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In a typical bankruptcy case, you are never going to see a judge. In a chapter 7, you’re going to see a bankruptcy trustee. The trustee is a person appointed by the bankruptcy court to administer your case. The trustee wants to make sure that you are listing all your assets and all your liabilities and you are answering truthful questions to the statement of financial affairs. The trustee’s job is to see if there are any nonexempt assets that can be taken, sold and administered for the benefit of your creditors.
The only time that you would see a judge is typically if there’s going to be a hearing with regard to whether or not the debt that you reaffirm on, which means the debt that you keep, is going to cause you an undue hardship. In some cases, judges want to make sure that reaffirmed debts, particularly on vehicles, can be afforded. If the Schedules I and J show that you as the debtor have a negative disposable income per month, then it is certainly within the court’s discretion to hold a reaffirmation hearing to determine whether or not you have the ability to make that payment going forward. This is part of the consumer protection portion of the bankruptcy code. If the judge feels that you do not have the ability to make the payment going forward, he can disregard or disallow the executed reaffirmation agreement between you and your creditor.
That is the only time you would typically see a judge in a chapter 7 bankruptcy case. The exception to this would be if there is an adversary case filed in your bankruptcy. An adversary case is a separate lawsuit within the bankruptcy court claiming that a debt that you owe is nondischargeable. The court would have to make a determination after a hearing or trial based on the evidence in the case and whether or not you are entitled to a discharge of that debt. Other than that, you would typically not see a judge in a chapter 7 bankruptcy case.
You are not going to go to jail if you file for bankruptcy. In fact, bankruptcy is a great way to get a fresh start, eliminate debts such as credit card bills, medical bills, personal loans and other types of unsecured debt. There’s nothing to be ashamed about in filing for bankruptcy. Bankruptcy is a federal right granted to you in the Constitution for being allowed to either reorganize your debt or get a fresh start. If you do not file for bankruptcy and you bury your head in the sand and ignore your creditors, then there is a chance that you might have to go to court. If you are sued, you may have to go to court for post judgment collection activities. If you fail to appear at two or more post collection judgment activities, you might be held in contempt of court. If you are held in contempt of court, then there could be a body attachment ordered against you and you may be picked up by the sheriff in your county. You are not being picked up because you owe money or because you are guilty of some type of crime, you are being picked up because you are in contempt of court for failing to appear and answer before the court.
So the odds of you going to do jail for a debt are very slim and it’s not going to be because of the debt, it’s going to be because of the fact that you failed to appear in court and you are held in contempt. You can avoid all this trouble by filing for bankruptcy under Chapter 7 or under chapter 13 and putting an end to your debt through federal bankruptcy laws.
Many times licenses are suspended for parking tickets, for child support, for driving without insurance. These suspensions can be lifted during a Chapter 13 bankruptcy, during the 110 days of your case. Now, this is not a lot of time to repay the debt; however, it does unfreeze the suspension, give you the opportunity to drive and an opportunity to work out some type of installment payment plan prior to your case coming to a conclusion.
If, after your Chapter 7 case is completed, you don’t have the ability to repay, then you are subject to another suspension. The best way to stop this is file a Chapter 13. Chapter 13 basically says that you are going to repay the debt that’s owed due to parking tickets, child support, driving without insurance or some other reason for your suspension, possibly moving violations; over the next 3 to 5 years. By stretching out over 3 to 5 years, you give yourself a huge cushion of time to repay the debt. You might want to pay back 100% so that you don’t owe anything after your Chapter 13 is completed or you may wish to do a 10% plan and be subject to the balance due at the end of your case.
In any event, having your driver’s license is very important to reorganize, to get to work, to be able to earn money, to be able to provide for yourself and for your family. So either Chapter 7 or Chapter 13 is going to provide some sort of relief in other words to get your license back. If you find that the debt owed based on your license suspension is large, then you might request a Chapter 13 and get a long period of time to repay it back. There is nothing worse than filing a Chapter 7, undoing a suspension just to see another suspension come on 110 days after filing. Talk to your attorney about what your rights are and what your obligations are and how either Chapter 7 or Chapter 13 can help you get your license unsuspended.
