Can I Repay A Discharged Debt?

On April 21, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Chapter 7 Bankruptcy Law Las Vegas, Individual Bankruptcy Las Vegas, Personal Bankruptcy Las Vegas, by Randy Creighton

The main reason people file bankruptcy is to receive a discharge of debt.  A debtor receives this discharge at the conclusion of the bankruptcy case in the form of an order from the court.  This discharge is a court injunction prohibiting creditors from taking collection action to collect on discharged debts. Violation of this injunction may result in a contempt of court charge and serious penalties.

But what if you have a debt that you want to pay even after it is discharged? Say for example a debt owed to a family member.

The Bankruptcy Code provides, “Nothing contained in. . . this section prevents a debtor from voluntarily repaying any debt.” 11 U.S.C. § 524(f).  Therefore, you are free to make voluntary payments on all or part of your discharged debts. These payments do not invalidate the discharge order and do not create a new legal obligation. The creditor is still prohibited from contacting you in any way and cannot take any collection action against you, including sending you a bill or even encouraging your continued payments. In this case the term “voluntary” means free from creditor influence or inducement.

If you are interested in making voluntary repayments after your discharge, discuss the matter with your bankruptcy attorney. While there are generally few down-sides to voluntary repayment, your bankruptcy attorney can discuss the pros and cons with you and help you reach the right decision for you and your family.

Randy M. Creighton, Esq.

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Chapter 13 – A Law With Benefits

On April 15, 2010, in Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Bankruptcy Services Las Vegas, Chapter 13 Bankruptcy Law Las Vegas, Chapter 7 Bankruptcy Law Las Vegas, Individual Bankruptcy Las Vegas, Personal Bankruptcy Las Vegas, by Randy Creighton
question markMany debtors choose not to file for Chapter 13 bankruptcy because it requires repayment of at least a portion of their debts. Chapter 7 bankruptcy, another option, wipes out many debts entirely.  In some cases, however, Chapter 13 bankruptcy IS the better bankruptcy option. Furthermore, certain debtors don’t get to choose because not everyone is eligible for Chapter 7 bankruptcy leaving Chapter 13 as the only option available.   Here are some good reasons to file for Chapter 13:

When You Cannot File for Chapter 7

You will not be allowed to file for Chapter 7 if you cannot meet some new requirements imposed by the 2005 revisions to the bankruptcy laws. Under these new rules, you cannot file for Chapter 7 if both of the following are true: 

  • Your current monthly income over the six months prior to your filing date is more than the median income for a household of your size in your state (go to the website of the United States Trustee, www.usdoj.gov/ust, and click “Means Testing Information” to see the median figures for your state).
  • Your disposable income, after subtracting certain expenses and monthly payments for debts you would have to repay in Chapter 13, exceeds certain limits set by law. These calculations are commonly referred to as the “means test” — if you have the means to repay a certain amount of your debt through a Chapter 13 repayment plan, you flunk the test and are ineligible for Chapter 7 bankruptcy.

The means test can get fairly complex and, to make matter worse, Congress has its own definitions of “disposable income,” “current monthly income,” “expenses,” and other important terms which, in some cases, can make your income seem higher than it actually is. 

In addition, if you have received a Chapter 7 bankruptcy discharge within the last eight years or a Chapter 13 discharge within the last six years, you may not file for Chapter 7 bankruptcy. 

When You Are Behind On Your Mortgage or Car Loan 

If you want to make up the missed payments over time and reinstate the original agreement, you can in Chapter 13 bankruptcy. You cannot do this in Chapter 7 bankruptcy. 

When You Have a Debt That Cannot be Discharged in Chapter 7 

Tax obligations, student loans, or other debts that cannot be discharged in Chapter 7 can be included in your Chapter 13 plan and paid off over time. 

When You Have a Sincere Desire to Repay Your Debts

You can benefit from the protection of the bankruptcy court if creditors are coming after you. The Chapter 13 process also provides the formal structure and deadlines that can you might find helpful in order to follow through on your good intentions. 

When You Have Nonexempt Property You Want to Keep 

When you file for Chapter 7 bankruptcy, you may keep only exempt property defined as property protected from creditors under state or federal law. You must give your nonexempt property to the bankruptcy trustee who can sell it and distribute the proceeds to your creditors. 

In Chapter 13, however, you don’t have to give up any property. Instead, you repay your debts out of your income. Therefore, if you have nonexempt property that you do not want to part with, Chapter 13 might be the better choice. 

When You Have a Co-Debtor on a Personal Debt 

If you file for Chapter 7 bankruptcy, your co-debtor will still be on the hook which means  your creditor will undoubtedly go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.

