When Should You Talk To A Bankruptcy Lawyer?

Attorney Christopher Carr, a Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com

In Chancery

In Chancery

Maybe the best approach to the question is to talk about when is not the best time to talk to a bankruptcy lawyer.  You were served with the foreclosure notice 6 months ago and the mortgage company has been refusing your payments and now your home is to be sold at a sheriff’s sale tomorrow.  Your car has just been repossessed and your job is now in jeopardy since you do not have transportation to work. These are bad times to be talking with a bankruptcy attorney.  Not because a bankruptcy attorney can’t still help you.  An “emergency” bankruptcy filing can still possibly help you save your home or maybe your car can be returned to you.  It is a bad time because had you consulted with a bankruptcy attorney sooner, a different plan to help you deal with your debt issues may have been available.  That is, while we may still be able to save your home in the short term, your bankruptcy may fail over the longer term whereas had you taken action earlier, a plan could have been devised to save it long term. So when should you talk to a bankruptcy lawyer?  HERE ARE SOME bASIC GUIDES: You know your finances are not what they should be.  You know that you are falling behind on your bills or are struggling to make ends meet each month.  You are juggling, you often have to choose between putting food on the table and paying your credit cards in full. You pay one card one month but not the next so you can pay another.   Or maybe you know that, even though you are current on your bills, there will be a  disruption in your income coming:  Maybe an operation that will require you or your spouse to be out of work for a time or a coming labor union strike. These are better times to be exploring options. Talk to an a compassionate, experienced, knowledgeable attorney who can look at your particular situation before absolute disaster strikes, before you are about to lose your home, car or possessions on the morrow! And it is important to recognize that ironically you must have money to file bankruptcy. If you wait till the axe has fallen, you likely will not have the funds to file:  As Max Gardner, Esq., a keen observer of trends in bankruptcy recently noted regarding the recent fall off in bankruptcy filings: A substantial number of consumers who need to file are simply too broke to file. And, those consumers who have lost homes to foreclosure during the Great Recession simply no longer care.  Simply stated, as many consumers who have lost hope for finding new employment have also lost the need for bankruptcy relief. A skilled bankruptcy lawyer can help you plan for a future filing before you reach this point of despair.  He or she can help you prioritize to help you keep things that are important to you. If the house is most important, then in order to afford the house, perhaps a vehicle can be surrendered and a less expensive vehicle obtained.  Or, the bankruptcy lawyer may tell you to stop paying your credit card or pre-Obamacare medical bills and use the money to make sure that your house payment is made.  This can ensure that you are current on your house for a bankruptcy filing so that you do not have to pay more money for mortgage arrears or that you can file a chapter 7 with a “walk through”. Forewarned is forearmed, as they say!  Merely talking to a bankruptcy lawyer does not commit you to a bankruptcy filing and many will talk to you initially for free or at a reduced charge What do you have to lose other than your current lack of knowledge?  It is not infrequently the case that we will either decide the timing is not yet ripe for a bankruptcy or that some other tool at our disposal is a better option for your particular situation.  While every case is unique, the bankruptcy lawyer will have had experience with cases like yours in the past that will have shown him or her pitfalls of various approaches both within and outside bankruptcy. For example, certain types of debt and liens which cannot be wiped out in a Chapter 7 can be discharged or removed as the case may be in a Chapter 13. Or perhaps he will guide you in the direction of combining bankruptcy with a mortgage modification to drive down your monthly payment to the mortgage company outside the bankruptcy perhaps even to the point where you ultimately can leave bankruptcy early. The alternatives to bankruptcy could include debt settlement; debt consolidation or even debt litigation. The debt settlement company (DSC) may promise over the radio that they can knock 50% off your debt but they cannot litigate or file a bankruptcy case for you. And they will not defend you if one or more of your creditors brings suit while you are in the settlement process.  A debt consolidation company may say that their solution is the most efficient  but they cannot litigate or file a bankruptcy case for you nor generally speaking can they even reduce your debt as can the DSC.  An attorney who litigates but does not file bankruptcy cases and does not have a financial background as do I may be extraordinarily skilled in the courtroom but is ill equipped to see your bigger debt picture and likely will say litigating a single debt (a costly alternative) is best when the debt could have been wiped out with a lot of other debt in bankruptcy.  An unbiased bankruptcy attorney will be part financial analyst and advisor and can lay out all avenues and recommend a path according to your needs. So, when should you talk to a bankruptcy attorney?  Many will hide their head in the sand but the early bird gets the worm…The clear answer is sooner as opposed to later.  Bankruptcy is not for everyone nor is it intended to be.  But if you have debts, and they seem out of hand, a thorough analysis of your finances should include a visit with an experienced bankruptcy attorney.