Utah has its own foreclosure process. A helpful link is Utah Foreclosure Help which contains a lot of helpful information about foreclosure and assistance scams. In summary, it takes about 200 days from the time you make your last house payment until the time your lender can foreclose or sell your property. After 90 days of missed payments, the lender can file a NOD or Notice of Default. This is public record as it is recorded at the County Recorder's office. You then have 90 days after the Notice of Default to "cure" or catch up on all of the arrears. At that point, if still in arrears, the lender can set a date for foreclosure which must be published for 3 weeks in a local newspaper. So 200 days is the minimum, and it is very common for lenders to take longer than that as they attempt to work with you on a loan modification or other loss mitigation alternative.Adam Brown is a bankruptcy attorney for Dexter & Dexter, a debt relief agency helping people file for bankruptcy.
Fannie To Allow Walkaways by On-Time Borrowers: Mortgages – Bloomberg.
Exciting news if you have a Fannie Mae or Freddie Mac insured loan. With the upcoming changes, you may be able to walk away from a home that is underwater without owing a deficiency to the mortgage company and without going into foreclosure.
This change gives the homeowner the option to deed the property back to the creditor to avoid foreclosure and walk away from the property. The “deed in lieu of foreclosure” has always been an option but traditionally the mortgage company would try to collect the remaining balance owed on the home from the homeowner. The change is that now, it appears, they may be writing off the deficiency owed and not trying to collect from the homeowner. Even more good news is that the government has extended tax-free status to the forgiveness of the loan, however, currently, that law is set to expire at the end of 2013.
Fannie To Allow Walkaways by On-Time Borrowers: Mortgages – Bloomberg.
Exciting news if you have a Fannie Mae or Freddie Mac insured loan. With the upcoming changes, you may be able to walk away from a home that is underwater without owing a deficiency to the mortgage company and without going into foreclosure.
This change gives the homeowner the option to deed the property back to the creditor to avoid foreclosure and walk away from the property. The “deed in lieu of foreclosure” has always been an option but traditionally the mortgage company would try to collect the remaining balance owed on the home from the homeowner. The change is that now, it appears, they may be writing off the deficiency owed and not trying to collect from the homeowner. Even more good news is that the government has extended tax-free status to the forgiveness of the loan, however, currently, that law is set to expire at the end of 2013.
If you are only three months behind on the mortgage, you have plenty of time and plenty of opportunity to save your home. You can save your home through non-bankruptcy measures, provided that you can work a payment plan or a repayment plan with your mortgage company for the amount you fell behind.
If your mortgage company is not willing to work with you, then you can save your home through Chapter 13. Chapter 13 will allow you to repay the part that you fell behind over the next 3 to 5 years by reorganizing that debt along with all of your other debt. When a Chapter 13 bankruptcy is filed, you must continue to make your regularly scheduled mortgage payment on time every month going forward.
So more important than the three months you fell behind is are you going to be able to make current payments going forward? If the answer to that question is no, then a Chapter 13 is not going to work for you in the long run. You’re going to stop the foreclosure, you’re going to stop the high interest, you’re going to stop any collection activity but if you can’t make both the current mortgage payment plus the arrearage over time, you’re going to be back in the same situation where the creditor is going to ask for permission to avoid your bankruptcy and proceed against the collateral. That motion is known as a Motion to Modify the Automatic Stay which basically removes the bankruptcy protection and allows the finance company to proceed with collection efforts including foreclosure.
In Illinois, the foreclosure process is very long; approximately 7 months to 11 months start to finish. So if you are only three months behind on your mortgage, you have time to work out an agreement with your mortgage company or as a last resort, file a Chapter 13 and dictate to the mortgage company how they are going to be repaid. So Chapter 13 is a way to save your home if you have fallen three months behind and you don’t have the ability to catch up on your own and you need a time period in which to catch up. Contact your local bankruptcy attorney to find out a Chapter 13 will work for you and your family.
