Friday, September 21, 2012

N is for a no asset report in bankruptcy

This is the holy grail in bankruptcy, what every chapter seven debtor wants.

A no asset report by the standing bankruptcy trustee means there are no assets to administer in the bankruptcy case for the benefit of creditors. It's either because your exemptions are great enough to protect all of your belongings, or that there is no significant value that the trustee would receive if they tried to liquidate the unexempt asset. (The trustee does not want to sell your used VHS cassette tapes at a flea market to make $11)

The no asset report is filed shortly after the 341 meeting of creditors. If everything is proceeding as planned, the chapter 7 discharge should come about 2 months later.

Tuesday, September 04, 2012

M is for Marriage in bankruptcy

If you are married, you are not required to file a joint bankruptcy.   In many cases you should though.

a.  If you live in a community property state it is usually wise to file a joint case.  Debts incurred by either spouse during a marriage are each spouses responsibility in most instances.   Therefore, if only one spouse files on marital debt, the other spouse gets socked with the responsibility for repayment, which defeats the purpose of filing a bankruptcy case.

b. Many debts are cosigned and joint between spouses, so a joint filing discharges them for both filers.

c. If the parties are separated and contemplating divorce, it is often helpful to discharge all debts for both spouses, making the break cleaner, and the divorce simpler, rather than having to resort to splitting the debt, and then splitting income to help pay for the debt during the marital settlement agreement.   This is most helpful for a home that is under water, with neither party really wishing to keep the home.
I'm not advocating that parties file bankruptcy just because they are divorcing, but money problems is often a major factor in the decision to file divorce.

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