341 Meeting Readiness

By Attorney Christopher Carr, a Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com WHAT IS THE 341 MEETING OF CREDITORS? Regardless of whether you file a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will be required to attend a “Meeting of Creditors” or a 341 hearing as attorneys call it. THIS IS A MISNOMER….IT IS NOT REALLY A HEARING! It has that name because it is held under oath (see below.) It is scheduled about 30‐45 days after your case is filed. Though it is called a “Meeting of Creditors,” creditors rarely attend. But the Trustee is there and HE represents the creditors! You, your attorney, and the trustee attend this meeting. It can seem quite intimidating if you do not know what to expect, but the 341 hearing is actually a fairly informal meeting designed to help the Trustee better understand what’s happening in your bankruptcy. A NOTE ON TIMING OF TRUSTEE PAYMENTS FOR CHAPTER 13 CLIENTS: Remember that your first payment to the Trustee is due THIRTY (30) DAYS AFTER YOUR PETITION IS FILED, irrespective of when the 341 is held. WHAT TO EXPECT: There will be a pile of Bankruptcy Information Sheets at the front of the room. Take one and read it. You will be asked if you did (see below.) You will sit at a desk or table with your bankruptcy lawyer and the Trustee. Other people will be in the room with you, generally other bankruptcy filers and their lawyers. You will be asked first off to state your name and address and verify your identity by providing your social security card and drivers license. IF YOU DO NOT HAVE YOUR ORIGINAL SOCIAL SECURITY CARD AND SECOND FORM OF ID, THE MEETING WILL NOT BE HELD AND EVERYONE’S TIME WILL HAVE BEEN WASTED SO DON”T LEAVE IT AT HOME OR EXPECT A COPY TO DO. BRING THAT TATTERED ORIGINAL AND IF YOU DON”T HAVE ONE ORDER IT FROM THE SS OFFICE. The meeting will be recorded. The Trustee will start a tape recorder going. You will be sworn in; i.e. raise right hand solemnly swear and affirm to tell the truth. Dress is business casual for you. Be well groomed. I will be in my “lawyer suit” as will the Trustee, but you are not expected to wear one. Be on time. It may appear that I am running late but that is because I have a better idea of when the 341 will start than you do! Try to relax! WHAT CAN THE TRUSTEE ASK AT THE 341 MEETING? The trustee will ask you some basic questions about your bankruptcy. Here are some of the common questions that trustees ask during the meeting. They are in no particular order. These are not all of the questions that the Trustee could ask, and he/she will not ask every question on this list. In other words, this is a very generic list. The items that are almost always asked are highlighted.

Did you sign the petition and the schedules your attorney is showing you?
Have you read the bankruptcy information sheet?
Did you review the bankruptcy petition and each of the schedules and the statement of financial affairs (SOFA). Is the information correct? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.
Are there any corrections that need to be made to the Schedules? There should be none. See my piece on the importance of full disclosure within the Bankruptcy Petition.
Did you list all income, assets, and debts on the Schedules? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.

Have you filed all your taxes? Are the tax returns you supplied to the trustee true, correct and complete, including all schedules and W2s? (Typically we will have filed these beforehand.)
Are you entitled to any tax refunds? This one is VERY popular around tax time. You and your Attorney should have discussed this one and its ramifications before the 341.
Have you previously filed bankruptcy? If so when?
Why are you filing bankruptcy? You can be a bit creative here but see below.
Do you expect to receive an inheritance or property?
Are you a party to any law suits?
Do you have any domestic support obligations?
Have you have sold, transferred, or given away any property in the prior four years?
How long have you lived in Pennsylvania?
What do you plan to do with your house, cars, or other personal property?
Are you employed? What do you do?
How much do you earn?
Is your employment the same as when you filed?
Do you own your own home?
Do you own any motor vehicles? What are these?
Please provide appraisals for your cars and home. (Typically we will have filed these beforehand.)
Please provide insurance declaration pages for your home if owned and cars. (Typically we will have filed these beforehand.)
Do you have any retirement funds (IRA, Roth IRA, 401K etc.)?
Does anyone owe you money?
Is anyone holding money for you?