Law Offices of Christopher C. Carr, MBA,  P.C., owned and managed by Attorney Carr since 1997, a quality Chester County Bankruptcy Atttorney, with his practice located in  Valley Township, west of Coatesville, Pennsylvania, where Carr, who has over 30 years of diversified legal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!
Not Legal Advice.

©Christopher C. Carr, Attorney at Law 2013, All Rights Reserved.

 

Advertisements

“CAN I GET MY CAR BACK AFTER REPOSSESSION BY FILING BANKRUPTCY”? (THE LETTER “Y” IS FOR YO-YO AUTO SALES}

3484919638_cbbd0e534b_t[1]Silver

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com

Website: westchesterbankruptcyattorney.org

A yo-yo sale is a consumer vehicle purchase under a valid signed agreement of installment sale which is followed, days or weeks later, by a phone call from a sales person at the agency that sold the vehicle who states that the consumer must return the vehicle, get a co-signer for the loan or sign new paperwork typically because, “the financing fell through.” Of course, this is impossible because the financing was locked in before the car was ever delivered but even so the befuddled consumer will fall for this line and present himself and his vehicle at the dealership for a new round of negotiations.

The way this scheme plays out the dishonest dealer will either negotiate more favorable terms after the fact or to repossess the car and resell it.   With touch ups to the paint and an (illegal) odometer rollback, he may be able to  pass it off as brand new. While yoyo sales are actually quite illegal under various federal and also state laws, they are quite prevalent especially in economic downturns. And they can result in the loss of your vehicle to repossession and oftentimes with it all the valuable property you left within it.

With the help of a skilled attorney, Yoyo’s can often be prevented especially if reported right away so they can be documented while in progress. However, you must still at least pay according to the original terms of the installment agreement or the vehicle can legitimately be repossessed by the dealer or the creditor.

Oftentimes, the Yo-yo victim, not knowing what to do or where to turn will simply stop paying his or her car payment entirely.  This is a very bad idea because they will have then not complied with the terms of the original agreement and have lost most if not all of the ammunition needed to fight the Yo-yo legally but also will ultimately lose the vehicle as well to the repo man. What remedies may be left to help you to get your car back in such a situation? Well, bankruptcy may still help, to a greater or lesser degree, depending on whether you elect to proceed under a chapter 13 or a 7.

SO, CAN I GET MY CAR BACK AFTER REPOSSESSION BY FILING A CHAPTER 13 BANKRUPTCY?

If your car has already been taken out of your driveway, and if it has not yet been sold, you can get the car back in a Chapter 13. See Note 1 below. You will not need to come current (as you do in a Chapter 7, see below), but will just have to be able to make regular Chapter 13 car payments, which will almost always be smaller than the payments that you were making before filing. See Note 2 below for an example of how the car payments can be reduced.  You usually also have to pay a reasonable repossession fee, these range in the hundreds of dollars, and wait anywhere from one week to a couple of months before getting it back.

Most vehicle lenders  will return a car voluntarily once you file a chapter 13 (provided the car is not already sold) if you show adequate insurance. This policy generally must include collision and name the finance company as a loss payee, i.e. the policy must mention the loan companyby name as the entity which gets paid first in the event of a loss or claim.

But why deal with the delay, inconvenience, added expense and potential damage to your car and/or loss of personal property involved in a typical repossession? A Chapter 13 filed before the repo man does his dirty work is your best bet.

CALL ME IF YOU ARE BEHIND IN PAYMENTS AND WE CAN AVOID THIS NASTY SCENARIO AND LOWER YOUR PAYMENTS TO BOOT. See Note 2 below.

