Many people assume that filing for bankruptcy is a financial death sentence that should be avoided at all costs. They may even believe that if you file for bankruptcy, you will lose everything you own in addition to your future prospects. However, that perception couldn’t be farther from the truth. Bankruptcy is not a shameful, life-ruining disaster. Rather, it’s a financial tool that is designed to be used by people who have accumulated an unmanageable amount of debt and need a financial fresh start. Moreover, while it is possible to… Read More
When filing for Bankruptcy, one of the very first things a debtor does is to compile a full list of their debts. There are many different types of debts, which in bankruptcy are largely classed into two categories: secured debt and unsecured debt. Secured debts are debts that are guaranteed by collateral (usually property), on which the creditor has a lien. This means that the creditor has an ownership interest in the collateral property that remains in effect until you pay off the debt. If you fail to pay the… Read More
Problem or Issue: In a Chapter 7: In a Chapter 13: You are behind on your mortgage. You must bring the loan “current” after filing the Chapter 7 bankruptcy petition (which commences the bankruptcy) or the mortgage lender may request that the bankruptcy court grant permission for the lender to foreclose on the home. You can repay the “arrears” through your Chapter 13 repayment “plan” over the 3-5 year life of the plan while continuing to make your regular monthly mortgage payments. You are behind on your rent.… Read More
*obtained from the website of the United States Courts on May 31, 2020 at: https://www.uscourts.gov/educational-resources/educational-activities/bankruptcy-basics-glossary A adversary proceeding A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. A nonexclusive list of adversary proceedings is set forth in Fed. R. Bankr. P. 7001. assume An agreement to continue performing duties under a contract or lease. automatic stay An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed. B… Read More
In chapter 7 your assets and liabilities are essentially “frozen” with the filing of the bankruptcy petition. You keeps the “exempt” property/assets. The bankruptcy trustee takes the non-exempt property/assets and liquidates that property. The trustee then distributes the proceeds of the liquidation of the non-exempt property/assets to your existing unsecured creditors. You are then relieved (discharged) of the duty to pay most existing debts and your future earnings cannot be seized by the existing creditors. Lenders with loans on a house or vehicle are either paid as agreed or the… Read More