dorota trzeciecka bankruptcy blog

Bankruptcy A-Z – I is for Individual Liability

Dorota Trzeciecka — Wed, 16 May 2012 15:44:58 +0000

This is a real question that someone posted on AVVO: I filed for bankruptcy and I was discharged. Why is the bank foreclosing on my home?

Here is why. When you sign loan documents for a purchase of a home, a car, a boat, or a motorcycle, you not only give the creditor a security interest in that property, but you also make yourself individually liable for that debt when you sign the note. What it means is that when you give security interest, you stand to lose the home, the car, the boat, or the motorcycle, if you won’t make the payments. But, at the same time, you make yourself individually liable for the debt, and the creditor can pursue you personally for any difference between what you originally promised to pay, when you signed the note, and what the creditor can recover from the sale of that property at an auction.

It is important that you understand this dual liability concept in the context of bankruptcy. When you file Chapter 7, commonly known as liquidation bankruptcy, only your individual liability is discharged. It means that the creditor cannot pursue you for any deficiency from the sale of collateral. But, the creditor can still foreclose on your house or repossess your car, boat, or a motorcycle, with the proper procedure called lifting of an automatic stay, because, in Chapter 7, you cannot discharge security interest that the creditor has in the property.

Bankruptcy Alphabet A-Z – H is for How to ensure a smooth sailing to discharge in Chapter 7

Dorota Trzeciecka — Wed, 02 May 2012 15:00:56 +0000

Disclose, disclose, disclose.

My yoga teacher always says “when in doubt stick it out”. He means “stick your butt out” to make a yoga pose smooth and easy. The same concept applies to bankruptcy – ”when in doubt, disclose it” - it will make your way to Chapter 7 discharge go much smoother. I am referring here to transfers of property and money that you may have made prior to filing, but you may not think of them as transfers. Let me give yo some examples. Signing a quit claim deed is considered a transfer in bankruptcy. Assigning your interest in a limited liability company to an insider is also considered a transfer. Sometimes, even a judicially ordered sale of your property, over which you had little control, may be considered a transfer, if made within 90 days of filing. And then, there are the more obvious transfers, for example, repaying a loan to your Mom within a year of filing bankruptcy, or making large payments to a single creditor within 90 days of filing. The trustee can sue Mom or the creditor and demand a turnover of these preferential payments, so that the trustee can use the money to pay other unsecured creditors in the case.

Failure to list such transfers on your petition can lead to a delay or even denial of discharge. Any creditor in the case can file an action against a debtor for denial of discharge in a separate adversary proceeding. Such lawsuits can not only prove expensive to defend, but can prompt an investigation by a trustee, and hold up your discharge. So when you are in doubt as to whether a transaction is a transfer, tell your attorney about it, and let him or her decide whether it is a transfer which should be listed on your petition for you.

If you need to learn more about bankruptcy topics beginning with a letter H, click on the links below.

Harassement by Creditors

Hardship Discharge

Hearing

Home is where the Heart is

Homestead

Honest but unfortunate debtor

How much is your home worth

Household median income

Home: Can the Trustee take it

Hope for refinance for underwater borrowers

Dorota Trzeciecka — Tue, 10 Apr 2012 03:30:07 +0000

When I called my mortgage company to request refinancing of my mortgage a couple of years ago, the mortgage representative told me that my house would have to appraise at $645,000 for me to qualify for a refinance. My house might have appraised at that amount during the 2006 housing boom, but clearly would not in today’s or 2009 real estate market. In short, I could not refinance and take advantage of record low interest rates, because my home lacked equity. But now, there may be hope for these homeowners who previously lacked the equity to refinance. The program is not new; it has been in existence since 2009 under the name of HARP, or Home Affordable Refinance Program. Only, it did not catch on — the lenders shunned away from it as too risky and too restrictive. So, last fall, the Obama administration revamped the program to encourage banks to work with underwater homeowners. The program eliminates, for example, the requirement that the loan could be no more than 125% value of the house. Fannie Mae and Freddie Mac, on their part,made the HARP loan application processing easier.

HARP is limited to loans owned or guaranteed by Fannie Mae and Freddie Mac, the big government-run mortgage companies. That includes about 60 percent of all mortgages. So, the chances are good that your loan falls into that category. To determine if you’re eligible, you can check your own mortgages at www.freddiemac.com/mymortgage or www.fanniemae.com/loanlookup.

There are other eligibility requirements for HARP, for example:

The existing mortgage must have been accepted by Fannie or Freddie before June 1, 2009.

