An individual can ordinarily file a bankruptcy case at anytime, however there may be restrictions on the relief that is available.  The most common restriction is the eligibility to receive a bankruptcy discharge.  To receive a Chapter 7 discharge, you must file your case eight (8) years after your previous Chapter 7 case was filed, or six (6) years after your Chapter 13 case was filed.  To receive a Chapter 13 discharge, you must file your case four (4) years after your previous Chapter 7 case was filed, or two (2) years after your Chapter 13 case was filed. 

In some cases, receiving a bankruptcy discharge may not be important to the debtor.  For instance, if a debtor has a non-dischargeable debt like child support or taxes that must be paid, bankruptcy can offer an organized process for payment while the debtor retains some control. 

Another less common restriction concerns the automatic stay.  If your bankruptcy case is dismissed within the past year, the bankruptcy court assumes that your second bankruptcy is filed in bad faith.  The automatic stay will only apply for 30 days after your second filing.  A hearing is required to extend the automatic stay and you must convince the court that you have filed in “good faith.”  If you file two or more cases within the past years, you must petition the bankruptcy court for a stay – it is not automatic for any period of time. 

Finally, you are not eligible to file at all if your case was dismissed by the bankruptcy court within 180 days due to a willful failure to obey an order of the bankruptcy court, or if your case was voluntarily dismissed after a creditor sought to lift the automatic stay to enforce a lien against your property. 

Filing a second bankruptcy is not uncommon.  Congress has established a few additional rules to deter abusive serial filers, but bankruptcy protection is available for the honest yet unfortunate debtor.  If you need assistance with filing a second bankruptcy case, contact an experienced bankruptcy attorney and get the relief you need.

A common problem after a divorce is the family court’s order concerning joint debt.  The order will typically direct one party to pay or refinance a joint debt.  Many are surprised to learn that this order does not relieve a parties’ obligation to pay the debt.  The simple explanation is that the family court judge does not have the authority to rewrite a contract between you, your spouse, and a creditor who is not a party to your divorce.  If your spouse does not pay the joint debt, your credit may be harmed.  

On the other hand, by filing a bankruptcy prior to the divorce, most joint debts can be legally and finally terminated either by payment or discharge.  Additionally, by resolving many of your outstanding debts, it is easier to negotiate the remaining obligations between you and your spouse. 

Married couples also enjoy protections in bankruptcy that single debtors do not receive.  For instance, married couples often receive increased legal exemptions that protect property from creditor attachment.  These exemptions may be lessened or no longer available once the divorce is finalized.  In other words, what you could protect in bankruptcy while married may not be protected after a divorce. 

To say that the interplay between the state family laws and the federal bankruptcy laws is complex is a gross understatement.  However, many of these complexities can be avoided by filing a bankruptcy ahead of a divorce.  In some cases, the couple decides to stay together after the financial strain is removed by the bankruptcy. 

If you and your spouse are considering divorce, consult with an experienced bankruptcy attorney and have your finances examined.  If bankruptcy is a possibility, it is generally better to proceed with the bankruptcy case prior to the divorce.

A creditor that contacts you in an effort to collect a discharged debt is in violation of the bankruptcy court’s discharge injunction.  Usually such contact is a mistake and the creditor is unaware of your bankruptcy discharge.  While claiming ignorance is not a valid excuse for violating the bankruptcy court order, informing the creditor that you have filed bankruptcy and received a discharge of the debt is often enough to stop future collection actions.  The creditor may want to know certain information about the bankruptcy (case number, date of discharge, chapter, etc.) to update their records and stop further collection efforts.  You can answer these questions or simply refer the creditor to your attorney. 

It is good practice to document any post-discharge collection action by creditors.  While these collection attempts are often mistakes, a main purpose of the bankruptcy discharge is to allow you to live your life free from creditor harassment.  The bankruptcy discharge applies to the debt and enjoins any collection of the debt.  Consequently, the discharge injunction applies to the original creditor, collection agencies, attorneys, and any other subsequent collector. 

Your bankruptcy discharge is legal protection against creditor harassment concerning discharged debts.  If you are repeatedly contacted by a creditor after your bankruptcy discharge, document the creditor contact and report it to your attorney.  The law is on your side and will protect your right to a fresh start free of creditor harassment.

The first concern is safeguarding the property.  Maintaining insurance and basic utility service is important until possession (and in some cases ownership) of the house is transferred.  Should you fail to safeguard the property, you may be liable to the lender for damages. 

Next, once transfer of title is accomplished (usually through a foreclosure proceeding), the bank may sue you for breach of contract and damages.  Sometimes the bank will wait until after it fully realizes all of its damages upon sale of the house, then it will sue for the difference between the amount it recovers and the amount you owed.  This is called a deficiency balance and it is recoverable by the lender in most states. 

The bank may also forgive the debt difference and issue you an IRS Form 1099C.  When this happens the bank is telling the IRS that it has given you a “gift” in the amount of its loss (because you don’t have to pay it back) and you owe income tax on the “gift” amount.  You have two options to avoid paying the tax debt: bankruptcy, or the insolvency exclusion in the tax code.  The insolvency exclusion requires that you prove that your liabilities exceeded the value of your assets.  By filing bankruptcy this type of tax debt will be discharged. 

