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Chapter 13 bankruptcy is reorganization through a Chapter 13 trustee. The reason why many people will file Chapter 13 is to save a home that has gone into foreclosure. Now, the reason why the home fell into foreclosure could be several; in many cases, someone has lost their job, fallen behind on their bills and+ Read MoreThe post What are the most common causes of Chapter 13 bankruptcy? appeared first on David M. Siegel.
When you file for bankruptcy protection, the Petition’s got some interesting friends that come along for the ride.
Your bankruptcy petition is three simple pages, calling for some simple bits of information.
It’s the gateway to the bankruptcy case, with every answer spilling into more questions.
Tread lightly or you may spring a trap.
Exhibits To You Bankruptcy Petition
If you’re a publicly-traded company, you’ve got to complete Exhibit A of the bankruptcy petition. But let’s face facts – if you’re filing a case on behalf of a publicly traded company then you likely have a lawyer. Or a team of lawyers. And if you don’t, then you’ve got bigger problems.
Exhibit B, reserved for your bankruptcy lawyer (unless you don’t have one – in which case you don’t need to worry about this piece of information), is a declaration that the lawyer told you about all the different types of bankruptcy protection that’s available to you.
Exhibit C asks about whether you, “own or have possession of any property that poses or is alleged to pose a threat of imminent and identifiable harm to public health or safety.” We’re talking about explosives, dangerous chemicals, and things like that. If you’ve got a garage full of fireworks for July 4, a vat of cleaning solvents, or a lab of chemicals then you’re going to want to take a look at this Exhibit carefully.
Exhibit D is your statement of compliance with the pre-bankruptcy requirement for credit counseling. Failure to file this certification may jeopardize your bankruptcy case entirely.
Without Exhibits, Your Bankruptcy Fails
Though these are called Exhibits, these items are by no means to be seen as afterthoughts to your bankruptcy petition.
They’re not only important, but also required in order for your petition to be seen as complete. Drop the ball by filing a petition without required exhibits and you’ve doomed your case to failure before you’ve gotten past the initial documents.
How to File Bankruptcy: Exhibits To Your Bankruptcy Petition was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Learning of new attacks being made against debtors who own Individual Retirement Accounts I am reminded of Al Pachino's line in the last Godfather movie: "Just when I thought I was out, they pull me back in!" As reported by Illinois law professor Robert M. Lawless in a recent article posted on CreditSlips.org, some Chapter 7 Trustees are reopening and issue that most of us thought was finally settled in 2005 when Congress passed the latest bankruptcy reform act.
The Bankruptcy Reform Act of 2005 states that retirement funds held in tax exempt accounts would be protected in bankruptcy cases up to one million dollars. Funds held in IRA accounts are exempt from federal taxation, so at last debtors could be sure that the retirement nest egg was safe.
Some Chapter 7 Trustees are now questioning whether certain IRA accounts should be given tax favored treatment since the fine print of the account agreements allow the brokerage firm to use the IRA funds to repay other loans taken out by the debtor from the same brokerage firm. Since the tax code prohibits tax qualified IRA accounts from making loans to the account holder, the Chapter 7 trustees argue that accounts with such loan provisions are not tax exempt and thus not protected under the Bankruptcy Code.
The bankruptcy court for the Eastern District of Tennessee recently ruled that IRA accounts with such loan provisions are not exempt, and that case is currently on appeal in the Sixth Circuit Court of Appeals. In re Daley, 459 BR 270 (Bkcy. EDTenn., 2011).
Nebraska exemption statute 25-1563.01 states that IRA accounts are exempt from the claim of creditors "to the extent reasonably necessary for the support of the debtor and any dependant of the debtor." Prior to the Bankruptcy Reform Act the issue commonly litigated in bankruptcy court was whether the amount held in the IRA account was "reasonably necessary" to support the debtor's family, and if the Trustees succeed in their arguments this issue will come back to life.
Until this new attack of the trustees is finally decided, I would recommend that debtor attorneys claim both the new federal exemption and the older Nebraska exemption to IRA accounts in the bankruptcy proceeding, and that they inform their clients of the possible risk they may face if they hold substantial IRA assets.
For those who missed it, our firm was featured in the Oakland Press last year. You can read the article by following the link here:
http://www.theoaklandpress.com/articles/2012/03/26/news/local_news/doc4f6bc6fed7012515634862.txt
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for May 21, 2013 Sinbad, almost $11M in debt, files for bankruptcy Battery maker B456 Systems’ bankruptcy plan approved GM Bankruptcy Proceedings Delayed by Zombie Whistleblower Case
As many readers of our blog probably know, IRAs (Individual Retirement Accounts) are exempt under New York State Debtor and Creditor Law and the federal Bankruptcy Code. An exempt asset means that an individual can file for Chapter 7 bankruptcy and keep that asset after the bankruptcy filing. The reason for this exemption is twofold: (1) IRAs are deemed "spendthrift trusts" under New York State and federal law; and (2) the purpose of the law is to give debtors a "fresh start" with some assets, and especially to protect retirement monies for debtors.
As with many topics in bankruptcy, sometimes there is not necessarily a clear answer to an issue. While the law is clear with respect to IRAs (New York State law provides that IRAs of any value are exempt assets, with limited exceptions, and the Bankruptcy Code allows exemption of up to $1,245,475 in IRAs or Roth IRAs), what about inherited IRAs? An inherited IRA is an IRA that debtor inherits from a family member, generally a parent, and the distinction from a regular IRA is that the debtor's earnings were not used to fund the IRA, but instead the monies were rolled over from the IRA of a deceased family member, usually after the death of the family member.