Under Chapter 7 bankruptcy law, you have the ability to eliminate the debt on a vehicle whether or not you still possess it or whether or not it’s been repossessed or sold at an auction as long as you make the indication in your Chapter 7 bankruptcy petition that you no longer wish to retain the vehicle. Under Chapter 7 law, whatever amount is owed under that vehicle will be eliminated. In a typical scenario, the finance company repossessed is the vehicle, puts it on auction and comes after an individual for the deficiency. The deficiency is the amount that owed after the auction proceeds are paid toward the debt.
In a Chapter 7 bankruptcy, there is no amount owed after the case is filed if the debtor is going to be surrendering the vehicle. In a Chapter 13, an auto deficiency can be repaid over a period of months based on whatever dollar amount is available pursuant to the budget. In many cases, that amount is $.10 on the dollar, often $.25 on the dollar, up to approximately $.50 on the dollar in most cases. We see very few cases where we have 100% payment plan on unsecured debt.
The key to the car situation is to determine whether or not you wish to keep it or not. If you wish to keep it, you can reaffirm the debt under Chapter 7 or repay the debt under Chapter 13. If you don’t wish to keep the vehicle, you can eliminate the entire debt 100% under Chapter 7. You don’t have to worry about the attorneys’ fees, the repossession fees or the deficiency. The entire debt under Chapter 7 bankruptcy law will be eliminated on a repossessed vehicle if you no longer wish to retain ownership in the vehicle. Make sure that your attorney knows of your intentions so they can be properly listed on your bankruptcy petition.
In short, you should bring as much information as you have. The more information that you can give your attorney at the first interview; the more complete of a consultation they will be able to give you. Some important things to bring are your bills, especially medical bills and pay day loans because those often won’t appear on a credit report; paycheck stubs because people often don’t understand what they are actually bringing home. And tax returns.
It’s also a good idea to look through a budget. Your attorney will often go through a budget with you during your consultation, but it’s good to get an idea of what you’re spending and where your money is going. That way, your attorney can formulate a good plan for you to file bankruptcy and move forward in a positive direction. You should also consider bringing funds in order to hire your attorney. The sooner you file bankruptcy, the sooner you are going to get out of debt and the sooner you are going to be stress free, debt free and living a happy, stress-free, debt free life.
It is possible to discharge traffic tickets in a chapter 7 bankruptcy. Many lawyers will tell you that you cannot discharge traffic tickets in chapter 7 at all; and, that you have to file a chapter 13. However, that is not true. This is one of the funny technicalities of the Bankruptcy Code that less experienced lawyers overlook.
Section 523(a)(7) of the Bankruptcy Code provides that fines, penalties, or forfeitures are non-dischargeable in bankruptcy. If you stop reading after the first sentence than you might think that you cannot discharge a traffic ticket in a chapter 7 bankruptcy. However, subsection B provides that a fine, penalty, or forfeiture is dischargeable if the transaction or event occur in more than three years before that date of the petition filing.
It is important that your bankruptcy lawyer understand this rule. A chapter 7 is faster and less expensive than a chapter 13. If the traffic tickets that are holding up your driver’s license are more than three years old, then you do not have to file a chapter 13 bankruptcy.
A good bankruptcy lawyer listens and asks questions. In Washington State, it is possible to go to the department of licensing website and find out exactly which tickets are holing up your license. If your bankruptcy lawyer does not ask the right questions or do the right background check before selecting a chapter for you, then you may end up in a chapter 13 case and you could just filed a chapter 7.
One of the major themes of this site, and one of the goals of my bankruptcy practice, is to find the right fit for each client. I bring years of expertise to my practice. So when you are dealing with something that gets into the technicalities of bankruptcy law – like discharging traffic tickets – make sure that your bankruptcy lawyer gets all the facts and knows what to do with them. You may be able to get your driver’s license back using a chapter 7 bankruptcy, which is faster and cheaper than filing chapter 13 bankruptcy.
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