GENERAL TIPS AND CAVEATS: It is normal to be a bit nervous going into the 341 but just answer the questions put to you fully and honestly and be courteous to one and all! Do not over answer, the Trustee does not need to hear your life story. All of you financial information should be properly presented in the bankruptcy petition and there is no sense in trying to hide something from the Trustee. If you are uncooperative it may motivate the Trustee to investigate or scrutinize your petition further which will only mean more time and effort for you and your attorney. Always remember that the Trustee may act friendly but he is NOT your friend. He represents the unsecured creditors and his job is to maximize their return from the bankruptcy (not your own). He gets paid a commission on assets he recovers from Debtors for them. I am on a first name basis with the Trustee but that does not mean we are friends! The time to report undisclosed assets, that big tax refund, debts to family or friends, that new job or the 1000 shares of Google.com or that partnership you forgot about is NOT at the 341. If you wear a big diamond ring to the 341 and didn’t disclose it, expect trouble! Other than that type of thing you have nothing to worry about! Should you have concerns about such matters you should be asking me about them NOW! See my piece on the importance of full disclosure within the Bankruptcy Petition.

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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!

Not Legal Advice. Copyright © 2010, 2014 by Christopher C. Carr, Esq., All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.

Web:westchesterbankruptcyattorney.orgBlog: christophercarrlaw.wordpress.com Member: National Association of Consumer Bankruptcy Attorneys, Phi Beta Kappa & Beta Gamma Sigma.*************************************** “WE SAVE HOMES”

This is a Federally Designated Debt Relief Agency which is proud to assist individuals in need in filing for bankruptcy protection.

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Prepared 2‐25‐2014.

FIXING YOUR CREDIT AFTER A BANKRUPTCY DISCHARGE

Nov28

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

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

In my prior article on the topic of post discharge activities, I discuss 11 different areas for your attention. Below, I focus in on just one of these: credit repair.

You have received an Order of Discharge from the Courts. That does not mean that your credit is being properly reported to/by the credit bureaus however. Fixing any errors is up to you. Here are the steps:

60-90 days after you receive the discharge, you should call the number provided on the www.annualcreditreport.com site and order your credit reports. (Consumers are entitled to a free credit report every year or when a negative decision is made by a creditor relying on a credit report.) You will see an option to download the report or to view it on the internet. You should request your report be mailed to you by each of the three credit reporting agencies Equifax, Experian, and Transunion. If you are married and filed a joint bankruptcy, both of the spouses must request their own reports. There are many websites that will claim to be “free” but will typically start assessing a monthly fee after a trial period…don’t fall for it: www.annualcredi treport.com is the only such site authorized by federal law to provide truly free reports.
You will also want to get additional reports from Telecheck, Early Warning Services, and Chexsystem if you have ever had a problem with a checking account or overdrafts. These are the agencies that banks and credit unions rely on when the bank or credit union is making a decision about whether you can open an account with them.
So, you are now up to six different reports and if married multiply this by 2. However the review you will need to do is actually rather straightforward. Look for a line under each of the creditors that indicates whether a balance is due. That balance should read ZERO (unless it is a debt that is not dischargeable by law, like court ordered support, taxes, criminal fines or penalties). There may or may not be a line saying “Chapter 7 Bankruptcy” or “Chapter 13 Bankruptcy”. These statements refer to the reason why it is no longer a debt.
If any of your creditors is still listing a balance, then the next step is to dispute the report of that creditor. The Federal Trade Commission offers a sample dispute letter to consumers. [The sample is here. ] You may alternatively use the form supplied with the credit report (usually found near the end of the report.) Also send a copy of the letter to the creditor who is reporting inaccurate information. And please, make and retain in your files two extra copies (one for your file and one for your attorney). Note that if more than one entity is reporting the debt improperly, they each must be notified separately.
When a consumer disputes a credit report, the agency by law must investigate. The creditor can either verify the accuracy, update or remove the information. The credit reporting agency has deadlines for their response to the consumer. Generally the wrongly reported debt will now be off your report.
However, if a creditor verifies the report (that is, wrongfully indicates the money is still due and owing), you should seek legal advice promptly. This is likely a violation of the discharge order of the bankruptcy court. There may also be a Fair Credit Reporting Act violation. Your lawyer may suggest a lawsuit against the original creditor, the debt collector (if applicable) and/or the credit reporting agency. . Only a lawyer experienced in these kinds of cases can properly evaluate the situation and provide advice about your options.
Just to make sure your credit is being reported correctly you may want to order your reports again in a year or whenever you are again eligible for a free report from www.annualcredi treport.com. Repeat the process above as needed.

