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To my readers around the country, please keep in mind that I cannot give you legal advice. My answers here on this blog may help you think of things to talk about with YOUR LAWYER. DO NOT TRY TO BE YOUR OWN LAWYER, based on anything you read here. That would be a really bad idea. Welcome. […]
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Christopher Brandon Craner, 32, of Buhl, Idaho was sentenced to two years’ probation for concealing an asset in his bankruptcy case, which included personal interest from a boat. Part of Craner’s sentence includes a two month home detention with a $400 fine. His sentence comes after being charged with bankruptcy fraud-asset concealment. Craner filed for [...]
I regularly see clients who come into my office with a pre-determined notion of what they want and how they need to get there. They have either talked to friends or family about their situation and they come to me simply to see if I can help them accomplish their pre-determined solution. They are looking for a paper pusher, not an attorney.
Fortunately for my clients, I am not a paper pusher. I do not seek to take on every client that walks in my door and I do not seek to tell my clients what they want to hear simply so they will hire me. I do a formal intake where we look at every issue and every possible solution. We discuss the benefits of each. In some cases the client is right and the solution they came to me to discuss is the right solution. In other circumstances the solution the client seeks is either not possible, or simply not the best option for that particular client.
Earlier today I had an individual call me. He wanted some advice. Apparently I met with this individual approximately 3 years ago and I indicated to him that saving his home was not going to be in his best interest. Due to the totality of his circumstances a Chapter 13 bankruptcy would be to expensive and very unlikely to succeed. I suggest walking away from the home, filing a Chapter 7 and getting a fresh start on his financial future. This was the advise that he needed to hear.
Unfortunately, after leaving my office this individual went to another bankruptcy attorney to seek a second opinion. The other attorney told this individual exactly what he wanted to hear. Of course they could save the home. Of course a Chapter 13 was feasible. Of course everything the clients friends and family had told him was true. This individual was seeking this attorney’s aid and counsel and instead he received a sales pitch for the services the attorney wanted to provide instead of a realistic evaluation of the client’s circumstances.
Now the individual is three years into his plan and the case is a mess. He cannot afford to continue and he told me on the phone that all of my predictions are coming true. He now wants to come into my office to figure out the best way to move forward. He wants to convert his case to a Chapter 7. That may or may not be the best option. We will see when he gets here. Once again I am going to evaluate his case to determine what he needs to hear, not what you wants to hear. When you seek an attorney, make sure that you are not sold a product simply because it is what you told the attorney you wanted. Make sure you are given advice based on what you need to hear, not what you want to hear. Make sure the attorney does his job.
In recent years, as credit ratings and credit report information have become so important to everyone, cleaning up the credit report has become one of the most cited motives for filing bankruptcy. Unfortunately credit reporting agencies have often moved at a snails pace when it came to correctly reflecting debts as discharged in bankruptcy rather than as past due. Thankfully in the past few years, the big three credit reporting agencies have become considerably better
This change largely came about as a result of litigants successfully challenging the practices followed by these agencies in updating reports after bankruptcy. While the reporting has greatly improved, it is critically important that when you do file bankruptcy and obtain an actual discharge from the bankruptcy court, you take the next step and review your credit report six months after the discharge date to make sure that the debts are accurately reflected.
The reality is that most people bounce back incredibly quickly with respect to their credit scores in the eighteen months after discharge, but this process is going to be greatly slowed if the reports are not properly reflecting the status of the debts six months after discharge.
If you have filed bankruptcy in either Washington or Oregon and it was discharged at least six months ago, you should probably ask yourself whether you have really checked your credit reports thoroughly.
The original post is titled Credit Reports Now Reflecting Debts Discharged in Bankruptcy More Accurately. , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Post-Petition Property Transfers
Every so often clients will ask me if they can sell, give away, deed, or transfer property after their bankruptcy is filed. I’m glad that they ask, because the consequences for a prohibited post-petition property transfer are steep.
Let’s quickly review how property works in bankruptcy. Once you file bankruptcy, all property becomes property of the bankruptcy estate. Exemptions allow you to protect equity in property, so that you can get a fresh start after the bankruptcy is completed. For example, if you have a house that is worth $200,000, and you have a $175,000 mortgage, then you have $25,000 in equity. That equity is 100% protected by the Washington State homestead exemption; and the trustee cannot force you to sell your house. However, you cannot sell the house or deed the house while you are in bankruptcy, unless you get written permission from either the court or the trustee.
You should get written permission to sell, give, transfer, deed, or transfer property as long as your case is open. So how long is your case open? It depends on the chapter you file.
If you are in a chapter 7 bankruptcy, your case is usually open for about 100 days. It is important to distinguish between getting your discharge and having the case closed. You get your discharge about 90 days after you file. The discharge is what removes your legal obligation to pay pre-petition debts, but it does not close your case. The case is closed when the trustee files a no asset report or a report that the administration of the case is completed, and the judge approves the report. Until the judge approves the report and the case is closed, the bankruptcy estate remains in existence.
If you are in a chapter 13 bankruptcy, the case will remain open until all of your plan payments are complete. Then the trustee will process a final report. Until the judge approves the final report and the case is closed, the bankruptcy estate remains in existence.
Depending on what you are proposing to do, getting permission can be as simple as having your bankruptcy attorney send an email to the trustee and wait for the trustee’s written response. In some cases, you will have to file a motion with the court. The bottom line, however, is that as long as your bankruptcy case is open, you must have proof that you got written permission from either the trustee or the court to give, sell, deed, or transfer any property.
