Bankruptcy RecordsBankruptcy Records – overview to bankruptcy law for all 50 states

Financial advice after bankruptcy is available from more than one source. The attorney who helped to file the case in the first place would be the logical first choice for guidance. Where an individual filed on his own (not usually the best way, but for some it can be done), then finding an attorney who handles these cases would be a good beginning. In addition, there are a number of consulting companies who will help a person with financial problems without charge. Conservatism in financial matters is the logical first approach to regaining financial stability in life after bankruptcy. Separating what is needed from the wants in one’s life can put things in perspective. Simplifying life helps not only on the financial level, but on the spiritual as well by relieving the stresses that come with money problems. Jesus helped his disciples not to rely on money for their security: “And commanded them that they should take nothing for their journey, save a staff only; no scrip, no bread, no money in their purse;” (Mark 6:8)

One unalterable fact that results from bankruptcy is that the proceeding stays on the debtor’s credit report for ten years. Anyone the debtor approaches for credit will see that when they do a credit check, and many times it is enough to result in a turn down. There are ways to overcome that handicap. One thing that can be done is to get a prepaid credit card from the bank. Put in a given amount of money into a special account, have the bank issue a credit card up to that limit, and use it for purchases. This will help to re-establish a good credit record. Life after bankruptcy might also include getting a mortgage loan for extra cash for purchases. As long as the borrower is gainfully employed, this could give a person the “leg up” needed to begin the climb back to credibility where money is concerned.

Life after bankruptcy isn’t altogether bleak. There are lenders that will look further than the legal proceeding to make their decisions on lending to someone who has taken that route. Car dealers especially, are often willing to work with post-bankruptcy customers because transportation is necessary for them to work. The drawback is, the interest will likely be a little higher than for the person who has a better credit record. Also, for things like clothing there are second-hand shops that carry some quality clothing for a fraction of what would be paid in the retail stores. Financial advice after bankruptcy will largely be a matter of taking a different view of the world. The kind of car one has been used to, and the clothes a person wears may have to be adjusted. Eating out may become a rarity, along with other sorts of entertainment.

If a person filed for relief because of job loss, financial advice after bankruptcy may come in the form of suggestions for classes that will prepare a person for a different line of work. These can be arranged without cost to the student under certain government and private organizations that work with various campuses, or student loans may be obtained that won’t have to be paid back until the student is gainfully employed at whatever he has prepared himself for. Also included in advice after bankruptcy may be greater cooperation in the family. Where children are old enough to hold down part-time jobs, they can bring in needed cash. If a spouse has not been working, perhaps that will have to change. All of this will be temporary until the breadwinner is once again gainfully employed. Life after bankruptcy sometimes means difficult choices.

Americans have become so accustomed to living above their means through the use of credit that it’s easy to understand how people wind up having to seek help through the court system. When debt reaches the level where no matter how hard the debtor works he cannot keep up with the burden, there is little alternative. Financial advice after bankruptcy can be an enlightened time if the debtor is successful in changing his attitude toward spending and saves more. This change in attitude, along with learning how to budget what is coming in constitutes the most important points stressed when someone offers advice. Finding a source for this kind of advice is not complicated. Attorneys are listed in most phone books, and of course there is the Internet search that is available to those having computers. No one has to face post-bankruptcy problems alone.

Removing Property Liens in Chapter 7 Bankruptcy

Removing Property Liens in Chapter 7 Bankruptcy

By Jacqueline S. Edington, Paralegal

            Normally a second mortgage lien can not be removed in a chapter 7 bankruptcy.  However, if the creditor has put a “judgment” lien on the home instead of a “mortgage” lien; it can be done.  We recently had a debtor who is buying a home valued at $250,000, due to the first mortgage, there is no equity available.  We made a Motion to Remove Judicial Lien based on this fact.  The creditor made no objection in the proper time allotted and the Motion was granted.  The lien was for $59,000.  Because a creditor made a mistake, it lost out on recovering money loaned.  Perhaps not surprising to realize, creditors make mistakes like this all the time.  Simply researching your client’s case and reviewing any liens involved could save your client a vast amount of money. 

            In another instance, we had a debtor who filed a chapter 7 bankruptcy and discovered that a creditor had put a lien on the debtor’s property for an above ground pool.  A pool is collateral in itself; it is never acceptable to place a lien on someone’s property for a secured item.  We thought at first to file an adversary proceeding against this creditor until realizing that the client had a second mortgage on his home that was wholly unsecured by lack of equity in the property.  By converting this client to a chapter 13 case, we can remove the second mortgage and the lien for the pool.

