Chapter 13

Published on: November 17, 2015

What is Regular Income for a Chapter 13 Bankruptcy?

In order to be able to file a Chapter 13 Bankruptcy, the United States Bankruptcy Code requires that you must be an individual and have a regular source of income. You must also have enough regular income to be able to make a monthly chapter 13 plan payment as well as pay your everyday living expenses. Specifically, Section 101(30) states “[t]he term `individual with regular income’ means individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13 of this title, other than a stockbroker or a commodity broker.”

Courts have unambiguously held that “an individual” precisely only refers to a flesh and blood human being. Thus, businesses are not eligible to file bankruptcy under chapter 13.

But what exactly is considered “regular income”? The best example of “regular income” would be salary employment, which has a predetermined compensation amount that is paid either monthly, weekly, bi-weekly or semi-monthly and earned during the normal course of employment. This is the type of person chapter 13 was originally designed for. However, there are many other types of incomes, many of which can also be considered “regular income.” Another easily identifiable type of “regular income” would be an hourly employee who has a set amount of hours they will work each week, but any income received from overtime or bonuses would not be included in determining the amount of your “regular income”.

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Published on: November 3, 2015

Can Bankruptcy resolve my personal business debt?

By Kendal Schoepfer

All too often business owners are forced to file personal bankruptcies when their corporation or LLC fails. This often comes as a shock to them as they thought they had shielded themselves from being personally liable for their business debts when they created their corporation or LLC.

There are many bankruptcy options for people with personal business debt. Which option is right for you depends on whether your business is a sole proprietorship, LLC or corporation; whether you are personally liable for your business’ debts; and what your goal is for your business moving forward.

The scenario we will address today is one in which you have a corporation that is liable for a few business loans as well as a couple of commercial leases. You no longer wish to continue operating the corporation, the corporation has no assets, and you want to make sure you cannot be sued personally for these debts. Unfortunately you personally guaranteed each debt, because you quickly found out that as a small business it is impossible to obtain a loan or lease without personally guaranteeing them.

Chapter 7 Bankruptcy

If your income is low enough to qualify for a Chapter 7 Bankruptcy, and most of your assets can be protected, a Chapter 7 is the easiest and fastest option for you. A Chapter 7 will absolve you of all personal liability for all of the corporation’s loans and leases as well as any personal credit card or medical debts you may have. However, the corporation will remain liable for the business debts, so it may make sense to also file a business Chapter 7 for your corporation. In addition, you may also want to speak with a CPA regarding the advantages of revoking your S-Election to become a C-Corporation prior to filing as you may trap forgiveness of debt income inside the business.

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Published on: October 29, 2015

Can I file Bankruptcy Again?

By Kendal Schoepfer

You have already filed and completed a Chapter 13 Bankruptcy. All of your unsecured debts have either been paid off or discharged and all of your secured debts (such as your mortgage) are current. You found the light at the end of your financial debt tunnel. In addition to your mortgage, you have been approved for a couple of new credit cards and a personal loan. You are able to make all payments very easily. Then, very unexpectedly, you are laid off from your job or are forced to take a pay cut. You can no longer afford to continue to pay your mortgage along with the credit cards and personal loan. Your creditors are already sending you harassing letters in the mail and calling your phone multiple times a day. You are devastated. You worked so hard to get out of your financial crisis only to find yourself in another one. You need bankruptcy protection NOW. You find out that your income is now low enough to qualify for a Chapter 7 Bankruptcy. So you think you’ll just file a Chapter 7 Bankruptcy, reaffirm your mortgage, and be ok. Right? You meet with a bankruptcy attorney to get the process started only to find out you cannot file a Chapter 7; at least, not yet.

The good news is that you can definitely file bankruptcy again, but there are very strict time limits that must be followed if you have already received a Chapter 13 discharge. In order to file a Chapter 7 Bankruptcy, you must wait 6 years from when you filed your Chapter 13 Bankruptcy, but you only have to wait 2 years from when you filed your Chapter 13 in order to file another Chapter 13. Therefore, you can usually file for another Chapter 13 immediately after receiving a Chapter 13 discharge, since Chapter 13 Plans generally last between three and five years.

In the above scenario, you filed your first Chapter 13 Bankruptcy on August 15, 2013. Today is October 29, 2015, just over 2 years later. Therefore, you cannot yet file a Chapter 7, but you can file another Chapter 13 in order to receive bankruptcy protection now from your harassing creditors.