Congress has granted a reprieve from tax debts stemming from the sale of your primary residence.  The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) provides that taxpayers do not owe taxes on mortgage debt that was forgiven by the lender.  The law only applies to deficiencies during the 2007, 2008, and 2009 tax years. 

Finally, walking away from your home will have negative consequences to your credit report.  The possible negative items include 120 day late entries, foreclosure, and debt write-off.  All of these items have a devastating impact on your credit report and, consequently, your credit score. 

If you are contemplating walking away from your home, get the facts!  Investigate your options from a qualified bankruptcy attorney.  Only a bankruptcy attorney will be able to explain your options including those available under the bankruptcy laws.

Under the Emergency Medical Treatment and Active Labor Act hospitals and ambulance services are required to provide emergency healthcare to a person regardless of ability to pay.  This federal law requires appropriate medical screening, necessary stabilization, and transfer to an appropriate facility for treatment of an emergency condition.  In broad general terms, if you have an emergency medical condition, a hospital ER must treat you. 

If you do not have an emergency medical condition, the hospital or doctor may refuse treatment to a bankruptcy debtor.  It is unusual for a hospital to deny service after bankruptcy unless the patient demonstrates an inability to pay the new bill.  If you have insurance or other form of guaranteed payment, the hospital will likely treat you. 

Individual physicians are more likely to deny services if you have discharged their bill.  Many bankruptcy debtors want to continue a relationship with their personal doctor, and consequently make payment arrangements after the bankruptcy has been filed.  While the bankruptcy law requires the debtor to list every creditor, there is no prohibition against paying a debt after the bankruptcy.  Paying the debt does not renew or create a new obligation and the doctor may not take action to collect a discharged debt (i.e. writing or calling to encourage payment). 

If you need to include medical bills in your bankruptcy, but worry about receiving future medical care, consult with your bankruptcy attorney.  In most cases there is no interruption in medical care or treatment.  Know your legal rights and be informed of how your bankruptcy will affect your ability to receive medical care.

Stafford Loans during a Chapter 13 bankruptcy presents a problem for the student.  You will need permission from the bankruptcy trustee and bankruptcy court to incur additional debt.  These requests are handled on a case-by-case basis, so consult with your bankruptcy attorney if you want to take loans to attend school during a Chapter 13 bankruptcy. 

Credit-based financial aid is a different story.  This type of financial aid includes student loans from private lenders such as Sallie Mae.  Applying for credit-based loans is the same as applying for an unsecured personal loan.  Your credit history is considered and your bankruptcy will play a part in the decision to give you the loan. 

Your credit is also considered if you are a parent applying for a parent loan like the PLUS (Parental Loan for Undergraduate Students) Loan and the Graduate PLUS (a loan for Graduate students) Loan.  These federally guaranteed parent loans are credit based and federal regulations state that a parent with a bankruptcy within the past five years is automatically disqualified from obtaining a PLUS Loan for his or her child, unless there were extenuating circumstances or the borrower obtains a creditworthy endorser.  However, if you are denied a PLUS Loan, your child qualifies for increased unsubsidized Stafford loan limits.  Stafford loans remain in forbearance while the student attends school, while a PLUS Loan is subject to immediate repayment. 

If you are a student or parent who needs money for school after a bankruptcy, speak with your student financial aid advisor and your bankruptcy attorney.  Bankruptcy can help eliminate your personal debt and free money for college, or college loan repayment.

Generally, when you file a bankruptcy petition all collection actions are automatically stayed.  The purpose of this stay is to give you some breathing room and time to sort out your financial difficulties.  If you are behind on rent payments, the bankruptcy automatic stay stops the commencement or continuation of an eviction action.  The automatic stay prohibits your landlord from any attempt to collect rents that accrued prior to the bankruptcy filing date.  Your landlord may not write or call you in an effort to collect these rents, and may not start or continue a lawsuit to evict you. 

The bankruptcy automatic stay will not relieve you from your obligation to pay rent after the bankruptcy filing date.  If you fall behind on your rent payments after the bankruptcy is filed, your landlord may evict you regardless of the bankruptcy, but cannot seek payment of past rents.  If you are not behind on rent at the time the bankruptcy case is filed, your landlord is not a creditor and will not receive notice of your bankruptcy filing.  However, you must account for any rent deposit on your bankruptcy schedules. 

In some circumstances a landlord may complain to the bankruptcy court that the tenant is endangering the property or using controlled substances illegally on the property.  The landlord must file a certification to the bankruptcy court and the tenant has 15 days to respond.  The court must hold a hearing within 10 days.  If the landlord is successful in this complaint, the court will lift the automatic stay and allow the eviction process to continue. 

If your landlord has obtained a judgment for possession and order of eviction before you file bankruptcy, the legal process is more complex.  You must deposit one month of rent to the bankruptcy court immediately upon filing the bankruptcy petition along with a certification stating that your landlord’s judgment permits you to stay in the premises upon satisfaction of the entire judgment amount.  This filing stays the eviction process for thirty days.  If you wish to remain longer, the amount stated in the judgment for possession must be paid within the thirty day period. 

