Chapter 13

Published on: September 16, 2015

Are you smart for filing Bankruptcy?

Filing for bankruptcy can be a very smart decision, but it is not a smart decision for everyone. Many different factors must be taken into account before making the decision to file for bankruptcy and it is a decision that should not be taken lightly.

First you should consider all possibilities that could get you out of your current debt situation. One possible alternative is to come up with a repayment plan based on your current income. This approach basically allows you to make a little progress with each paycheck you receive. You will most likely be living paycheck to paycheck, but if you are in a lot of debt, you are probably already doing this. If you think this approach is possible for you, you must then consider whether you can emotionally deal with the lingering debt and harassing telephone calls you most definitely receive from your creditors until you have paid everything off. This could last for years and take a toll on your mental and physical health. If you think you can do this financially, but do not believe you can handle the mental or physical stress that comes with it, then this approach may not be a good one for you.

If the above approach is not for you, then you might want to consider filing for bankruptcy, but you must first fully understand which chapter of bankruptcy you are eligible to file and how bankruptcy will affect your debts, assets, future, and health. There are generally two types of bankruptcies an individual files. The first is a Chapter 7, which is a strict liquidation of your assets and a wiping out of your debts, and the second is a Chapter 13, which is a reorganization of your debts. Which chapter you are able to file mostly depends on your household income and family size.

Continue reading →

Published on: September 14, 2015

Self Created Impossibility of Compliance with Bankruptcy Court Orders is not a Valid Defense

By Kendal Schoepfer

For years people have turned to asset protection trusts and offshore accounts to protect their assets. While a trust can be a great estate-planning tool to protect your assets, off-shore accounts and trusts used to defraud your bankruptcy trustee could place a you in some very hot water. Oftentimes trustees of a trust will not distribute funds because they are able to withhold a distribution at their own discretion and a foreign bank may make the same claim.

On the outset this might seem like a great idea: the bankruptcy court cannot force the legal entity or bank to present the money and therefore the debtor doesn’t technically have to turn the assets over to the bankruptcy estate. However, a bankruptcy court will usually remedy this situation by holding the debtor in civil contempt until the repayment has been made. This means that if a trustee or bank refuses to make a distribution, the debtor could face a lot of jail time.

Another similar issue has become more frequent in bankruptcy court. In the case of In Re 1990’s Caterers LTD., a debtor admitted he had received money from a property auction that was owed to the bankruptcy estate. However, at the subsequent contempt hearing the debtor said he had spent the money so there was nothing left to turn over. The court was then presented with the issue of whether the debtor’s inability to return spent money excused the debtor from civil contempt and incarceration.

Continue reading →

Published on: September 11, 2015

Can I Get a New Car Loan During my Chapter 13 Bankruptcy?

By Kendal Schoepfer

A Chapter 13 Bankruptcy lasts for 5 years and a lot can happen in that time! You started bankruptcy with a car that was in good running condition and you thought it would last for at least the duration of your bankruptcy, but all of a sudden it breaks down and is extremely expensive to fix. The cost to fix the vehicle is just about what the car is worth!!! You decide it would be a smarter decision to just get a new car, but you would have to obtain financing and wonder if you can acquire a new car loan while still in your Chapter 13 Bankruptcy? In addition, you have also been informed that you must first obtain the court’s permission; is this true? The answer is you may possibly be able to obtain a new car loan, but there are a few additional steps to complete first, and then yes, you will need to motion for the court’s permission.

The key to being able to obtain a new car loan while in a Chapter 13 Bankruptcy is demonstrating to the court and trustee that it is absolutely necessary, that the cost of the new vehicle is reasonable and that the interest rate is fair. For example, you need a reliable car to get back and forth to work in order to make your Chapter 13 Plan Payments, but that luxury vehicle is not an essential. Your trustee understands this and wants to help you successfully complete your Chapter 13 Bankruptcy, but will not allow you to set yourself up for failure by obtaining a car loan you can’t afford. In other words, as long as the new car loan payments do not affect your Chapter 13 Plan Payments, then your trustee will most likely allow you to obtain the new debt.