The mortgage cannot have been refinanced under HARP previously. Fannie Mae loans refinanced from March to May 2009 are excepted and eligible.

The borrower must be current on the mortgage, with no late payment for six months and no more than one late payment in the past year.

To learn more about HARP, visit the government website at http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx.

Bankruptcy A-Z – F is for Filing Requirements

Dorota Trzeciecka — Mon, 19 Mar 2012 14:13:10 +0000

If you’re an individual debtor (as opposed to an entity, like a corporation), you will need the following to file a petition for Chapter 7 bankruptcy :

1. Filing fee of $306 (this fee can be waived if you qualify, or paid in installments)

*2. Voluntary Petition

Additional Requirements for Petitions:

A. If you’re an individual debtor, you must complete credit counseling before filing of the Petition

B. Completed Statement of Compliance with Credit Counseling Requirement accompanied by a certificate of completion of credit counseling within six months of filing of the petition. If you’re filing a joint case with your spouse, you have to file two separate Statements of Compliance.

B. If you’re filing pro-se (without an attorney) you have to provide photocopies of government issued photo identification at the time of filing of your Petition.

3. Completed Schedules A-J and related documents, including Summary of Schedules, Statistical Summary of Certain Liabilities and Related Data, and Unsworn Declaration Concerning Debtor’s Schedules

4. Completed Statement of Financial Affairs and Unsworn Declaration

5. Completed Chapter 7 Individual Debtor’s Statement of Intention, declaring your intention to either keep or surrender real property, personal property, like a car, or any unexpired leases, like a car, or a rental agreement on a place where you live.

*6. List of your Creditors (if your Schedules are not filed with the Petition).

Additional requirements (Filed Separately)

7. Official bankruptcy Form “Statement of Social Security Number”. this document will not be placed in public records.

*8. Creditor Matrix filed in accordance with the “Clerk’s Instructions for Preparing , Submitting and Obtaining Service Matrices.”

9. Local Form “Declaration Regarding Payment Adices” with attached copies of pay stubs or other evidence of payments received within 60 days before the date of filing of the petition. If you do not have copies, file the Declaration and explain the reasons.

10. Official Bankruptcy Form 22(A) – Statement of Current Monthly Income and Means Test Calculations for Use in Chapter 7 Only.

11. After the Petition is filed, you have to complete Personal FinancialManagement course and file the Official bankruptcy From “Debtor’s Certification of Completion of Post petition Instructional Course Concerning Peresonal Financial Management.

The local and the official bankruptcy forms can be obtained from the court’s website.

*minimum initial filing requirements

To learn more about bankruptcy topics beginning with letter F, follows these links.

Failure (and “The Fresh Start in Bankruptcy)

Future Flow Agreement

Free Bankruptcy Consultation

Bankruptcy Attorney Fees

Bankruptcy A-Z – D is for Domicile

Dorota Trzeciecka — Mon, 05 Mar 2012 04:39:50 +0000

Your domicile is where you are living, and intend to live for an indefinite time, even if you’ve been living elsewhere temporarily. Domicile may govern where you file your bankruptcy case, but most importantly, what state’s exemptions you can use in your bankruptcy case.

You can file your case in a bankruptcy court in the district where you “[have] been domiciled, [have] had a residence, principal place of business, or principal assets for 180 days immediately preceding the date of the petition or for a longer part of such 180 days than in any other district”.

Which state exemptions you may use are governed by these domicile rules:

If you have been living in your current state for two years, you must use that state exemptions. Each state has its own set of exemption rules, since Bankruptcy Code gave states the right to limit the use of federal exemptions;
If you have been living in your current state for less than two years, you must use the exemption of the state where you were domiciled for a longer part of 180 days immediately prior to two-year period preceding the filing of your petition. If that state permits only its current residents to use its exemptions, then you can use federal exemptions.
If you have been living in your current state for less than 91 days, than you have to wait until you have lived there for at least 91 days, to even file in that state , and then use the exemption rules in accordance with these domicile rules.
If the state where you are filing allows federal exemptions to be used, you can use these exemptions regardless of how long you’ve been domiciled in that state.
If your situation does not allow you to use any of these domicile rule, then you can use federal exemptions.

Domicile rules courtesy of NOLO Chapter 7 Bankruptcy.