            Many times, some analytical thought regarding a client’s circumstances and petition can lead to money saving solutions such as these.  It is well worth spending extra time on a case to insure a debtor can indeed obtain a fresh start by filing bankruptcy.

Is Debt Relief Legal through Bankruptcy?

Is Debt Relief Legal through Bankruptcy? If you are deciding about declaring bankruptcy, then probably you are suffering from major financial problems due to unforeseen circumstances. Usually, we do not incur debt that we feel certain we will not pay. We incur debt with the purpose of making repayment. While abuse of the system is of concern and there are those who use bankruptcy to wipe their slate clean just to fill it up again, this is not what your average bankruptcy filer does.

Bankruptcy is a legal vehicle that gives relief to individuals and businesses in serious financial crisis and protects their creditors to the extent possible. Generally, the bankruptcy process assesses the debtor’s assets and liabilities and provides a structure within which the debtor is permitted to keep some, and in most cases, all property and ordered to satisfy as many qualified debts as possible, according to an order of priority established by law. Remaining debts are discharged, except those of certain types, like domestic support orders, debt obtained by fraud and most tax debt.

The purpose of a Chapter 7 bankruptcy is to provide debtors with a fresh start by removing or liquidating debts. Based on the Reform Acts means testing some debtors are presumed able to repay a part of their debts when their median income for their family size exceeds certain levels. The bankruptcy code was made to provide debt relief to those who have run into financial difficulties and either needs a fresh start or time to pay off their current debts. Debt relief is provided by the bankruptcy process but it does not come without strings. A bankruptcy filing will stay on your credit record for up to 10 years, as well, not all debts are qualified to be expunged through bankruptcy. You may be in need of debt relief but before you reject other options you should confer with a bankruptcy attorney your specific debts.

Chapter 13 bankruptcy is designed to allow you to catch up your past due payments that accumulated before the filing of your petition by repaying them over a 36 to 60 month period. At the same time, the debtor is restarted in their current obligations going forward and must remain current on those obligations to experience the continued protection of the bankruptcy automatic stay against foreclosure and repossession of secured collateral such as a home or a car.

The prospect of losing your job while facing unmanageable credit card debt can be a difficult and stressful time in one’s life. Seeking debt relief through bankruptcy is legal; it is the best choice under difficult circumstances for many individuals and companies. Most likely, debt relief is the treatment of a “disease,” and if the disease is not cured from the roots, any treatment would be useless. The organization would enter consultation with the lenders on behalf of the debtor and work out either a small per-month installment toward the complete liquidation of the loan or agree to allow one or two large installments as debt settlement.

Bankruptcy proceedings often contain complex legal issues that can be difficult and overwhelming to handle alone. It is essential that you seek knowledgeable counsel who will protect your legal rights and patiently handle your concerns. For more information about bankruptcy, visit http://www.onlinebkassist.com.

Pre-Bankruptcy Leased Vehicles Purchased After Expiration of the Lease: Are Such Agreements Enforceable?

It’s common for persons to lease a motor vehicle, rather than to purchase it using a traditional vehicle loan.  It’s also common for such persons to file chapter 7 bankruptcy before the vehicle lease is finished.  Often the debtor will continue making the payments on the vehicle, retaining it until the end of the lease term, without entering into a formal reaffirmation agreement with the lender (the “ride through” option).  Often the lease will contain a provision allowing the debtor to buy the vehicle for a predetermined price at the end of the lease term.  If the debtor buys the vehicle, financing is often obtained by the debtor from the same bank that financed the lease.

This presents the question whether the new loan is enforceable against the debtor in the event of a default, or whether the new loan is invalid for failure to comply with the bankruptcy code’s rules governing reaffirmed debts.  Section 524(c) provides:

(c) An agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based on a debt that is dischargeable in a case under this title is enforceable only to any extent enforceable under applicable nonbankruptcy law, whether or not discharge of such debt is waived, only if—

(1) such agreement was made before the granting of the discharge under section 727, 1141, 1228, or 1328 of this title;

(2) the debtor received the disclosures described in subsection (k) at or before the time at which the debtor signed the agreement;

(3) such agreement has been filed with the court and, if applicable, accompanied by a declaration or an affidavit of the attorney that represented the debtor during the course of negotiating an agreement under this subsection, which states that— (A) such agreement represents a fully informed and voluntary agreement by the debtor; (B) such agreement does not impose an undue hardship on the debtor or a dependent of the debtor; and (C) the attorney fully advised the debtor of the legal effect and consequences of— (i) an agreement of the kind specified in this subsection; and (ii) any default under such an agreement;

(4) the debtor has not rescinded such agreement at any time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later, by giving notice of rescission to the holder of such claim;

(5) the provisions of subsection (d) of this section have been complied with; and

(6) (A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an agreement under this subsection, the court approves such agreement as— (i) not imposing an undue hardship on the debtor or a dependent of the debtor; and (ii) in the best interest of the debtor. (B) Subparagraph (A) shall not apply to the extent that such debt is a consumer debt secured by real property.