Sine it can be difficult to obtain a loan from a conventional lender while still in bankruptcy (most do not understand the process of obtaining a loan while in bankruptcy or just do not want to take the risk), you will most likely need to contact a lender who specializes in financing for those who are in bankruptcy. They will need documentation from the court in order to provide you with the needed financing.

Continue reading →

Published on: September 4, 2015

My Car Payments are Current. Will I be Able to Keep it if I File Bankruptcy?

By Kendal Schoepfer

Most likely yes. Regardless of whether you file a Chapter 7 or a Chapter 13 Bankruptcy and this is why.

Chapter 7 Bankruptcy

When you file a Chapter 7 Bankruptcy with a leased or financed vehicle, you simply need to reaffirm the debt in order to keep it. If you are current on your monthly payments, you simply continue to make your payments and the vehicle lessor or financer will provide you with a Reaffirmation Agreement for you to sign. Once executed, it will be filed with the court. By reaffirming the debt, you are agreeing to remain liable for the full amount you still owe on the vehicle despite filing bankruptcy.

Continue reading →

Published on: September 1, 2015

How Can Bankruptcy Stop a Wage Garnishment?

By Kendal Schoepfer

What is Wage Garnishment and how does it work?

Wage garnishment is a court order that compels your employer to deduct a certain amount of money from each paycheck you receive and send it directly to your creditor until your creditor is paid in full. Luckily there are limits set by law on the amount of money that can be garnished from each paycheck.

Florida requires your creditor to first obtain a judgment from a court before they can request a wage garnishment. Once a judgment order has been obtained, your creditor files a Motion for Continuing Writ of Garnishment with the Court. The Court then provides a Continuing Writ of Garnishment Against Salary or Wages, which is served on your employer. Your employer then has 20 days from receiving it to file a response with the Court. Your employer’s answer must state whether or not they are in fact your employer, as well as the frequency of your pay periods and the amount of your salary and wages. The writ then directs your employer of where to send the withheld money and how much shall be withheld. The only instances where your paycheck can be garnished without a judgment from the court is when it is for debt owed for income taxes, child support, or student loans.

Continue reading →

Published on: August 26, 2015

Jointly Held Property in Bankruptcy

By Kendal Schoepfer

Many people who are considering filing bankruptcy are very concerned about their property jointly owned with a spouse, sibling, or other person. These are real concerns as a bankruptcy filing could cause a joint-owner to lose his or her interest in the property. The exact affect a bankruptcy filing may have depends on who the joint-owner is, how the property is titled, and your state’s exemptions.

The most commonly held joint-property is property held by a husband and wife. In Florida, property owned by a husband and wife is presumed to be by Tenancy by the Entirety unless specifically specified otherwise. This type of joint ownership protects the property from the bankruptcy estate if only one spouse is filing bankruptcy and there are not any unsecured joint debts. Property held by a husband and wife as joint tenants with the right of survivorship is not afforded this type of protection.

The second most commonly held property is property inherited by siblings from a passing parent or other family member. Unless the property can be protected by a bankruptcy exemption, your siblings or other family member could lose their title to the property due to a bankruptcy filing. Unfortunately, the bankruptcy court does not care how you acquired the property. It could be through a gift, inheritance, purchase, etc., but once you have acquired the property, you have acquired it, and it is part of your bankruptcy estate. This means that if it is not protected by an exemption, the trustee could ask the court to order the sale of the property in order to settle your debts. This causes your joint owners to lose their title to the property. This is true for property held as joint tenants, joint tenants with the right of survivorship, and tenants in common.

Continue reading →

Published on: August 19, 2015

Filing Bankruptcy after receiving a Chapter 7 Discharge

By Kendal Schoepfer

Recently, I have been receiving inquiries from clients regarding filing bankruptcy after having already filed a Chapter 7 Bankruptcy and receiving a discharge. If you have already received a Chapter 7 Discharge, you can most definitely file bankruptcy again. BUT, you must obey some very specific time limits.

