Now that you Have Your Bankruptcy Discharge: 10 (actually 11) Things to Do to Make the most of it!

 

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

So You Finally Got that Bankruptcy Discharge
Congratulations!
You’re on your way to a fresh start.
Now you’ve got more to do? See why below:
1. Check debts that didn’t get discharged: Child or spousal support, student loans, or taxes for years for which you did not file a return (unless the IRS exceptions are met) are not dischargeable in bankruptcy. The discharge order will not tell you which debts survive and which do not, nor will the Court provide this information so you may continue to require the services of a knowledgeable bankruptcy lawyer to help you to assess this.
2. Verify lien balances: The discharge eliminates your personal liability for dischargeable debts; liens survive. If you plan to keep a house or car encumbered with liens, find out what you owe and resume payments. Otherwise, the creditor can enforce its lien by foreclosure or repossession.
3. Reset Banking Priveleges: Online banking and automatic bill pay may have been disabled while you were in bankruptcy but can be restarted at your request now..
4. Do Some Record Keeping: Save your bankruptcy papers and keep a copy of your discharge paper handy: You’re likely to encounter efforts by buyers of to collect debts that have been discharged in your case, or so called “zombie debt”. You need to be able to show that the debt was discharged in your case. Creditors with notice of the bankruptcy, and likewise those who buy up their worthless accounts and try to collect on them, were discharged (unless they fall within Rule #1 above). The services of a knowledgeable bankruptcy lawyer may be necessary to stop these collectors, or even under some circumstances to sue them for unfair practices and potentially turn the tables by collecting from them, including your legal fees.
6. Join a credit union: Credit unions are owned by their members. They are in the business of extending credit to members (hence the name, “Credit Union’: “Credit” stands for what they do and “Union” for the members they lend to) and the profits from such loans flow to members. Rates are almost always lower and terms better than the commercial banks, savings and loans and private lenders. Start out with a savings or checking account. Sooner or later you will probably need a car loan or even a home loan. Joining now will give you the longevity that adds credibility to a credit union.
7. Maintain insurance coverage: Even though you may have elected to surrender property through the bankruptcy that still stands in your name, make sure that you are insured for liability. Liability insurance covers you for claims of anyone injured on your property. Electing to surrender property doesn’t take you off title until someone else goes on title. Post bankruptcy claims arising from property you’re trying to offload can potentially ruin the fresh start.
8. Get a credit report: Several months after your discharge, check your credit report to make sure all discharged debts reflect a zero balance. The bankruptcy history can properly remain on your credit for up to 10 years, but you are entitled to a showing that you now owe nothing on all discharged accounts (but see Factor #1 above) This is crucial because your debt to income ratio (“DTI”),one of the primary if not THE primary factor lenders look to in extending credit. Getting erroneous entries corrected may be facilitated using the services of a knowledgeable bankruptcy lawyer. You are entitled to a truly free credit report annually from each of the 3 major credit bureaus which you can get by clicking here and credit experts recommend that you check it at least once a year.
9. Budget and Learn to Spend Within Your Means: Studies have shown that people who go bankrupt only do so ONCE in their lives. WHY? Well debt relief is only one side of the coin. On the flip side are the lessons people take from bankruptcy. So, like these now money wise people, take advantage of the fresh start that bankruptcy has provided, and make lifestyle changes so that it does not happen again. Follow Rule # 10 below and stop using trade credit (AKA: Credit Cards). Get a debit card instead and be you own bank, there is no interest that way!
10. Use credit Wisely. Once Lenders see that you have received a discharge, they may well start sending you “preauthorized” credit card applications. However, if you start to load up on credit again, you will soon be right back where you started. So the rule of thumb is to have just one credit card that you keep in a drawer somewhere for emergencies; If you do use it, make it “free credit”, that is: plan to pay it all back in the same month as incurred so that you are not left carrying a balance ant interest. That way you are living within your means. See Rule # 9 above. The only other credit to use generally speaking is for major purchases such as car or home loans.
11. Build up a reserve for emergencies and start saving again. Set up automatic savings Bankruptcy probably brought home to you how little net worth you have and how thin the safety net is. Arrange for automatic savings for both an emergency fund and for retirement.
Since you no longer have trade credit, it will be easier to devote some of your income to savings…follow the rule “Pay yourself first”. Experts recommend a reserve of 6 months salary and at least a 10% savings rate. Contributions toward your IRA or 401K at work count as you can withdraw these funds (with penalty if applicable) in an emergency.
If you follow these rules, you are more likely to take full advantage of your fresh start and not ever be back to see your friendly local bankruptcy lawyer!