Several Bankruptcy Trustees around the country have raised the issue of whether inherited IRAs should be deemed exempt in bankruptcy. In the Southern District of New York, in In re Cutignola, 450 B.R. 445 (Bankr. S.D.N.Y. 2011), the exempt IRA of a debtor who died post–petition passed to her co–debtor husband through her will. The Bankruptcy Trustee moved for turnover of the IRA to the bankruptcy estate, arguing that the IRA lost its exempt status when it was transferred to the husband. In its analysis, the Court looked at the language of Bankruptcy Code § 522 and concluded that if the funds are: (1) retirement funds; (2) in an account exempt from taxation; (3) and arrived in that account through a direct transfer, the funds remain exempt. Accordingly, the Bankruptcy Trustee's turnover motion was denied.
While the issue has not been definitively settled, this author's opinion is that in the Southern and Eastern Districts of New York, inherited IRAs are exempt.
The question of what assets are exempt in bankruptcy is very complex, depending on the asset, the jurisdiction and the type of bankruptcy relief sought. For more information, please contact Jim Shenwick.
There are exemptions available in Chapter 7 bankruptcy that may help protect your cash. Although the cash in question has to qualify as an exempt asset. It’s common for consumers to be afraid of filing in fear of losing cash assets. The good news is you may be able to retain your cash and other assets [...]
The Bankruptcy Code defines a bankruptcy petition preparer as “a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney, who prepares for compensation a document for filing.” The Justice Department uses the term “typing service” to describe bankruptcy petition preparers. This is because the limits on what a bankruptcy petition preparer can and cannot do are extreme.
Bankruptcy Petition Preparers are not attorneys and they are not qualified to give legal advice. They cannot advise you as to what chapter of bankruptcy will best serve your purposes. They cannot tell you what property to exempt or how to exempt it. They cannot help you avoid the perils of fraudulent transfers or preference payments. They cannot attend hearings with you or represent you in court. In affect, all that a bankruptcy petition preparer can do is read you the questions on the bankruptcy form and type your answers.
For this reason the Bankruptcy Court for the Eastern District of Michigan has set a firm $100.00 cap on the amount of money that a bankruptcy petition preparer can charge for their services. The Court understands the limited benefit that bankruptcy petition prepares provide and it also understand that a large percentage of cases that are filed through the use of bankruptcy petition preparers fail to successfully obtain a discharge.
The bottom line is that individuals who are seeking bankruptcy protection are vulnerable. Money is tight and they are looking for the most affordable help that they can find. They look to cut corners through the use of bankruptcy petition preparers or on-line form preparation software and manuals. However, the cost of a good bankruptcy attorney is generally far less than the cost of the damage that can be done through inadequate representation.
A bankruptcy attorney can help you avoid losing your home, car or other assets. A bankruptcy attorney can help avoid having the Trustee sue your family and friends for preferential payments or fraudulent transfers. A bankruptcy attorney can help you analyze your situation and determine which type of bankruptcy will best accomplish your goals. An experienced bankruptcy attorney is not only a reasonable expense, an experienced bankruptcy attorney is a necessary expense.
A study from the Fred Hutchinson Cancer Research Center in Seattle found that cancer patients are 2.5 times more likely to file bankruptcy than people without cancer. The study was published in the journal Health Affairs. The risk is even higher for younger cancer patients. This confirms what bankruptcy lawyers have known for a long time: many people don’t slide into bankruptcy, they are catapulted into bankruptcy or – put another way – debt has a way of kicking you when you are down.
Cancer is an extreme example of how a sudden and unexpected life event can rocket someone into bankruptcy. The study’s authors highlighted a few of the reasons that cancer correlates to an increased risk of bankruptcy filing: 1) cancer is extremely expensive, even with health insurance; 2) cancer treatment leads to income disruption or job loss; 3) support networks are unable to take up the slack; and 4) existing debt becomes unmanageable. These factors, however, are just as present with any sudden and unexpected life event, not just cancer.
Debt problems have a way of kicking you when you’re down. Most of us – bankruptcy lawyers included – have personal debt, whether it’s student loans, mortgages, car loans, or credit cards. The bottom line is that debt is a necessary part of everyday economic existence. What none of us want to admit is that it doesn’t take much for your economic existence to be knocked off balance. You can be the most responsible credit card user out there and have a modest mortgage, but if you lose your income for six months, you are almost certainly going to start missing payments.
Once you start missing payments, you will begin to spiral deeper into debt. It’s simple. You have a mortgage, you have to pay your utilities, you have to buy food, and you go through an income disruption. If you don’t pay your mortgage, your home will go into foreclosure. If you don’t pay your utilities, the lights will be shut off. You have to buy food. Even at that minimal level of existence, it is easy to spiral into debt if you lose your income for even a few months.
Most of my clients have been financially responsible their whole lives. It just takes a few months of financial disruption like lost income or unexpectedly large medical bills for them to spiral into debt and end up in bankruptcy. The bottom line is that any kind of disruption whether it is extreme and life threatening like cancer, a layoff, a furlough at work, or anything that radically increases your expenses or radically decreases your income can put the most responsible person into bankruptcy.
You do not have to hire an attorney to file for bankruptcy; however, I would strongly recommend that you do so. You do have the ability to fill out forms online or from an office supply company, go down to the clerk’s office and attempt to handle a Chapter 7 or Chapter 13 bankruptcy case+ Read MoreThe post Do I have to hire an attorney to file for bankruptcy? appeared first on David M. Siegel.
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