If you filed a Chapter 7 Bankruptcy and received a discharge, you:

CANNOT file another Chapter 7 for eight (8) years from the date of your Chapter 7 filing.

Continue reading →

Published on: August 12, 2015

Lien Stripping: Can I get rid of my second mortgage through bankruptcy?

By Kendal Schoepfer

In Florida lien stripping is the practice available through bankruptcy, which allows you to remove liens that are entirely unsecured from your homestead property. An entirely unsecured lien is referred to as a “wholly unsecured lien” in bankruptcy. If a lien on your property would not receive any proceeds from a foreclosure sale because there would not be any proceeds remaining after the first lien holder was paid, then the lien is wholly unsecured. In other words, if you owe more on your first mortgage than your property is worth and you also have a second or third mortgage, your second and third mortgages would be wholly unsecured. Who your first mortgage holder is depends on when each mortgage was recorded in the public record.

If filing a Chapter 13 Bankruptcy and you ask the Court to strip your wholly unsecured mortgage, then your wholly unsecured mortgage becomes an unsecured debt. Unsecured debts are debts such as credit cards, medical bills, utility bills, etc.; any debt that is not secured by an asset such as a car or home. Just like all other unsecured debts, your stripped lien receives little or no money through your Chapter 13 Plan. Once your Chapter 13 Plan is completed and you receive your discharge, then the stripped lien is also discharged and the lien holder must remove their lien from your property.

Unfortunately, lien stripping is not available when filing a Chapter 7 Bankruptcy due to a recent ruling from the United States Supreme Court.

Continue reading →

Published on: August 7, 2015

I can’t make my Chapter 13 Plan Payments! Can I reduce my payments?

By Kendal Schoepfer

When you file a Chapter 13 Bankruptcy you must remain on a repayment plan for at least 3 to 5 years in order to receive a discharge. However, life happens and the repayment plan payments may become impossible to keep up with. If this happens, you might be able to apply for a modification.

Because a Chapter 13 Bankruptcy lasts for such a long period of time, it is natural that a debtor’s life will go through changes during the duration of the plan. Things can happen such as a job loss, illness, or an unexpected emergency that can have an affect on a debtor’s ability to make their payments. If you find yourself in this situation, you may be able to petition the bankruptcy court for a modification of your monthly payments.

When a debtor begins the bankruptcy process, he or she files with the court and provides to the Trustee lots of information that help you, the Court, and the Trustee figure out your Chapter 13 Plan. Among these documents is your proposed Chapter 13 Plan. Prior to confirmation, your proposed plan is essentially in a temporary probationary period until the Court, the Trustee, and your creditors have a chance to review, or reject to the proposed plan. If no one objects, or the objections are resolved, then the court will finalize the plan. This is known as confirmation.

Continue reading →

Published on: August 4, 2015

How to avoid a short sale deficiency judgment

By Kendal Schoepfer

A short sale can be a great solution for a homeowner who is having trouble making his or her mortgage payments. A short sale is when a bank agrees to accept a sale price that is less than the full mortgage amount owed in order to avoid foreclosure. However, homeowners that complete a short sale are often surprised to find out months or even years later that their lender is seeking a deficiency judgment against them.

What is a deficiency judgment? Since the sale price is less than the full amount owed on the mortgage, the difference between the total debt owed and the sale price is known as the deficiency. In some states, the lender can seek a personal judgment against you after the short sale to recover this deficiency amount. If this judgment is entered against you, then the lender may collect this from the borrower by garnishing wages or levying the debtor’s bank account; Florida is one of these states.

The good news is there are ways to avoid a deficiency judgment after a short sale. One of the best methods is to negotiate a full waiver of the lender’s right to seek a deficiency judgment while negotiating the short sale with your mortgage holder. If the lender agrees, then the provision will be included in your short sale agreement. The agreement must state the transaction is in full satisfaction of the debt and that the lender waives its right to the deficiency.

Continue reading →