If the vehicle lease was reaffirmed according to the requirements set forth in section 524, then there is little doubt that a subsequent purchase loan is enforceable.  However, if the lease was not reaffirmed, then an argument can be made that when the lender extends new credit to finance the purchase of the formerly leased vehicle, for the price specified in the discharged lease agreement, the consideration for this purchase is now based “in whole or in part” on the discharged lease agreement.

This brings the new, post-bankruptcy vehicle purchase loan within the ambit of section 524(c), at least where the new lender is the same entity to whom the debtor owed the payments under the discharged vehicle lease, and where the purchase price is dictated to the debtor by the old lease.

Debtors who lease a vehicle and then purchase it later, after the bankruptcy is discharged, should be aware of this avenue of attack on the new loan’s validity, in the event of a default on the new loan.  Even better is to avoid purchasing a leased vehicle which might be no more than an unpleasant reminder of the debtor’s prebankruptcy financial affairs.

Student Loan Discharge Case Heard by U.S. Supreme Court

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Earlier this month the U.S.  Supreme Court heard arguments in a case involving the question of discharge of student loans in a Chapter 13 case.   The case arose from a Chapter 13 petition filed in 1992 by Francisco Espinoza, an American Airlines baggage handler.

Mr. Espinoza’s story began in 1988.  Sensing that airline baggage handling was not a great long term career, Mr. Espinoza enrolled  in a technical school to learn computer drafting and design, and he financined his education with a student loan.  Unfortunately, he was not able to find a job using his new education and he found himself in a financial bind when American Airlines froze wages and reduced his hours.

By 1992, Mr. Espinoza found himself living paycheck to paycheck and unable to pay down his $13,000 student loan.  At that point, he contacted a lawyer and filed a Chapter 13 bankruptcy.   The Chapter 13 plan prepared by Mr. Espinoza’s lawyer provided for full payment of the balance due on the student loan over the term of the plan but it did not provide for payment of $4,000 in accrued interest or for future interest.

The student loan lender was given notice of this plan provision and did not object.  The bankruptcy judge to whom Mr. Espinoza’s case was assigned issued an order of “confirmation” that formally approved the plan.   Mr. Espinoza dutifully sent in his trustee payments and approximately 5 years later, after payments were made per the confirmed plan, the judge issued a “discharge order” declaring debtor Espinoza free and clear of all debt.

In 2003 and 2004, Mr. Espinoza’s student loan creditor renewed its efforts to collect the student loan debt interest.  The creditor contends that the Bankruptcy Code does not permit the discharge of any part of student loan debt unless the debtor files a special lawsuit in his bankruptcy case to ask for a finding of “undue hardship.”  The creditor contends that a bankruptcy  judge cannot discharge student loan debt or interest on a student loan debt through a confirmation order in the absence of a hardship discharge finding.

The United States government, 24 states and the student loan lending industry are supporting the student loan creditor in this case.   You can read the court documents and more information about the Espinoza case by clicking on the link.  The Supreme Court’s decision in this case is expected within the next few months.

I will be very surprised if the Court rules in favor of the Espinoza position.  The Bankruptcy Code seems fairly clear in placing the burden of showing undue hardship on the debtor – to make a non-dischargeable debt dischargeable because the lender did not object to a provision buried in a Chapter 13 plan seems contrary to the plain language of the code.  It will be interesting to see what happens.

Declaring Personal Bankruptcy

There are many reasons why people consider declaring personal bankruptcy. Unexpected medical bills, a job loss or difficult divorce can quickly put a strain on a person’s budget. Money goes out faster than it comes in. Checks start to bounce, creating even more fees and debt. The spiral is overwhelming. But crisis is not the only cause of serious debt. Many young graduates enter the work force with high hopes and small salaries that just don’t keep up with their spending habits. Some reach adulthood never learning to manage the balance between incoming and outgoing funds. Regardless of the reason, some people see their situation as hopeless and declaring personal bankruptcy the only option.