Bankruptcy can stop an eviction and give you time to move or make arrangements to stay.  If you are facing eviction from your rental home and contemplating bankruptcy, discuss your situation with an experienced bankruptcy attorney.

Years ago it was unheard of for a debtor in an active bankruptcy to obtain an auto loan.  Several years ago two companies, 722 Redemption Funding, and Fresh Start Loan Corporation, began making auto loans to debtors in bankruptcy, and now many banks have lending programs for debtors.  The attitude towards bankruptcy has changed and many debtors are evaluated more on their future ability to pay the loan rather than their past financial trouble. 

Obtaining an auto loan during bankruptcy is a matter of showing stable income, a good debt-to-income ratio, and some assurance that your current financial trouble is unusual and not likely to reoccur.  All lenders require a loan application and the criteria for approval can vary significantly.  Some lenders will not approve a loan if you have had a prior repossession.  Other lenders want a substantial down payment.  New auto loans often want the bankruptcy discharged before approving the loan.  In all cases your vehicle choice will be restricted to a newer vehicle with low miles. 

During a Chapter 7 bankruptcy the debtor and the lender are free to negotiate terms outside of the bankruptcy case.  The loan is not a part of the case and is not affected by the bankruptcy discharge.  For Chapter 13 debtors, any new indebtedness must be approved by the trustee and the court.  In most cases the Chapter 13 debtor can obtain approval after a showing of need and ability to pay. 

If you are considering bankruptcy and need to buy a different vehicle, consult with an experienced attorney.  There are many different options during bankruptcy for retaining, refinancing, or purchasing a different vehicle.  Call today and get the information you need to drive your financial future.

Well, you can stop worrying about barrel chafing because there are many legal protections that allow you to keep household property during bankruptcy.  These protections are generally limited to “common sense” amounts and typically apply to clothing, household furniture, musical instruments, books, electronics, appliances, etc.  

One stated goal of bankruptcy is to give the debtor a “fresh start,” so Congress and state legislators attempt to balance the requirement of the debtor to have basic necessities against your creditors’ interests in receiving payment for your debts.  The idea is to permit the debtor the things he needs for day-to-day living while prohibiting the debtor from living a lavish lifestyle at the expense of his creditors.  For instance, if you have a Steinway grand piano worth $50,000 in your living room, it will likely be taken and sold to pay creditors.  If you have a family piano worth $2,000, you can likely keep it. 

The truth is that only around four percent of Chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor.  In the vast majority of these “asset cases” the debtor loses a car or real estate in which he has too much equity.  It is very rare to see a debtor lose any household item during a Chapter 7 bankruptcy.  Debtors in Chapter 13 keep their property. 

Determining whether a household item is at risk is a simple arithmetic calculation.  First, start with the liquidation value of the item.  Often this value can be determined by looking at yard sales or internet auction sites like Ebay.  Next subtract the applicable state or federal exemption amount for that item.  Any remaining sum is unprotected equity.  Your bankruptcy attorney can discuss your options for protecting and keeping items with unprotected equity. 

It is important to correctly describe, value and apply the proper exemptions to household items in your bankruptcy schedules.  Once you have provided an adequate description and value of your household items, your attorney can apply the proper exemptions and protect your property from turn-over to the bankruptcy trustee.  Discuss any high-dollar household item with your attorney to ensure that you obtain full legal protection for your property.

In deciding whether to discharge a bank account debt, you must determine if repayment is feasible.  In cases where the debt is small, the account is still open, and you have the resources to pay the debt, repaying the debt is generally the best option.  Remember to consult with your attorney before repaying any debt prior to filing bankruptcy.  In many cases it is advantageous to wait until after the case is filed before repaying a debt. 

If paying the bank account debt is not feasible, you may face several negative consequences.  First, the bank will close your bank account.  Second, over eighty percent of all banks use Chexsystems, a consumer reporting agency that provides information regarding accounts at banking institutions.  Negative information may remain on your Chexsystems file for five years.  To view your Chexsystems report for free, visit: https://www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm 

While a bankruptcy will discharge a bank account debt, factual information concerning the debt will remain on your Chexsystems report after the bankruptcy.  This information is available to financial institutions and may prevent you from opening another bank account.  

Fortunately, there are programs available to an individual with a derogatory Chexsystems report offered by banks, universities, and not for profit groups.  One of the most popular is the “Get Checking” program offered by several groups around the country.  The University of Missouri Extension offers a typical “Get Checking” program, which requires a debtor to pay all outstanding bank fees on the prior bank account and take a six-hour checking education class.  The debtor then receives a certificate of completion which can be used to open a new account at a participating financial institution.  If ChexSystems reports suspicion of fraud on a prior account, a certificate will not be issued and institutions are not required to open an account. 

If you have an overdrawn bank account and are considering bankruptcy, discuss your financial situation with an experienced bankruptcy attorney.  There are many options to deal with bank account debt, but the situation can only grow worse from procrastination.  Quick action is the best cure for this type of debt.