Summary:

Order your credit reports 60-80 days after your Order of Discharge
Order additional reports for problem with checking account or overdrafts
Carefully review your credit reports
Dispute any balances that are no longer owed with both the original creditor and the credit reporting agency.
Review responses promptly
If the response says you still owe the debt, seek legal advice from an experienced attorney.
Repeat in a year

I also provide HAMP, HAMP2 and other Mortgage Modification Services.

Death & Divorce and Their Disparate Effect on Marital Distribution in Pennsylvania

Jun9

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

A stark contrast exists in the law of Pennsylvania as between the effects of death and divorce upon marital property distribution. In the case of divorce, the marital assets, including assets nominally titled in the name of one spouse alone but purchased with marital assets, are subject to equitable distribution (ED) as between the spouses. In the case of and by virtue of death however, the deceased spouse (or more precisely, his or her estate) loses all rights in all property held in the name of husband and wife or otherwise subject to ED unless accruing to the estate under some other law. This is because there ceases to be any counterparty in the divorce action, which as an action in equity can then no longer proceed. With few exceptions, summarized below, the surviving spouse takes all.

However, there is a new exception to this death/divorce disparity which was entered into the Pennsylvania statutes in 2005. Recognizing that this had produced some highly inequitable results, the Pennsylvania General Assembly sought to remedy this when Divorce Code amendments were considered. Section 3323(d.1) was added to the Divorce Code providing that where divorce grounds have been established by the date of death of the spouse, the divorce action may proceed with the executor for the decedent being substituted as a party for the decedent. To establish grounds the following rules are set forth by the statute: a) If a fault divorce was pending the Court needs to have found that divorce grounds are established, b) If both parties consented to the divorce, grounds are established, or, c) Lastly in the no fault case, if an affidavit of two year separation was filed without contest or the court found two years of separation to have elapsed and the marriage was irretrievably broken, grounds are again said to be “proven”. Where grounds are not established as of the date of death, the old rules apply. The divorce ends and each party resorts to those rights created by federal laws like ERISA, the rights of joint owners to the decedent’s interests and the rights to take against the will under the Probate Code. Taper v. Taper, 939 A.2d 969,973 (Pa. S. 2007.) COMMENT: As our population ages, one can envision this becoming a problem of epidemic proportions. There are obviously many situations which will not fall within the aegis of the 2005 amendment and appear left to chance. One obvious example would be a fault based divorce where no court decree finding grounds for the divorce has been entered as of the date of death. This writer suggests that thePennsylvania legislature will need to take more decisive action, terminating the inequitable operation of the old rules entirely under circumstances where it can be proven that the divorcing spouse knew or should have known of the dire health status of the other spouse as of the date of the divorce petition.

©Christopher C. Carr, Attorney at Law 2009, 2013, All Rights Reserved

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

Dec2

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.

I also provide Mortgage Modification Services.

Other lawyers asking “Y” include:

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WHAT YOU NEED TO KNOW ABOUT CHAPTER 13 BANKRUPTCY

Jul20

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.

I also provide Mortgage Modification Services.