BUT, CAN I ALSO GET MY CAR BACK AFTER REPOSSESSION BY FILING A CHAPTER 7 BANKRUPTCY:

In a Chapter 7, no, you cannot get the car back without the creditor’s permission because chapter 7 involves liquidation of the debtor’s non-exempt property. The only way that most creditors are going to agree to return your car to you is if you are able to catch up on the payments right away and sometimes the creditor will not even accept this but will accelerate the note and demand the entire balance due and owing on the vehicle. So, there is virtually no difference between this and not filing at all in terms of what you have to pay.

A Chapter 7 filed before repossession will stop the repo man temporarily, but it won’t take long for the creditor to get the court’s permission for relief from the stay and take the car anyway. The only sure way to save a car is in a Chapter 13, unless you can find a way to pay the value of the car in one lump sum but if you can chances are you probably aren’t thinking about bankruptcy.

Note 1:   In Pennsylvania where I practice, you can stop the repo man from coming on your property to take your car if you are watchful enough to spot him in the act.  That is trespass.  It is however suggested that if you meet with resistance, you call 911 and summon the local constabulary rather than attempt to defend the property yourself. This of course is not true for a sheriff who enters upon real properly with a valid writ of execution or if your car is parked on a public thoroughfare or in the parking area of your apartment building, since you do not own it.

Note 2:   For instance, let’s say you have a car that is worth $15,000.00, on which you still owe $20,000, and are paying $519.00 per month at 19% interest on a 60 month note. (This is only an example…every situation will vary.) I can always lower the interest rate down to 2 or 3 points above the prime rate and in many cases, assuming you have owned the vehicle long enough; we can set the payments based on the $15,000 valuation, rather than the $20,000 debt.

In this example, the monthly payments would be reduced to roughly $380.00, for a savings of $139 per month or a whopping $8,325 over the life of the loan, (based on the WSJ prime rate quote for 11/8/2012 of 3.25 plus 2% Risk Factor or 5.25% total.) If we are able to drop the loan down to $15,000 the payment would be only about $285 per month, for a savings of $234 per month. The same thing applies to boats, RV’s, motorcycles, motor homes, appliances, furniture, electronics, and any other secured property, except for primary residences.

©Christopher C. Carr, Attorney at Law 2009, 2012. All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


I also provide Mortgage Modification Services.

Other lawyers asking “Y” include:

Photo by takomabiblilot

WHAT YOU NEED TO KNOW ABOUT CHAPTER 7 BANKRUPTCY

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

WHAT IS CHAPTER 7 BANKRUPTCY?

Lucky Number 7 by ganesha.isisThe avowed goal of bankruptcy is to give debtors a “fresh start.” What is a Chapter 7 bankruptcy and how does it go about accomplishing this? The “automatic stay” in bankruptcy applies immediately once a Chapter 7 case is filed and generally halts all collection activities, foreclosures, repossessions, sheriffs’ sales, and etc. while in effect. Let’s first look at the different types of bankruptcy proceedings.

The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy. If you think you might be a candidate for a 13, you might wish to visit my article on the topic.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13.  For those who do not qualify, there is only one option:

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other than consumer perceptions that bankruptcy is somehow unethical or “wrong”, the primary issue with filing bankruptcy is that it remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.

In summary, the automatic stay provides an effective if temporary refuge from foreclosure and other debt collection activities and many debtors ultimately do obtain the permanent solution to their debt problems, the “fresh start” which is the ultimate objective of the US bankruptcy laws.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Mod Services.

Photo by ganesha.isis

WHAT YOU NEED TO KNOW ABOUT CHAPTER 13 BANKRUPTCY

WHAT IS A CHAPTER 13 BANKRUPTCY?

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

13 by cappelmeister The avowed goal of bankruptcy is to give debtors a “fresh start.” What is a Chapter 13 bankruptcy and how does it go about accomplishing this? The “automatic stay” in bankruptcy applies immediately once a Chapter 13 case is filed and generally halts all collection activities, foreclosures, repossessions, sheriffs’ sales, and etc. while in effect. Let’s first look at the different types of bankruptcy proceedings.

The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13.

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other than consumer perceptions that bankruptcy is somehow unethical or “wrong”, the primary issue with filing bankruptcy is that it remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.