Randy M. Creighton, Esq.

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Credit and Its Problems – a free seminar

On April 12, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Individual Bankruptcy Las Vegas, by Randy Creighton

Credit and Its Problems – a free seminar, tomorrow April 13 @ 7 PM at Sahara West Public Library. RSVP Abe Geller 869-8801.

The presentation is set to cover the different types of credit; the importance of having good credit; options if a person cannot handle his or her current debt load; foreclosure; loan modification; short sales; and bankruptcy.

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Short Sales In Bankruptcy…Possible?

On April 11, 2010, in Uncategorized, by Randy Creighton

I hear the question almost every day, can I short sale my house if I file bankruptcy?

First, lets first define what a short sale is. When you sell real estate “short,” you are asking the lender to approve the sale without receiving the full amount of their loan, very common now in this depressed real estate market. For example: you bought a home in 2005 for $500,000 with a first mortgage of $400,000 and second mortgage of $100,000. The property is now worth $300,000 and you have a buyer willing to close escrow in 30 days for $300,000. If the first mortgage agrees with the sale, they will receive about $100,000 less than their current debt and the second will receive $0. Typically the second signs off with a nominal payment such as $5,000.00.

Second, yes you can short sale your house in bankruptcy; nothing in the bankruptcy code helps and/or hurts you from getting the short sale approved. You must still go through same painful process of receiving approval from the lender to sell the home. Nonetheless, as a borrower you are not concerned with the deficiency amount due and owing after you filed bankruptcy because any deficiency will have been discharged in the bankruptcy.  This fact makes it easier to get a short sale approved.

But realize that as a debtor in bankruptcy your are receiving NO tangible benefit to short selling your house.  In bankruptcy any deficiency amount is discharged, or in simpler terms, you are not liable to the lender for any amount due and owing under the loan.  The only parties really benefiting here is the realtor and buyer. Since all the work, worries, and monies you provide do not benefit you at all, the entire short sale process is usually done in vain.

Instead, it is usually best to surrender the home after the bankruptcy is filed. Under bankruptcy laws, there is no taxable event on a foreclosure after bankruptcy (except possibly a capital gain in rare cases in today’s economy), the lender can not report to credit bureaus foreclosure but can only report $0.00 balance, bankruptcy discharge (which by the way gets reported in all bankruptcy cases whether you keep the home or not and is generally better than foreclosure or short sale in terms of effecting your credit score), the debt is finalized as non-recourse, you avoid wasting your time and money, and you are able to stay in the property or rent it out longer.

If you have any questions please contact us.

Randy M. Creighton, Esq.

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Can I Have Money in a Bank Account When I File Bankruptcy?

On April 8, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Bankruptcy Services Las Vegas, Chapter 13 Bankruptcy Law Las Vegas, Individual Bankruptcy Las Vegas, Personal Bankruptcy Las Vegas, Uncategorized, chapter 13, by Randy Creighton

 To begin, we must first recognize that there are two common types of consumer bankruptcy cases, Chapter 7 and Chapter 13, because each chapter deals with this issue differently.  In a Chapter 7 all of the debtor’s property is placed into an estate which is controlled by the bankruptcy trustee.  While no property physically changes hands (at least not at the beginning of the case), the trustee and bankruptcy court have broad legal power over your property.  Nonetheless, an individual is allowed certain exemptions, which are found in state law. Nevada has at least 33 exemptions available. If the value of your equity in the property is below the exemption amount, then you will be entitled to keep the property.  The most commonly used exemption for money in a bank account is 21.090(z) whoch exempts any personal property not otherwise exempt, including, without limitation, the judgment debtor’s equity in any property, money, stocks, bonds or other funds on deposit with a financial institution, not to exceed $1,000 in total value.

 Take for example that you have $5,000 sitting in your checking account on the day you file bankruptcy.  That money is property of the Chapter 7 bankruptcy estate and is no longer yours to control or use.  However, you will be allowed to keep $1,000.00 but the Trustee can seek to receover the remaining $4,000.00.

During a Chapter 13 bankruptcy the debtor retains possession and control over his or her property, and is free to use any funds in the debtor’s bank account.  An accounting is performed and the debtor’s property is classified as either exempt or non-exempt.  Non-exempt property is not taken from the debtor (as is often the case in a Chapter 7), but the Chapter 13 debtor is required to pay unsecured creditors a sum equal to the amount of non-exempt equity.  For instance, if there is $5,000 in the debtor’s bank account, the debtor may only be able to exempt a portion of the entire sum, or possibly $1,000.00.  The non-exempt portion must be paid to the creditors through the debtor’s Chapter 13 plan (over three to five years). 