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!  

The Telltale Signs of an Email Fraud

Edited by Jenny Greenhough of Rocket Lawyer | August 10, 2012

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Rocket Lawyer Guest contributor Christopher C. Carr , Esq., MBA on how to spot a fraudulent client or transaction in your inbox. Slightly reedited for this blog publication.

                       

 

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

Don’t let a fraudster pull the wool over your eyes.

As discussed in my prior post, attorneys need to stay on alert for collection scams. Even for a savvy attorney, it’s easier to become an unwitting target of fraud than you may realize. For example, publicizing a big win in a lawsuit on your website may indeed bring you new clients, but some of them may actually be intent on profiting from a fraud perpetrated against your firm.

These scams can take on many guises. For example, a few weeks ago I got a very sophisticated scam letter. This time it was purportedly the representative of a Japanese law firm wanting local representation for litigation against debtors in the US. I immediately asked for his bona fides and he wrote back pretending to be insulted by my lack of trust. I then wrote back and explained that I had been taken in before and had lost some $2,000 in such a scheme and had thus adopted a policy whereby my firm holds all payments until final payment is issued to my bank by the depository bank on any settlement check (not just provisional payment because the check can still bounce until honored by the depositary institution).

Needless to say, I never heard from my Japanese “colleague” again.

Reading the signs

Let’s look at some if the identifying marks of this trade:

  1. Typos and other language errors: Note the punctuation errors and idiomatic problems in the text above. These are harbingers of this type of fraud and may actually be intentional for the purpose of hiding the true identity of the author from the authorities. However, the message will virtually always contain typos or non-idiomatic English usage, suggesting that the drafter is not even employed by the institution they claim to represent.
  2. No logos/Crude or Incomplete Logos: Another dead giveaway is a suspiciously “plain” appearance. But don’t use this as your only guide. I have recently begun seeing fake PayPal and even some bank items bearing an authentic looking logo.
  3. International debt collection: The message will nearly always solicit your assistance to collect a debt purportedly owed by some American commercial entity or ex-spouse of a foreign national.
  4. Different names: The account you are supposed to credit with the payment will not be in the same name as your client. There may be some excuse like “it’s my mother’s account and she has a different last name than mine.”
  5. Urgency: Anyone who pressures you to pay them however gently or subtlety should be immediately suspect; it means they’re trying to get paid before you receive notice of final payment.
  6. Slow build-up: Sometimes the scammers take a different route: they actually pay a couple of checks for smaller amounts to lull you into a false sense of security. Then they float a big rubber check with a reason like: “We are in a cash flow crunch, would you please pay us early just this once because you are holding up a lot of our money.” If you fall for it, the check bounces and they are never heard from again.
  7. Righteous indignation: When you express doubt about their claims or start asking questions, they respond as if they’re offended. In actuality, they’re trying to make you doubt your own better judgment.
  8. Reality check: As always if it seems to be too good to be true, it probably is!

So how do you test for legitimacy?

If you see any of the telltale signs above or anything else that makes you suspicious, make sure you:

  • Check their IP address. It should be in the same location as they claim.
  • Ask them to wait until you are notified of final payment. Just watch for the “slow build-up trick”.
  • Ask for their ID. Make sure it’s legitimate, and do some in depth Internet research as well to see if the company they claim association with is legit and has a real address where they say it is.

If you use caution, common sense, and follow the tips above, you should be able to spot a scammer without too much trouble. The old adage applies:  IF IT SEEMS TOO GOOD TO BE TRUE, IT MOST LIKELY IS. Otherwise, you and your family or coworkers could find yourself the victim of a home-shattering or firm-busting fraudulent transaction.
About the Author

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!  


Mr. Carr blogs regularly on debt and bankruptcy topics at https://christophercarrlaw.wordpress.com/.

Related articles

Don’t Let a Scam Put Your Solo or Small Firm Out of Business

Don’t Let a Collection Scam Put Your Solo or Small Firm Out of Business

This Article and a companion piece first appeared on RocketLawyer.com,  Edited by Jenny Greenhough| July 27, 2012

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

 

ROcket Lawyer Guest contributor Christopher C. Carr , Esq., MBA describes a debt collection scheme that nearly took him in and what attorneys can learn from his experience.