In summary, the automatic stay provides an effective if temporary refuge from foreclosure and other debt collection activities and many debtors ultimately do obtain the permanent solution to their debt problems, the “fresh start” which is the ultimate objective of the US bankruptcy laws.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

<!– Do not change code! –> <table cellspacing=”0″ cellpadding=”0″ border=”0″><tr><td></td></tr><tr><td”>http://www.foxyform.com/form.php?id=284228&sec_hash=7e5ea686fba”></iframe></td></tr><tr><td align=”center”><a style=”font:8px Arial;color:#5C5C5C;” href=”http://www.foxyform.com”>foxyform.com</a></td></tr></table> <!– Do not change code! –>

The “F” in Bankruptcy Alphabet is for “Failure” (and “Fresh Starts” in Bankruptcy)

F 2724770810_f84d80d958_t[1] is for Failure and “Fresh Starts” in Bankruptcy {Perhaps also for “Favorite”  because of all the articles I have written, this is my favorite”}

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

Many people in our culture still believe unfortunately that it is a mortal “sin” to declare bankruptcy; akin to a financial death sentence, to admitting failure as a human being and as a member of the larger economic enterprise. But in fact bankruptcy has been “built into” the US capitalist system since its beginnings with the Bill of Rights because it is essential to the very success of that model, which is in turn based on encouraging individual risk taking.

Being a success is a basic assumption of American life. We are taught almost from birth that at all costs we must be winner! But In fact, it is a harsh irony of life that success is built on trial and error and consequently upon failure. Some companies have even adopted corporate cultures which actually encourage failure so that employees will be willing to take risks and innovate.  See Why I Hire People Who Fail.

Our lawmakers from the very founding of our country have been mindful of the necessity to provide this “escape path for risk takers”:

The United States Constitution provides a method whereby individuals, burdened by excessive debt, can obtain a fresh financial start and pursue newly productive lives unimpaired by past financial problems. It is an important alternative for persons mired deep in financial difficulty.

The federal bankruptcy laws were enacted to provide debtors with a fresh start and to establish a ranking and equity among all the creditors who are clamoring for the debtor’s limited resources. Bankruptcy helps people avoid the kind of permanent discouragement that can prevent them from ever reestablishing themselves as hard-working members of society.

Source: Purposes, Benefits and Costs of Bankruptcy Disclosure pursuant to U.S. Code § 527(a)(1) & § 342(b)(1).

Some disagree with this proposition stating based on empirical findings that bankruptcy only helps about 2/3 of all who apply to get a fresh start and that is only because they find a steady income source.  See “The Failure of Bankruptcy’s Fresh Start”.  But for me, this only proves the point for i.) 2/3 is a pretty high rate of economic “resussitation”, ii) a study design like this just looks at a single point in time, it does not do follow ups to see what percentage ultimately do see improvement in their financial condition and iii.) how do you get people to pull themselves out of the economic mire (see quote above) unless society provides a safety net which is after all what bankruptcy really is? Not everyone will try and of those who do not all will make it but then there are no guarantees in life (or the law).

In my practice I represent many hard working small business people (from screenplay writers to truck stop owners) who are heavily engaged in the capitalist system. And what is capitalism at its core but the willingness of people to take chances in hopes of making money?  Someone–a small business venture–comes up with an idea for a business, obtains the financing and other myriad necessary resources to get that business up and running, strives to generate sufficient revenues to cover expenses over time, all in the hopes of making a profit from engaging in the business. At any point things may not work out as expected, causing the business to founder and ultimately sink.  Failure lurks in waiting at every corner!

Indeed some historians of note have argued that the American Revolution was in large part fought for debt relief:

The idea that debt is necessary for trade, and is to be forgiven liberally when necessary, is a key driver to the rise of our market economy. Americans fought to provide the same debt relief to everyone because we believe in equality and because bankruptcy protection takes the risk out of risk taking. Our historic willingness as a nation to forgive debt lies behind a good part of our prosperity. One good example is John Pintard, a state legislator and stockbroker, who was one of those who fell for William Duer’s financial scheme, which helped trigger the Panic of 1792, the nation’s first stock-market crash. Pintard ultimately landed in debtors’ prison in Newark. He got out of jail in 1798, and he filed for bankruptcy in New York in 1800. Among his many other post bankruptcy accomplismments, Pintard  founded the New-York Historical Society in 1804, and was a founder of the New York Bank for Savings in 1819.