Cash in a bank account can be a problematic issue for a debtor.  Avoiding these problems is the joint responsibility of the debtor and the debtor’s bankruptcy attorney.  Timing is critical to minimizing your financial exposure.  An experienced bankruptcy attorney can help you maximize the benefits of the bankruptcy laws and navigate around any pitfalls.

If you have any questions please contact us.

Randy M. Creighton, Esq.

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How Bankruptcy Can Help With Foreclosure

On April 7, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Bankruptcy Services Las Vegas, Chapter 13 Bankruptcy Law Las Vegas, Chapter 7 Bankruptcy Law Las Vegas, Individual Bankruptcy Las Vegas, Mortgage, Uncategorized, by Randy Creighton

If you are facing foreclosure and cannot either short sale your home or agree on a loan modification, bankruptcy may help.

The Automatic Stay: Delaying Foreclosure

When you file either a Chapter 13 or Chapter 7 bankruptcy, what is called the automatic stay springs into effect. The automatic stay immediately requires your creditors to cease their collection activities immediately, no excuses. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while the bankruptcy is pending–typically for three to four months. However, there are two exceptions to this general rule:

Motion For Relief From The Automatic Stay. If the lender obtains the bankruptcy court’s permission to proceed with the sale (by filing a “motion to lift the stay”), you may not get the full three to four months. But even then, the bankruptcy will typically postpone the sale by at least two months, or even more if the lender is slow in pursuing the motion to lift the automatic stay.

Foreclosure notice already filed. Unfortunately, bankruptcy’s automatic stay won’t stop the clock on the advance notice that most states require before a foreclosure sale can be held (or a motion to lift the stay can be filed). For example, before selling a home in Nevada , a lender has to give the owner at least three months’ notice. If you receive a three-month notice of default, and then file for bankruptcy after two months have passed, the three-month period would elapse after you’d been in bankruptcy for only one month. At that time the lender could file a motion to lift the stay and ask the court for permission to schedule the foreclosure sale.

Also, and very important, the automatic stay is IMMEDIATE.  So, for example, say a foreclosure sale is scheduled for 10:00 a,m, January 31, 2010.  If the homeowner files for bankruptcy at 9:59 a.m. the foreclosure sale is null and void, or in simpler terms, you keep your house and the lender must re-foreclose after submitng the Motion For Relief From The Automatic Stay.

How Chapter 13 Bankruptcy Can Help

If you’re behind on your mortgage payments with no feasible way to get current, the only way to keep your home is to file a Chapter 13 bankruptcy.

Unlike Chapter 7, Chapter 13 bankruptcy lets you pay off the “arrearage” (late, unpaid payments) over the length of a repayment plan you propose–five years in some cases. Assuming you make all the required payments up to the end of the repayment plan, you’ll avoid foreclosure and keep your home.

Also, unlike Chapter 7. Chapter 13 may also eliminate the payments on your second and/or third mortgage. 

How Chapter 7 Bankruptcy Can Help

The situation migt be that you will have to give u your home no matter what. In that case, filing for Chapter 7 bankruptcy will at least stall the sale and give you two or three more months to work things out with your lender. Options include a Short Sale.

Saving money. During a Chapter 7 bankruptcy, you can live in your home for free during at least some of the months while your bankruptcy is pending–and perhaps several more after your case is closed. You can then use that money to help secure new shelter.

Canceling debt. Chapter 7 bankruptcy will also cancel all the debt that is secured by your home, including the mortgage, as well as any second mortgages and home equity loans.  So, if you were to obtain a Short Sale you do NOT have to worry about any deficiency amounts.

Chapter 7 Will Not Cancel the Foreclosure

With all this debt being cancelled, you may be wondering why the foreclosure on your home won’t be cancelled too. The trouble is, when you bought your home you probably signed two documents (at least)–a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.

Chapter 7 bankruptcy gets rid of your personal liability under the promissory note, but it doesn’t remove the lien. That’s the way Chapter 7 works. It gets rid of debt but not liens–you’ll still probably have to give up the house under the lien since that’s what provided collateral for the loan.

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What Happens If I Forget to List a Creditor in My Bankruptcy Petition

On March 30, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Chapter 7 Las Vegas, Chapter 13 Bankruptcy Law Las Vegas, Chapter 7 Bankruptcy Law Las Vegas, Filing Bankruptcy in Las Vegas, Personal Bankruptcy Las Vegas, by Randy Creighton

When you are filing for Chapter 7 or Chapter 13 bankruptcy, it’s all too easy to forget to list a creditor or to discover, after the petition has been filed, a creditor that you did not even know existed, or leaving off the creditor was a simple error. No big deal. It happens. I try to avoid such error with my clients by obtaining the most recent credit report before filing their petition but, on occasion, certain creditors, such as medical debts, are not reported to credit bureaus. Just because a debt is not reported to a credit bureau does not mean you do not owe them any money.