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V is for “Victory”: FINDING & RESTORING CREDIT AFTER A BANKRUPTCY FILING

May30

V is for “VICTORY”: FINDING & RESTORING CREDIT AFTER A BANKRUPTCY FILING

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

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

Why do so many of us come this way? Well, virtually all of us who seek a bankruptcy do so in order to get a “fresh start”. That is precisely what the law says it is there for. Elsewhere, I argue that without such a safety net there to catch us if we fail, WE COULD NOT AND WOULD NOT HAVE A ROBUST FREE MARKET ECONOMY. So many of us are maxxed out on our credit cards and have no more purchasing power. We seek fresh sources of credit for autos, schooling, even our everyday purchases. So for better or for worse, it becomes critical for us to find our way back to the credit wellspring as soon as possible after, nay even during, our bankruptcy.

A Chapter 7 “liquidation type” bankruptcy filing remains on your credit report for 10 years from the date of filing.   A Chapter 13 “debtor in possession” bankruptcy filing will remain on your credit report for 7 years from the date of filing. It will be automatically removed after the expiration of the applicable period.
Does this mean that your credit will be impaired for 7 to 10 years? Does it mean you will not be able to purchase critical items on credit?    Absolutely not.

Note that the period starts from the date of filing not discharge so, for example, if you are in a Chapter 13 and complete a 3 year plan 3.5 years later, you will only have three and a half to go. And during this time and even before, you will, with persistence, be able to get credit for the things you really need (see below.) But, you can begin to rebuild your credit rating immediately upon the date of your discharge order. (In a Chapter 7 this will be granted 3-4 months after your petition is filed, typically.)   Actually, it will often prove easier to rebuild your credit after a bankruptcy filing because you will no longer have debts that are in excess of your credit limits.

Don’t even think about hiring a “Credit repair” agency. The money you pay to them could actually be used directly to repair your credit. As any bankruptcy practitioner will tell you, it’s really no secret, the crucial thing you need to do to rebuild your credit quickly and at no added cost is to pay all of your future bills on time. After a bankruptcy filing, your payment history will be crucial. If you are in a Chapter 13 your plan payments will be reported. It is common to see former clients who have rebuilt their ratings within 2 to 3 years after a bankruptcy. Their secret? They paid their mortgage and car loans ON TIME and didn’t miss a payment. Some ideas: Send the checks EARLY in case the mail is delayed. Set up an emergency fund, perhaps in a short term CD, to give yourself the “float” needed to make the payments in case you are short one month and then replenish it in flush months or with your tax refund. Have the mental discipline not to use it for anything else!

As an example, a recent Chapter 7 client finished his case; obtained his discharge order and exactly 30 months later (2 years and 6 months), purchased a new home and obtained a competitive mortgage rate for a 30 year fixed.

You will be able to get a new credit card after your bankruptcy case has been completed. It is true that you are likely to be rejected once or twice, but you should be able to obtain approval for a small credit card as long as you are persistent. Your best bet may be to talk to that friendly bank manager you have known for years. And you may need to ask more than once.

There are also ways to surrender that car you are driving now and its high rate loan and purchase a new car even while in bankruptcy, believe it or not. You will pay a somewhat higher interest rate but rates are at historically low levels now anyway.

You will also be able to apply for student loans, for yourself or for a child. Specifically, the Bankruptcy Code (11 U.S.C. Section 525) prevents the government from discriminating against individuals on the grounds that they have filed for bankruptcy relief. I have yet to hear of anyone being denied a student loan on bankruptcy grounds.

I also provide Mortgage Modification Services.

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T in the bankruptcy Alphabet is for the Missing Tax Refund

Apr15

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

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

T 5309561982_8b35ba89ec_t[1] So you filed a Chapter 7 bankruptcy and then filed for a tax refund for the same year. YOUR REFUND NEVER ARRIVES. Surprise Surprise! The bankruptcy trustee had it directed to him. A trustee’s primarily job is to represent your unsecured creditors and he/she can submit a request for your federal tax refund on behalf of the bankruptcy estate and distribute the funds to them.

Think about it, when you file for bankruptcy what is the no. 1 thing the trustee is interested in? Your INCOME of course. And what is a tax refund really but INCOME that you let Uncle Sam hold for you (interest free). The trustee under most circumstances is entitled to it.