Wolf in sheep's clothingSometimes clients aren’t as they appear.

A single fraudulent transaction can easily wipe out the entire bank account of a small firm and expose the firm and members of the firm to lawsuits in the matter of just a few days.  A few years back I was taken in by a fraud scheme, and suffered what was luckily a much smaller loss, so when another scam came in through my email a year ago, I knew how read the signs.

In this most recent case, I would have been defrauded to the tune of $180,000 by a collection scheme that came in through my email. A supposed British subject hired me to collect $600,000 owed her under a very real looking promissory note from her ex-husband, a West Chester, Pennsylvania resident. I even got her to sign a fee agreement. The background of their relationship and source of the debt is beyond the scope of this article; suffice it to say that their ruse was very detailed and convincing.

These two had a relationship alright, but it wasn’t the one they told me about.

When I contacted him by email threatening suit, the correspondent in the fraud (the supposed ex) hemmed and hawed a bit (to make it look realistic) but ultimately agreed to pay a large installment on the debt. A Fed Ex pack duly arrived a few days later containing a check written on a Nova Scotia bank. I called the bank and verified that he was a customer of the bank but they would not tell me his balance for reasons of privacy.  I then deposited the check in my bank and watched my “available balance” soar.  The fee letter required me to remit the proceeds less my fee by wire to an account in the UK.  Had I done so, I and my bank would have been left holding the bag for hundreds of thousands. So I waited.  I ultimately got a notice from my bank that the check had been dishonored upon presentation to the Nova Scotia bank, which took about 10 days from the time of my deposit.

The couple perpetrating the international fraud obviously counted on this “float” period where I had funds in my account that did not really exist. Clearly their check was written on a foreign bank to try and extend this time as long as possible.

I contacted the local police who took a police report but nothing ever came of it. Although I didn’t suffer any loss in this instance, there would have been little or no insurance coverage for such a loss, had it occurred.

The only traceable elements of this scam typically are:

  • The account (and routing information) into which the proceeds are to be paid
  • The IP address of the defrauder (where the computer or other device is located in the world). It cannot be cloaked and can be checked using a free service available via the internet.

This information can be of use in detecting fraudulent activity as to avoid detection and apprehension these people will rarely be where they say they are.  This should be a dead giveaway.

What do you need to do ethically if a client attempts to defraud your or others? My blog on a related topic may provide some answers.

My advice is to fellow attorneys is to stay on alert when it comes to transferring large sums of money.  Never take anything for granted, and you won’t get taken to the cleaners.

About the Author

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!  


Mr Carr is licensed in Pennsylvania and Ohio and is admitted to the US District & Bankruptcy Courts for the Eastern District of Pennsylvania & the Middle District of Pennsylvania. 

WWW: http://www.westchesterbankruptcyattorney.org/
Bankruptcy Blog: https://christophercarrlaw.wordpress.com/

Attorney Carr may also be reached to schedule an appointment at 610-380-7969 or via email at cccarresq@aol.com.

Z is for “Zealous”, How far can your Lawyer go in representing you in Bankruptcy?

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

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

“Have Gun, Will travel”

Have_Gun%E2%80%93Will_Travel

Richard Boone as Paladin

Z is for Zealous.

Subsection 2 of the preamble to the Pennsylvania Rules of Professional Conduct: (“RPC”) “A Lawyer’s Responsibilities” states thatas advocate for his/her clients, “a lawyer zealously asserts the client’s position under the rules of the adversary system”.

Sounds simple enough but of course, the RPC nowhere gives any guidance as to the meaning of the word “Zealous”. Encarta defines the term simply as: “actively and unreservedly enthusiastic”. It is a sort of “boundary” term in the law in that we come to understand what it means more by understanding what we as lawyers serving bankruptcy clients can and cannot do in its name.  So let’s approach it from that angle.

A prerequisite for zealous representation is competence: RPC Rule 1.1 states that a lawyer shall provide competent representation to a client. Competent representation requires the legal expertise, skill, thoroughness and preparation reasonably necessary for the representation. In the bankruptcy context this means that a lawyer must have studied and understood the aspects of the Bankruptcy Code that are implicated in any representation.  Even if this requirement is met in general, should he or she not be well versed in a particular sub-area, there is a duty to seek the assistance and mentoring of another attorney who has the requisite skill set. For example, the implications of divorce for bankruptcy are so complex and localized/varied to the laws of each of the several United State as to be beyond the ken of most bankruptcy lawyers and equally so for most divorce specialists…cross disciplinary expertise must often be sought to answer these questions.