In 1841, Congress passed a sweeping federal bankruptcy law that offered bankruptcy to everyone. Meanwhile, in 1831, the New York State Legislature abolished imprisonment for debt. Other states soon followed. Debtors’ prison was abolished, and bankruptcy law was liberalized, because Americans came to see that most people who fall into debt are victims of the economic cycle or misfortune like Pintard, and not of sloth, greed, or other negative personal attributes.

What would happen if there were no bankruptcy laws, no bankruptcy courts and no chance for people to obtain a fresh start?  Would people be as eager to innovate, to take chances and to possibly fail with no safety net to catch them? It is a fundamental premise of the capitalist system that they would not. That is why people who cannot pay their debts should not feel that they are ethically “challenged”, especially in this difficult economy, if they find they must seek the protection from their creditors for which our bankruptcy laws so prudently provide. For, failure is only the first step on the way to a fresh start!

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

©Christopher C. Carr, Attorney at Law, 2011, 2012, All Rights Reserved.

More attorneys playing the bankruptcy alphabet game at letter F (HEY GUYS WE ARE 25% OF THE WAY TO Z!!!):

Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell: F is for Family Farmer/Fisherman.

New York Bankruptcy Lawyer, Jay S. Fleischman: F is for Future Flow Agreement .

Northern California Bankruptcy Lawyer, Cathy Moran: F is for First .

Kauai Bankruptcy Attorney, Stuart Ing: F is for Foreclosure

Jacksonville, Florida Bankruptcy Attorney, J. Dinkins G. Grange: F is for Forms .

Colorado Springs Bankruptcy Attorney Bob Doig: F is for Foreclosure .

Los Angeles Bankruptcy Attorney, Mark J. Markus: F is for Forgiveness of Debt .

The “A” in Bankruptcy Alphabet is for “Alimony”

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer

One of the most disturbing changes in the Bankruptcy Code* enacted by Congress in 2005 for persons getting divorces and contracting marital debts is Section 523 (a)  which states in effect that an alimony, support or maintenance  obligation to an ex-spouse cannot be discharged in bankruptcy, but must be paid in full, with two limited exceptions:

  1. If a divorce decree specifies that an obligation to a spouse is alimony, but the obligation is not actually in the nature of alimony, then the obligation can be discharged in bankruptcy.

For example, Joe Dentist and Mary Dentist enter into a divorce decree which states that Joe Dentist is to pay a marital debt to The Joe Dentist and Mary Dentist Professional Corporation, where both practice dentistry, and further specifies that the husband’s payment of the debt shall be treated as alimony.  Joe Dentist may nonetheless be able to have this debt discharged in bankruptcy even though the divorce decree indicates that the payment of the debt is “alimony”, because such payments can be characterized as a capital contribution to the Professional Corporation and not as alimony.

2. Also, an ex-spouse may be able to discharge an alimony obligation if it has been assigned to a third party.

For example, suppose John and Mary Jones divorce. John Jones is ordered to pay Mary Jones alimony of $1,500.00 per month. John does not pay the alimony and Mary, who needs the money, assigns the right to collect alimony to her brother, Crusher Jones, who owns a profitable Junk Yard and feels the urge to pummel John. Crusher now gives Mary the $1,500.00 each and every month. Crusher now owns the right to collect the alimony from John. But John can escape the debt (if not the pummeling).  The alimony obligation can be discharged under Section 523 since it has been voluntarily assigned by Mary.

*The United States Bankruptcy Code (Title 11 of the United States Code) states in Section 523 that:

(a) A discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . . (5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that (A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to § 402(a)(26) of the Social Security Act, or any such debt which has been assigned to the Federal Government or to a State or any political subdivision of such State); or

(B) such debt includes a liability designation as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support . . . .

(enphasis added).

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Mod Services .

©Christopher C. Carr, Attorney at Law, 2011, All Rights Reserved

For other articles on the letter A in the bankruptcy alphabet series, click here.

Other attorneys playing their “Bankruptcy A Game” include:

A is for Contract Assumption

A is for Adversary Proceeding

A is for Assets

A is for Assets

A is for Assumption

A is for Assumptions

A is for Attorney

A is for Automatic Stay

A is for Automatic Stay

A is for Automobiles

A is for Avoidance of Preferential Transfers  

A is for Avoidance

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality Chester County Bankruptcy Practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr, who has over 30 years if diversified experience as an attorney, concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

I also provide Debt Settlement; IRS Tax Settlement & Mortgage Mod Services NATIONALLY.