Could this have been avoided? The answer is most certainly “yes” with a little planning. Unless an emergency bankruptcy has to be filed to save a home from Sheriff’s sale or a car from repossession, most clients have a good deal of time between the time they come in to meet with me for the first time and filing. A good bankruptcy lawyer will examine your most recent tax return to see if your refund is too high. If so, I will advise you to immediately reduce your payroll tax deduction (by increasing your exemptions on your W-4 withholding form which you have the right to do at any time.) This will put money in your pocket NOW and you can likely show a tax refund small enough so that your trustee will not even bother with it.

I also provide Mortgage Modification Services.

Other Attorneys Blogging on the Letter T Include: .

Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell T is for Transfers.
Bankruptcy Lawyer Jay S. Fleischman T is for Trustee.
Kauai Bankruptcy Attorney, Stuart T. Ing T is for Taxes.
San Mateo County Bankruptcy Lawyer Cathy Moran T is for Tension.
Metro Richmond Consumer and Bankruptcy Attorney Mitchell Goldstein T is for Thirteen.

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P is for Property of the estate: The key to when a lien can be stripped by the bankruptcy court.

Mar21

By Christopher C. Carr, Esq. Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

When you inherited that property from your father who died in Texas, it had a second lien which was completely under water and impairs an exemption but you had no liability for the underlying home equity loan so it can’t be stripped in your Chapter 13 bankruptcy, right? Wrong. Let’s see why.

To be “strip eligible”, a secured claim has to be an “allowed claim”. Section 506(a)(1) of the US Bankruptcy Code provides:

An allowed claim of a creditor secured by a lien on property in which the estate has an interest … is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property…”,

The relevant inquiry then for lien stripping is not does the “debtor” owe the debt but does the estate have an interest in the property to which the lien attaches? For that to happen all that is required is that the subject property be in the estate created when the debtor declares bankruptcy. Here are 3 examples to better illustrate the point:

Simple Inheritance Scenario. Suppose the debtor inherited a parcel of real property from her deceased father subject to a lien in favor of his creditors. In the debtor’s bankruptcy case, a lien securing the father’s promise to pay the Bank of Armadillo is just as strip eligible as if the debtor rather than her deceased father were herself the borrower. As long as the property which is collateral for the debt is properly before the court, the lien is subject to stripping.
Co-Beneficiary Scenario. Take the same case but now we have two debtors, each a co tenant and heir with a sibling in the same inherited house (a duplex). Both halves of the house are subject to the BOA lien. If only one debtor files bankruptcy, only that co-tenant’s interest in the house is property of the estate, and the court can only strip the lien from the half of the property because only half is in the bankruptcy estate.
Husband & Wife (certain states only) Scenario. Somewhat the reverse fact pattern is a very common one in Pennsylvania, where I primarily practice law. This can happen for example because the original owner, say the wife, upon marriage deeds the property into husband and wife form, which under Pennsylvania is called “tenancy by the entireties” and serves to protect the marital property from the creditors of the individual marriage partners. The husband is now on title to the property while the wife, the original owner, remains the only one liable on the note. If both spouses file for bankruptcy,, the real estate comes into the bankruptcy estate. Once again, it’s strippable simply because the collateral is property of the estate without reference to the locus of the debt.

Because bankruptcy is essentially “all about the debtor and his or her debts”, it is a common mistake to overlook liens that could have been stripped because the debts do not happen to “belong” to the debtor. This then is another illustration of how competent counsel, by properly identifying and claiming this benefit for you, can save you far more than any legal fee you might have to pay.

I also provide Mortgage Modification Services.

Other Attorneys Blogging on the Letter P Include:

Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell: P is for Plan.
New York Bankruptcy Lawyer, Jay S. Fleischman: P is for Pay Advice.
Colorado Springs Bankruptcy Attorney Bob Doig: P is for Preferences.
Maui Bankruptcy Attorney, Stuart Ing: P is for Preference.
Southgate, Michigan Bankruptcy Lawyer, Christopher McAvoy: P is for Pride.
Cleveland Bankruptcy Attorney, Bill Balena: P is for Phone Call
Wisconsin Bankruptcy Lawyer, Bret Nason: P is for Property of the Estate
San Mateo Bankruptcy Lawyer, Jeff Curl: P is for Priority Debt
Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein: P is for Privacy
Jacksonville Bankruptcy Attorney, J. Dinkins G. Grange: P is for Payment

Photo by Too Far North

L in Bankruptcy is for Long Term Payments, Chapter 13 Plans

Feb4

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

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

This article deals with situations where debt repayment extends beyond the 3-5 year period allowed in a Chapter 13 and the end of the automatic stay in bankruptcy and some things that can be done about it.