However, it is clear that the lawyer who is competent is not thereby necessarily zealous.  Zealous representation, which is not defined in the RPC, serves for most as the benchmark for excellence. Perry Mason may not have had all it its legal points correct but it does stand in the eyes of the public as the more dinified epitome of this attribute. For those who consider law practice more a profession than a business, it evokes the image of a crusader for justice. To others, however it suggests a fanatical, “no-holds-barred” advocate, willing to do anything for a client (for a fee). A hired gun… Have gun, will travel. 

Thus, being overly “zealous” clearly can land a lawyer in deep trouble.  Some attorneys have attempted to use it to justify unacceptable conduct even though it may have disciplinary or malpractice liability consequences (or both).  For example, we bankruptcy lawyers frequently are asked clients for advice on what might be called “pre-bankruptcy asset protection planning.”  While the ethical dangers associated with advice in this area are very real [See, for example, Ohio Rules of Professional Conduct (“ORPC”) Section 8.4(c), prohibiting a lawyer from engaging in conduct involving fraud], the consequences can reach beyond the realm of ethics and involve actual criminal liability for both transgressing client and counsel. This will reach to knowingly assisting a client who wishes to perpetrate a fraud on the bankruptcy court.  See my blog on the topic of Bankruptcy Fraud for more information. For example, in a recent West Virginia case a bankruptcy lawyer was criminally indicted for advising his clients to transfer a mobile home to a relative before bankruptcy so as to attempt to “remove” the asset from the reach of the Trustee in Bankruptcy.

Thus while lawyers clearly have an obligation to advance their clients’ cases with competence and enthusiasm, they also have an obligation as officers of the bankruptcy court they serve to refrain from knowingly counseling or assisting a client to commit a crime or fraud. RCP 1.2 (d).

Picture credit: Wikpedia:  http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

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 2012, All Rights Reserved

Picture credit: Wikpedia:  http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

How Do Creditors Manage to Find Debtors with Such Seeming Ease?

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

One of the prime indicators that someone may need to file bankruptcy is when they start to get bombarded by calls and letters from creditors.

Well, just how do creditors manage to locate debtors? Especially in our mobile society where that have moved to a different city or even state, with no forwarding address.

  1. Social Media: Think creditors (and others) are not monitoring the information you post publicly?  Think again, virtually any information you might post, such as where you work, live, shop, etc., can unwittingly provide vital clues as to your whereabouts.
  2. Credit Card Applications: This is one of the most fruitful resources for your creditors. Not only is your residential address and contact information listed, so are references, contacts and acquaintances that creditors can use to track you down if you have relocated. Banks, credit references or relatives may also be detailed on the application and these also can provide promising leads.
  3. Relatives, Friends, Acquaintances, Neighbors, Etc.  These types of contacts are still acceptable if done properly. Collection agents may contact any number of people to get information on you, though there are some restrictions as to how/when they can do this under the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act.
  4. Self supplied information such as Phone Numbers. If a collection agency has or obtains your phone numbers, they may be able to then get your address using a reverse lookup. This is one reason why creditors will so frequently ask if they can add a phone number to your information on file.
  5. Voter Registration Forms: Any time you register to vote in a new area, that information can potentially be accessed by your creditors. Even if you move, your old county retains these records.
  6. Department of Motor Vehicles: These records are available to registered collection agencies in many states across the country. So when you get your license and register your car  in that new state, you may be automatically giving them the information they need to find you.
  7. USPS Change-of-Address forms: Many major credit agencies receive change of address forms when you move from your previous location. They may also take the initiative to check with the post office themselves.  Obviously, this is one of the best ways for creditors to track you down because you thereby tell them exactly where you are going.
  8. Skip Tracers:  Creditors also employ skip tracers.   These are professionals whose job it is to locate a person’s whereabouts for any number of purposes. The term “skip” refers to the person being searched for, and is derived from the idiomatic expression “to skip town”, meaning to depart (perhaps in a rush), leaving minimal clues behind to “trace” the “skip” to a new location. Records that “skiptracers” use may include phone number databases, credit reports (including information provided on a loan application, credit card application, and in other debt collector databases), job application information, criminal background checks, utility bills (electricity, gas, water, sewage, phone, Internet, and cable), social security, disability, and public tax information.  Much of this information is not available or not easily obtainable by the general public or comes from data bases that are not widely known.  Source: Wikipedia: http://en.wikipedia.org/wiki/Skiptrace

Once credit agencies do locate a debtor, their contacts are supposed to be in conformity with the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act (PFCEUA), both of which prohibit debtor harassment.  (The PFCEUA extends the requirements of the FDCPA to direct creditors.) However, many collectors are now evading the law by setting up shop in foregn countries and then calling in to the US.