Photo Credit: Too Far North

Filing Bankruptcy: Pros and Cons

 

Christopher C Carr, Bankruptcy Guest Contributor

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com Web: carrlaw.org

NACBA 1f18af63-1ee5-4ce2-8294-7eae8365f678

 

Christopher C. Carr , Esq., MBA explains the types of bankruptcy and weighs the pros and cons of filing bankruptcy.

In these troubled economic times many people are having difficulties paying their bills and may be wondering whether a bankruptcy will help them. To examine the various strategies available to avoid bankruptcy, we must first understand what bankruptcy is and what it can and cannot do. The United States Bankruptcy Code offers several types of debt relief. The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all of the debtor’s eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy such as a Home Affordable mortgage modification is obtained. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13. If either is exceeded then the debtor will have but one alternative if they wish to file for bankruptcy:

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other Advantages to Bankruptcy: The overall goal of every bankruptcy case is to give the debtor a “fresh start.” The “automatic stay” in bankruptcy will apply once your case is filed. This generally halts all collection activities, foreclosures, repossessions, Sherriff’s sales, etc. while in effect.

Disadvantages to Bankruptcy:

  • Many people wish to avoid bankruptcy because of the social stigma perceived to be associated with “going bankrupt” even though it is perfectly legal and in fact is guaranteed by the US Constitution.
  • Bankruptcy remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit where nothing else can.

A real life example would be where the debtor has amassed so much debt that they cannot qualify for a mortgage.  Their debt to income ratio is just too high. At tins point there is little reason to hold off from filing as the likelihood of obtaining credit resources at competitive rates are almost nil. However, once the debt is cleared by a discharge in bankruptcy this ratio can return to normal or better and given sufficient time and a good post petition payment profile, the debtor will once again be an attractive loan candidate.

Homeowners, who have racked up large arrears in their mortgage payments which have to be repaid in full over the 3-5 year plan period in a chapter 13 , may find the payments too high to afford causing the bankruptcy ultimately to be discharged or converted, perhaps thus only delaying the ultimate loss of their home in contrast to a Home Affordable (HAMP) mortgage modification where as the name implies ideally a long term affordable solution is reached.

  • Not all types of debt are dischargable in bankruptcy, a good example being guaranteed student loans.
  • While perhaps not strictly speaking a disadvantage,  there is a substantial waiting period once a bankruptcy has been discharged…the debtor has to wait to file if they wish to again obtain a discharge from new debt, the timeframes varying with the type of bankruptcy initially undegone. For this reason, bankruptcy should be considered strategically.  When its gone, its gone, at least for a good long time!

The key point is that each debtor’s situation is unique and deserves special consideration. Further, because the process is hardly ever as smooth as it is supposed to be because of the complexities and pitfalls involved, it is advisable to consult a competent and compassionate attorney who has experience in bankruptcies and/or in negotiating modifications to guide you through the process and help you properly complete the paperwork.


MY AVVO.COM ANSWERS FEED:


©Christopher C. Carr, Attorney at Law 2009, 2016, All Rights Reserved

Christopher C. Carr, Esq. is a  Chester County Bankruptcy Attorney owner of Law Offices of Christopher C. Carr, MBA,  P.C., a quality Bankruptcy & Debt Relief Practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr, who has over 30 years of diversified experience as an attorney, concentrates his practice on serving the residents of and businesses located within Western Chester, Southern Berks and Eastern Lancaster Counties in South Eastern Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Reading, Sadsbury, Sinking Spring, Thorndale, Valley Township, Wagontown, West Chester, West Lawn, & Wyomissing, Pennsylvania. Carr also has experience in many other areas of the law. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

I also provide Mortgage Mod  and Debt Settlement Services.

IMPORTANT NOTE: I am not your bankruptcy lawyer, and nothing within this site creates that relationship.  Bankruptcy law requires that for me to be your lawyer, you and I must have a written contract.  So, unless we both agree in writing, you are not my client. Therefore, nothing written herein is to be relied upon as legal advice such as I might give to a client.

I am a debt relief agency. I help people file for bankruptcy relief under the bankruptcy code.