The typical scenario would be where a homeowner uses a Chapter 13 to repay the arrears on their mortgage. The law states that while the arrears must be paid 100% over the course of the plan, payments on the mortgage may extend beyond that time. How could it be otherwise because almost all mortgages have a life of 30, 40 even 50 years, far longer than the maximum bankruptcy plan?

But what about a homeowner who also has non dischargeable taxes? They too can be “scheduled” and payments made over the course of the plan…but when the plan ends so does the “automatic stay” and the tax creditors will STILL be there waiting to get their money. And the IRS has an array of weapons at its disposal. For example, unlike common creditors, it can slap a lien on your home without even having to file suit to do so. And such liens can be more than just a nuisance, especially when it comes time to sell because then the title company will not issue a policy of title insurance until the lien has been paid thus in effect giving the IRS a second bite at the apple. You can try negotiating a lower tax with the Service by submitting what is called an Offer in Compromise after the bankruptcy is discharged but not everyone can qualify and a 20% nonrefundable down payment must be submitted with your offer on IRS form 656. If the IRS accepts the offer, it will want the remainder in 5 or fewer monthly installments.

But luckily there are other alternatives. The law allows a tax debtor to file under more than one chapter in bankruptcy in sequence. Many people wrongly believe that there is a waiting period after a discharge before another bankruptcy can be filed whereas the law actually reads only that you cannot receive a discharge in the second bankruptcy. However, as to non dischargeable debt, it really does not matter.

There are 2 scenarios where this strategy can be used with good effect. Suppose you file Chapter 7 to wipe out all your qualifying dischargeable debts and taxes. When the Chapter 7 is completed, some non-dischargeable taxes remain, but you could file under Chapter 13 for a repayment plan to deal with the balance. This strategy is called: “Chapter 20” (7 + 13). This stops interest and penalties.

Likewise, a “Chapter 26” (13+13) may be a way to spread paying a tax debt over a longer period– up to ten years (i.e. 2 5 year plans). This means filing one Chapter 13 and completing it, and then filing a second Chapter 13 for remaining debts. This also stops interest and penalties and most importantly liens will not attach to your property because of the automatic stay. If done quickly enough, this can be accomplished before the IRS starts up collection activity again.

As always, it is best to seek the advice of a competent bankruptcy attorney as this is a complex timing sensitive legal area.

I also provide Mortgage Modification Services.

Others who have actually reached the letter L in the Bankruptcy Alphabet include:

St. Clair Shores MI attorney, Kurt OKeefe, who speaks the truth when he says that L is for Lie, the Big Mortgage Industry

Cleveland Attorney ( oh how I miss beautiful Cleveland on the shores of lake Erie where once I lived), Bill Balena ensures us that L is for Life Insurance

New York & California Bankruptcy Lawyer, Jay S. Fleischman who attaches great relevance to L is for Lien

Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell who lays it all bare for us in L is for Lien Stripping

Honolulu Bankruptcy Attorney Stuart T. Ing also peels back the layers in L is for Lien Stripping

Marin County Attorney, Catherine Eranthe enlightens us in L is for Lift the Stay

Colorado Springs Attorney Bob Doig has gems of wisdom on why L is for Luxuries

Metro Richmond Consumer Attorney, Mitchell Goldstein who is solidly behind L is for Liquidated

Allen Park, Michigan Bankruptcy Lawyer, Christopher McAvoy enumerates how L is for List It Or Lose It

“B” in the Bankruptcy Alphabet is for “Business Bankruptcy” for Individuals Trying to Trying to Retain a Valuable Car

Dec5

in the Bankruptcy Alphabet is for “Business Bankruptcy” for Individuals

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

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

The US Supreme Court has held that individual debtors may file under the provisions of Chapter 11 of the Bankruptcy Code. This can be very valuable for persons owning high value cars in certain circumstances.

