of 700.00. I live in PA.
Answer
With Chapter 13, you would pay back anywhere from 10-100% depending on your income, and depending on your assets. You would pay this debt back with little to no interest. Speak with a local PA bankruptcy attorney to find out the exact percentage of repayment based on your individual situation.

Subject: Chapter 7

Question
Hello,

I have filed Chapter 7 and included my home (in Georgia). The mortgage attorney has a court date of January 31, 2008 for a motion of relief from stay. Will I be notified as to how soon I need to vacate the property or approximately how long will I have left to remain on property? I asked my attorney and was told 2-3 months after filing date. I just wanted to see if I could get a more definite time frame. Thank you in advance.
Answer
Once the stay is modified, the lender will start the foreclosure process. Foreclosures can be up to 9 months, depending on the case and the jurisdiction you live in. You would have a bit of time to stay in the property and to find alternate living arrangements. The bankruptcy will eliminate the balance owed on the mortgage.

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