It’s interesting that most of my clients are very concerned about getting credit again before they have even gotten out of debt. This is not uncommon. Most people want to have credit cards just like they had while they were in debt before they filed for bankruptcy. There is a comfort level of knowing that you have the ability to whip out a plastic credit card and make purchases without having cash money. Since bankruptcy, under Chapter 7, can be filed once every eight years, creditors understand that you are a good candidate to not only acquire another credit card but to utilize a credit card, incurring additional charges, over limit fees, high interest fees and late fees.
So, I tell my clients don’t worry about getting credit after bankruptcy because the offers will be coming in. I tell my clients that these are usually not the best deals immediately after a bankruptcy filing. If you can wait six months to a year after filing and go on a cash basis for a little while, you will see that the offers for credit following that six months to a year are going to be more enticing. For example, you can always put money in a bank account and get a secured credit card for an amount equal to what you put in the bank. This is a great way to start to reestablish credit and to have the convenience of plastic while you are really using your own money so you are not going to fall back into debt. You can qualify for a decent mortgage two years after your case is filed. Two years gives you plenty of time to save up for a reasonable down payment and to show no negative credit after your bankruptcy case was filed.
Keep in mind that creditors want your business. Keep in mind that credit card offers and other offers for credit will come in the mail, including auto credit. So if you are worried about credit after bankruptcy, you need not worry. You will have plenty of opportunities to reestablish credit after your case is over.
Typically, a bankruptcy filing and the proof thereof will last on a credit report for 10 years. However, don’t let the fact that it’s going to sit on your credit report for 10 years influence whether or not you need to file a bankruptcy. You should determine whether or not you need to file a bankruptcy based upon your personal situation. If you are someone who is struggling financially, and you don’t think you’re getting anywhere, then you may be best filing a Chapter 7 fresh start. I have had clients who have made minimum payments for years and years and years only to realize that they are not seeing their debt limit could down. I have also had clients who have borrowed from their 401(k), borrowed from family and friends, borrowed from other credit cards and equity lines of credit only to see that they’ve just transferred the debt from one party to another.
If you are struggling financially, Chapter 7 might be your best that to get a fresh start. The fact that the filing sits on your credit report should not dissuade you from filing. Please keep in mind that the fact that a bankruptcy is reported to the credit bureau for 10 years does not mean that you don’t get credit for 10 years. In fact, you can get credit almost immediately after a Chapter 7 bankruptcy. You can purchase a vehicle immediately after filing which is called open bankruptcy financing and you can qualify for other types of credit within six months to a year. Most importantly, you can qualify for a decent mortgage two years after the filing of a Chapter 7 bankruptcy.
So yes, bankruptcy will stay on a credit report for 10 years; however, you will get credit again much sooner than that. You’ll be able to reestablish credit within six months to a year and qualify for a decent mortgage after two years.
There are certain situations where cars cannot be kept during a bankruptcy. However, in the overwhelming majority of Chapter 7 bankruptcy cases, individual debtors keep the car that they have either by continuing to make financial obligation payments or continue to lease the vehicle. In other cases, if the vehicle is paid in full, if it doesn’t have significant value, then the property is exempt and free and clear from the long arm of the trustee. In a Chapter 13 case, the debtor has the option of either keeping the vehicle and paying for it through the Chapter 13 or surrendering the vehicle and eliminating the debt or at least the secured portion of the debt.
Either chapter of bankruptcy, whether it be Chapter 7 or Chapter 13 provide for the ability to keep a vehicle if the debtor continues to pay for either directly or through the Chapter 13. Either chapter will also allow for the surrender of the vehicle if the debtor decides that it’s not in his or her best interest to be obligated for future car payments.
When you meet with your attorney, you want to go through the budget. The budget will determine whether or not you have the ability to reaffirm and auto debt under Chapter 7. If you feel you have the ability to repay, then your attorney will request that the creditors send a Reaffirmation Agreement. The Reaffirmation Agreement has to be signed by the debtor and the attorney and then sent to the creditor for counter signatures. Once the agreement is filed, the court has the ability to see whether or not there is a presumption of undue hardship which would prevent you from being able to make your payments on that vehicle. If the court has a question on it, the court can set a hearing whereby you as the debtor will have to appear before the court and explain to the court how you are going to be able to make those payments without any undue hardship. In the overwhelming majority of Chapter 7 and Chapter 13 bankruptcy cases, individual debtors keep their vehicles.
Many individuals are unaware that when a creditor forgives a debt that the individual owes, the forgiven debt is considered income for purposes of their tax returns. The IRS and the State of Michigan both tax the forgiven debt, often creating large liabilities on the part of the tax payer.
It is important to note that there are exceptions to this general rule. Individuals who receive a discharge of their debts under the Federal Bankruptcy Code are not subject to tax liability on the forgiven debt. Additionally, individuals who are considered insolvent are not liable for taxation. Finally, debt related to an individual’s mortgage on their primary residence is not taxable upon forgiveness.
These exceptions are located in Section 108(a)(1) of the Internal Revenue Code. In the event an individual finds themselves in receipt of a 1099(c) from a creditor they need to be sure and have their tax preparer file Form 982 along with their Federal Income Tax Return. If your preparer is unaware of the rules regarding these exceptions, it may be best for the individual to seek the help of a more qualified professional.
The Scooter Store, known for helping seniors regain mobility through products such as the power wheelchair and scooter, has filed for Chapter 11 bankruptcy protection due to Medicare and Medicaid fraud allegations. Earlier this year, the company headquarters was raided by federal officials. Just weeks after the raid, a large number of employees were told not to [...]
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