As long as the error or omission is caught early enough in the  bankruptcy process, it is a simple matter to add a missed or missing creditor to a filed petition. The court charges a $26 fee for such amendments, but it is worth the cost.

Further,  it goes without saying that all debts and creditors must be disclosed. When you file your bankruptcy petition, you sign and testify under the penalty of perjury that you have listed all of your assets and debts.  At the 341 Meeting of Creditors you likewise will swear under oath that you have completely disclosed all of your assets and liabilities.

It is, thus, very important to work closely with an experienced attorney who will take the time, and not send this task to his paralegal, to talk with you to discuss your individual situation. As part of filing bankruptcy with Black & Lobello

If you are a Nevada resident and are considering filing for bankruptcy please contact us.

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New Means Test And Median Income Numbers

On March 30, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 7 Las Vegas, Bankruptcy Information in Las Vegas, Bankruptcy Laws Las Vegas, Chapter 7 Las Vegas, Individual Bankruptcy Las Vegas, Personal Bankruptcy Las Vegas, by Randy Creighton

For bankruptcy cases filed after March 15, 2010, new means test and median income figures apply. The details are available here: http://www.justice.gov/ust/eo/bapcpa/20100315/meanstesting.htm

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Can the Chapter 13 trustee dismiss my case if I’ve missed a couple of payments?

On March 28, 2010, in Bankruptcy Attorney in Las Vegas, Bankruptcy Chapter 13 Las Vegas, Bankruptcy Information in Las Vegas, Chapter 13 Bankruptcy Law Las Vegas, Chapter 13 Help Las Vegas, Filing Bankruptcy in Las Vegas, Individual Bankruptcy Las Vegas, Las Vegas Bankruptcy Help, Personal Bankruptcy Las Vegas, chapter 13, by Randy Creighton

Probably.  If you miss a couple of payments the Trustee will likely argue that your plan is no longer feasible — that you cannot make the payments and therefore your creditors aren’t getting paid and protected through bankruptcy.

Your best shot is to remember that old scout creed about being prepared. You’ll have to show the court that you can get back on track with your plan, or propose an amended plan with payments that are feasible for you and provide a sufficient amount to your creditors.

If the court agrees with the trustee and dismisses your case, you’ll owe your creditors the current balance on your debts — that is, what you owed at the start of your bankruptcy case, less the amounts you paid through your repayment plan — plus the interest that stopped accruing while you were in bankruptcy.

But the key is to be in constant contact with your attorney.  If you cannot make a payment it is always better to call your attorney to have him or her work out the issues with the Trustee.

If you have any questions please contact us.

Randy M. Creighton, Esq.

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Four Questions To Ask A Bankruptcy Lawyer Before Signing

On March 22, 2010, in Bankruptcy Help Las Vegas, Bankruptcy Services Las Vegas, Chapter 7 Help Las Vegas, chapter 13, chapter 7, by Randy Creighton

Should I file for bankruptcy or do I have other options?

While this question might be broad, it allows your lawyer to discuss all of your options. Your lawyer can discuss the benefits of Chapter 7 and Chapter 13, as well as options other than bankruptcy that you may not have considered yourself. This overview may provide you with a clearer understanding of the pros and cons of filing bankruptcy.

Who will actually be handling my case?

In some cases, the lawyer you consult with will not actually be handling your case. It is important to know who will handle your case and also whether this person is a lawyer. In many consumer bankruptcy “mill” practices, a non-lawyer performs the majority of the work on your case.

How much of your time is devoted to bankruptcy cases?

Though some lawyers have 20 years of experience, they may only work on two or three bankruptcy cases a year. Therefore, they will not be as experienced as lawyers who work bankruptcy exclusively for much shorter periods of time. Bankruptcy laws have recently changed so it is important to know that your lawyer is familiar with these new laws.

How much do you charge for your services?

This might seem like an obvious question to ask initially but there are benefits to waiting until the end of the consultation. First of all, you can evaluate all of the other services the lawyer plans to provide. Many of the consumer bankruptcy “mills” advertise a low price but their services are very limited and exclude many of the customary services. Thus, your fee will increase exponentially to file your case. Also, it is important to know if there are any other expenses that may be incurred during the process that may be charged to you. With a lawyer, as with so many other goods and services, you get what you pay for.

Randy M. Creighton, Esq.

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