©Christopher C. Carr, Attorney at Law 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.

M is for Matrimonial Property Obligations and the Discharge in Bankruptcy

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

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

    M by BigBlue Meanie                    There are two main types of domestic support obligations (‘DSO”) defined in the bankruptcy code. The first kind of DSO encompasses things such as child support payments and alimony. (To simplify, let’s just call this type: “support“). The second type of DSO comes from the distribution of property in divorce; in Pennsylvania the statutes refer to this as “equitable distribution“, which is the terminology I will use here. The latter usually consists of the spouse’s equitable share of the equity — as adjudicated by the courts or agreed to in a property settlement agreement, which also must be court approved in Pennsylvania — in the marital residence but can also include joint bank accounts and other valuable items.

In the general definitions within the Bankruptcy code 11 USC Sect.. 101(14 a-c), both support and equitable distribution appear as DSO’s, misleading one to think that perhaps the two will be treated identically in bankruptcy. However, while this is true of a Chapter 7, it is otherwise for a Chapter 13. The difference in treatment as between the two different kinds of domestic support obligations only become apparent when one looks at how they are treated those portions of the Bankruptcy Code dealing specifically with the discharge of these specific categories of debt.

At first glance in 11 USC Sect. 523(a)(5) and 11 USC Sect. 523(a)(15), the sections of the Code dealing with equitable distribution, it appears that these two subsets of domestic support obligations are treated the same. That is to say, neither support nor equitable distribution obligations appear to be discharged in bankruptcy, meaning specifically that in both a Chapter 7 bankruptcy these debts survive the bankruptcy and remain obligations of the debtor and alternately in a Chapter 13, they both must be paid in the plan and/or any amount left over so survives.

However, 11 USC Sect. 1328(a)(2) changes the picture radically, at least insofar as discharge after completion of a Chapter 13 Plan is concerned. (Note that virtually anyone who has a regular income can elect a Chapter 13 filing as versus a Chapter 7.) This provision essentially states that once all the plan payments are made and the debtor complies with its other requirements, the DSO types not listed in the statute will be discharged: one of the provisions so listed is 11 USC Sect. 523(a)(5), which again deals with with support debts. However, whether by design or inadvertence, Congress conspicuously excluded from that list 11 USC Sect. 523(a)(15), which again pertains to equitable distribution obligations.

Thus, unlike support, which cannot be discharged either in a Chapter 7 or a Chapter 13, the proceeds of an equitable distribution can be discharged to the extent that the ex-spouse still owes same once the Chapter 13 plan payments have been otherwise completed. A clever bankruptcy lawyer, knowing this, will to the extent possible, draft a plan which, perhaps by favoring secured and other priority unsecured debt in order and amount of payment, provides for less than all of the equitable debt to be discharged, which has the effect of excusing the debtor spouse from his or her remaining equitable obligations, even though ironically these were awarded to the creditor spouse by a court of law. The (alas little appreciated) lesson for the family lawyer representing the creditor spouse is to require all equitable debt to be paid up before the property settlement agreement is authorized, so as to avoid eventual loss of some or all of their equity in a potential Chapter 13 bankruptcy.

©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.

Others blogging on M include:

  • Bill Balena,      CLevand Bankruptcy lawyer tells us that M      is for Mistakes .
  • Omaha and Lincoln,      Nebraska Bankruptcy Attorney, Ryan D. Caldwell says M is for Means Test.
  • Marin County      Bankruptcy Lawyer, Cate Eranthe blogs M is for Means Test, a popular topic.
  • New York Bankruptcy      Lawyer, Jay S. Fleischman agrees M is for Means Test too.
  • Colorado Springs bankruptcy      Attorney Bob Doig says M is for Meeting of Creditors.
  • Northern California      Bankruptcy Lawyer, Cathy Moran believes M is for Modify & also for Monthly Income.
  • Hawaii Bankruptcy      Lawyer, Stuart T. Ing says M is for Mortgage Arrears.

Picture credit: Bigbluemeanie

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.

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