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Published on: October 23, 2015

Homeowner Association (HOA) Fees and Bankruptcy

By Kendal Schoepfer

When filing bankruptcy, whether it be a Chapter 7 or a Chapter 13, and you own your home or some other piece of real property that has Homeowner Association (HOA) Fees, it is very important to understand what will happen to your past due HOA fees and your HOA fees that will become due after filing bankruptcy. Understanding what your responsibility will be regarding your HOA fees before and after filing bankruptcy, can help you determine when and if you want to file.

If you are behind on your HOA fees and choose to surrender your real property when you file bankruptcy, all HOA fees that became due before you file will be discharged through your bankruptcy. HOWEVER, all HOA fees that become due beginning the day after you file are not dischargeable. This means that you are no longer liable for the HOA fees you owed before the day you file bankruptcy, but you are responsible for all HOA fees that became due after you file.

This situation has been addressed by the 11 U.S.C. § 523(a)(16) of the United States Bankruptcy Code, which states “for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case.”

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Published on: October 20, 2015

What is a 341 Meeting and what should I expect?

By Kendal Schoepfer

A 341 meeting, also known as the “Meeting of Creditors,” is held roughly 30 days after you file a Chapter 7 or Chapter 13 Bankruptcy. A lot of clients feel very intimated about the thought of this meeting, but in reality, it can be quite short and very easy. Of course, this depends all on how well your bankruptcy petition was prepared and how truthful you were in your petition. In short, if you were truthful on your petition and prepared it to the best of your ability, then you should have nothing to worry about and your 341 meeting should go very smoothly.

What is the purpose of the 341 meeting?

The original purpose behind the 341 meeting was to give your creditors the opportunity to scrutinize your affairs. In other words, it is your creditors opportunity to try to find any assets you have that can be sold by your Trustee and then the proceeds dispersed amongst your creditors. However, in reality, creditors rarely attend these 341 meetings. Instead, it is another opportunity for the Trustee to ask you questions about your petition and the financial documents you previously provided to your Trustee. The Trustee is in essence searching for any asset you may have omitted accidentally or on purpose that can be sold to pay your creditors. Again, if you prepared your petition truthfully, then the meeting should not last very long.

Questions the Trustee may ask you at the 341 meeting.

It is always much less stressful going into an unknown situation if you can prepare yourself for it. Therefore, below is a list of questions the Trustee may or may not ask you at your 341 meeting.

State your name and current address for the record.

State your name and current address for the record.
Please provide your picture ID and social security number card for review.

a. If the documents are in agreement with the § 341(a) meeting notice, a suggested statement for the record is:

“I have viewed the original state of ________ drivers license (or other type of original photo ID) and original social security card (or other original document used for proof) and they match the name and social security number on the § 341 (a) meeting notice.”

If the documents are not in agreement with the 341(a) meeting notice, a suggested statement for the record is:

“I have viewed the original social security card (or other original document used for proof) and the number does not match the number on the § 341(a) meeting notice. I have instructed the debtor (or debtor’s counsel) to submit to the court an amended verified statement by [date], with notice of the correct number to all creditors, the United States Trustee, and the Trustee, and to file with the court a redacted copy of the notice, showing only the last four digits of the social security number, and a certificate of service.”

When the documents do not match the petition, the Trustee shall attempt to ascertain why, and shall report the matter to the United States Trustee.

If the debtor did not bring proof of identity and social security number, the Trustee shall determine why.

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Published on: October 17, 2015

When Do I Know it is Time to File Bankruptcy?

By Kendal Schoepfer

The thought of having to file bankruptcy can be very scary. There are a lot of unknowns at first. One of the biggest unknowns is determining when it is time to finally give up, throw in the towel and actually declare bankruptcy. Meeting with an experienced bankruptcy attorney can be very helpful, but if you are not quite ready to speak with an attorney, here are a few questions to ask yourself if you are trying to decide if you should file bankruptcy now.

Are you only able to make your minimum credit card payments or no payments at all?
Are your wages being garnished by a Wage Garnishment Order?

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Published on: October 13, 2015

What you need to know about bankruptcy?

By Kendal Schoepfer

Filing bankruptcy is definitely not an easy decision to make and should not be taken lightly. If you are considering bankruptcy, then you are probably already overwhelmed by your debt and having to make a very important decision, such as whether or not you should file bankruptcy, can be extremely stressful. However, the more unknowns you can uncover about bankruptcy while trying to make this very important decision, the more it can help elevate some of the stress. You might not even know what questions you need answered and; therefore, below is a list of some of things you might need to know that may give you somewhere to start.