In contrast to a typical consumer bankruptcy under Chapter 7 or 13 however, Chapter 11 is generally designed for business reorganization bankruptcies. Chapter 11 cases tend to be complicated, as well as confusing and expensive for the debtor and the rules are generally less appropriate and less favorable for the consumer. For example, unlike a Chapter 13 case, a Chapter 11 case may not be dismissed or converted to a Chapter 7 case as a matter of right by the debtor and creditors must generally vote on the plan.

It is advisable for a careful review to be performed by a bankruptcy attorney to ensure that a Chapter 11 is necessary as in the vast majority of cases a Chapter 11 will not be the correct choice for an individual.

But there is at least one very important circumstance under which an individual might choose an 11, one which may actually be very advantageous in the case of high cost rapidly depreciating automobiles. A debtor who seeks to cram down (reduce the debt to the present day fair market value of the collateral) a lien on an automobile will be limited by the 910 day rule. If the vehicle was purchased less than 910 days before filing the bankruptcy petition then the debtor cannot cram down the lien in a Chapter 13 plan. However, under Chapter 11, no such time requirement exists. Hence if the vehicle is worth less than the loan a motion to determine secured status may be in order. The bankruptcy court can then value the vehicle and the debtor can pay off the vehicle in the Chapter 11 plan. But unless the vehicle was highly valuable when purchased the high cost even of a typical Chapter 13 case will outweigh the benefit of the cram down.

Let’s take a look at the economics from the client’s point of view. The minimum cost to the client of a simple Chapter 11 is $10,000 plus $1,039 filing fee as compared to approximately $3,000-3,500 for a 13 plus $274 filing fee. It is well known that that most luxury automobiles lose approximately 15% per year in the early years of ownership (when the 910 day rule would prohibit a cram down in a 13) whereas the debtor may have paid only interest and no principal so far on the auto loan. At the 2 year mark a luxury car that sold for $80,000 might now be worth $66,000 but the debtor might still owe close to $80,000 assuming payments are up to date. Under this example, all else being equal, the debtor might well want to elect to do a Chapter 11 so as to be able to cram the car down to its blue book value and save a maximum $16,700 after net fees and costs are deducted. But now let’s say that the same hypothetical debtor owned a less prestigious vehicle with a purchase price of say $20,000. If after 2 years of ownership, if it could be crammed down to $14,000, the net cost of a Chapter 11 would be greater than the $6,000 savings generated. This individual, if possible under the circumstances, might want to wait out the full 910 days and declare a Chapter 13 bankruptcy. There are additional factors which may favor a Chapter 11 which are beyond the scope of this article. Again, a thorough review of the matter is strongly advised however.

Other attorneys playing the bankruptcy alphabet game (more “B” topics from consumer lawyers around the country):

Bad Faith Filing Miami Bankruptcy Attorney, Dorota Trzeciecka

Bank Account New York Bankruptcy Lawyer, Jay S. Fleischman

Bank Account Daniel J. Winter, Chicago Bankruptcy Attorney

Bank Account Levy Philadelphia Bankruptcy Lawyer, Raymond Kempinski

Bank Tips Wisconsin Bankruptcy Lawyer, Bret Nason

Bankruptcy Taylor Michigan Bankruptcy Lawyer, Christopher McAvoy

Bankruptcy Abuse Prevention and Consumer Protection Act Livonia Michigan Bankruptcy Attorney, Peter Behrmann

Bankruptcy Estate Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein

Bankruptcy Mill Chicago Bankruptcy Attorney, Kyle A. Lindsey

Bankruptcy Petition Preparers Colorado Springs Bankruptcy Attorney Bob Doig

Bankruptcy Petition Preparers Los Angeles Bankruptcy Law Monitor, Christine Wilton