You most likely have time to assess your financial situation before making your very important decision to declare bankruptcy. This is of course as long as you are not already facing a time-sensitive situation, such as a repossession or foreclosure.

If you are married, your spouse does not have to file with you. And, if you file without your spouse, your spouse’s credit will not be affected.

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Published on: October 8, 2015

How will Bankruptcy affect my current job and future employment?

By Kendal Schoepfer

Debtors often file bankruptcy too quickly without first considering what, if any, ramifications a bankruptcy may have on their current employment or future employment opportunities. Luckily, in most instances, filing bankruptcy should not affect your current employment, but could play a role when applying for a new employment opportunity and this is why:

If you file a Chapter 7 Bankruptcy it is actually unusual for your employer to find out that you have filed for bankruptcy unless a creditor has an active wage garnishment order against you. You will then have to inform your employer of the bankruptcy in order to stop the wage garnishment from continuing, but, in reality, if your employer was already served with a wage garnishment order, then they already know you have been having financial difficulties and may even welcome the bankruptcy.

If you file a Chapter 13 Bankruptcy your employer will still only find out of the filing if, like with a Chapter 7, you have a wage garnishment order against you. Your employer may also find out if your bankruptcy Trustee requires a wage deduction order. A wage deduction order requires your employer to deduct your monthly Chapter 13 Plan Payments from each of your paychecks and to send it directly to your Trustee in an attempt to help you keep your Chapter 13 Plan Payments current.

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Published on: October 1, 2015

Where do I file for Bankruptcy if I recently moved?

By Kendal Schoepfer

If you recently moved to a new state, figuring out where you should file bankruptcy and which exemptions are available to you can be a little confusing. The one thing that remains the same no matter where you live and when you last moved is that you will be filing your bankruptcy in the United States Bankruptcy Court, which is a federal court.

The simplest answer to this question is that if you have resided in your current state for the 180 days prior to filing a bankruptcy, then your current state is the proper place to file. Most states have a few different districts so you would just need to find out which district you are in. It becomes a little more tricky when you have resided in your new state for less than 180 days. If you fall into this classification, then the proper state for you to file your bankruptcy in is the state in which you resided for the greater period of time prior to filing. For example; you have lived in Georgia for the last 10 years, but relocated to Florida 2 ½ months ago. Since you have only resided in Florida for approximately 75 days, it is proper for you to file your bankruptcy in Georgia because you resided there for the majority of the 180 days prior to filing.

Once you have figured out which district you should file your bankruptcy in according to where you live and how long you have lived there, you now need to decide whether you should file bankruptcy now or whether you should wait. If you have just moved to a new state and do not yet qualify to file your bankruptcy in your new state, then you need to look at the exemptions each state offers along with what assets you are going to want to protect when you file. If your old state offers better exemptions that will better protect your assets, then you should probably file sooner rather than later in your previous state. But if your new state has better exemptions that will benefit you more, then you may want to consider waiting to file your bankruptcy until you have resided in your new state for at least 730 days (2 years). If you have resided in your new state for anywhere between 180 days and 730 days, then you will have to use the exemptions of the state in which you resided in for the greater part of the previous 180 days.

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Published on: September 30, 2015

Creditor Harassment During and After Bankruptcy

By Kendal Schoepfer

Creditor Harassment During Bankruptcy

When you file a Chapter 7 or Chapter 13 bankruptcy, something called an automatic stay is put in place as soon as you file. This Automatic Stay prevents your creditors from continuing to try and collect a debt from you, but unfortunately your creditors will most likely not stop harassing you and trying to collect from you the moment you file for bankruptcy. This is because it takes the Bankruptcy Court a few days to prepare your Notice of Bankruptcy and to then mail it to all of your creditors. If, however, your creditors continue to harass you after a reasonable time has passed for them to receive notice of your bankruptcy from the Bankruptcy Court, then they are most likely in violation of the Automatic Stay, provided the debt falls into one of the very limited exceptions: criminal matters, child support, alimony, taxes, certain evictions, ect.

So what should you do if a creditor is still harassing you? The first thing you should do is to let the creditor who is harassing you know that you have filed bankruptcy. You can do this verbally over the phone, or by writing. For example, you can write that you filed bankruptcy on their bill and mail it back to them. Letting the creditor know you have filed bankruptcy stops the contact in the majority of instances. These initial contacts from your creditors shortly after filing bankruptcy are generally just mistakes, which is often due to the creditor’s system not having been updated with the Notice of Bankruptcy they received. It is not yet time to be alarmed, but it is important to keep a log of their contacts with you.

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