To learn more about bankruptcy terms beginning with D, follow these links:

Bankruptcy A -Z – N is for Non-exempt Property

Dorota Trzeciecka — Sun, 05 Feb 2012 18:35:33 +0000

In bankruptcy, there are two types of property: exempt and non-exempt. Property is everything that you own. Exempt property is the property you’re allowed to keep when you file bankruptcy. The amount of what you can keep is limited by state and federal statutes. If you live in Florida, you have to rely on state exemptions, except as specified by Florida Statute 222.201, which allows you to keep, among others, public assistance benefits, like social security, unemployment, veteran’s, and disability benefits. The remainder of your property is the non-exempt property. Typically, the following property would be considered non-exempt, provided you have equity in it:

expensive musical instruments
expensive jewelry
computers, ipads, cameras, digital recorders
cash in bank accounts, stocks, bonds, and other securities in brokerage accounts
coin, stamp, and other collections
valuable family heirlooms
real estate investment property
boats, planes, motorcycles, antique cars, off road vehicles
vacation homes

You have to either buy it outright from a bankruptcy trustee, if you really want to keep it (the trustee will make you an offer), swap it in exchange for exempt property, or sell it before filing, and, with those funds, buy an asset that is exempt.

Chapter 13 may be another option for you to keep the non-exempt property. Chapter 13 allows you to keep your non-exempt property regardless of its value. But, you will be required to propose a plan that pays your unsecured creditors an amount that is equal to at least the value of your non-exempt property.

If you have a lot of non-exempt property, you should consult a bankruptcy attorney who can help you determine how much of your property is exempt, and plan for the ways you can keep your non-exempt property.

Here are more bankruptcy terms beginning with letter N:

Naked by Jay S. Fleischman

Never by William Balena

No Asset by Mitchell Goldstein

No Asset Report by Stuart T. Ing

Nondischargeable by Cathy Moran

Nondischargeable by Mitchell Goldstein

Nondischargeable Debt by Ryan D. Caldwell

Notice by Bob Doig

Bankruptcy Alphabet – C is for Costs

Dorota Trzeciecka — Sun, 22 Jan 2012 20:32:58 +0000

A question on the mind of most potential bankruptcy clients is “How much will this cost me?”. Whether you’re filing Chapter 7 or Chapter 13, the costs can be broken down into the following categories: attorneys’ fees, credit counseling and financial management fees, and court filing fees. In addition, if an amendment to your bankruptcy forms is necessary after filing of the original petition, amendment filing fees may apply.

Despite of what you may believe, bankruptcy lawyer fees are not fixed. Lawyers decide what to charge, based on the services they will provide and how complicated your case is likely to be. But, the fees do not go unchecked. Bankruptcy attorneys have to file a Disclosure of Compensation of Attorney for Debtor with the court disclosing the fee in each individual case.

There are two important things that you want to remember about attorneys’ fees. If you’re filing Chapter 7, your attorneys’ fees have to be paid in full by the time you file your petition. That is because no lawyer likes to become your creditor in Chapter 7 bankruptcy — they would likely not be paid for their services. It does not mean that you have to come up with the full amount of attorney’s fee for Chapter 7 all at once. Most lawyers will let you pay it in installments, up to the time of filing of the petition.

Chapter 13 fees, on the other hand, can be paid through your Chapter 13 plan, with or without a deposit at the start of the case. Chapter 13 fees are two to three times the amount of what the Chapter 7 fees are. They’re generally capped at a certain amount by the local rules and guidelines. For example in the Southern District of Florida, the standard attorney’s fees for a Chapter 13 bankruptcy are set at $3,500. Additional set fees may be allowed for filing any necessary motions, for example, a Motion to Value Real Property or PersonalProperty, without application to the court. Your retainer agreement should specify those services that are included in the standard fee and those set fees in addition to the standard fee. The court may award other fees by special application to the court only.

Before you can file petition for bankruptcy, you have to complete a mandatory credit counseling, and before your debts can be discharged, you have to complete a financial management course, at the fee ranging from $10-$45 each.

The court filing fees are $306 and $281 for Chapter 7 and Chapter 13, respectively.

Each amendment to your bankruptcy schedules in both Chapters is $30; this is in addition to the fees specified by your attorney for amendments.

Check out more bankruptcy terms beginning with C

Competence and Compassion

Cramdown by Stuart Ing

Cramdown by Mitchell Goldstein

Credit Card Tips

Credit Counseling

Credit Counseling by Daniel Winter

Creditor by Jay Fleischman

Creditor by Kurt O’Keefe

Creditors Meeting

Bankruptcy Alphabet – B for bad faith filing

Dorota Trzeciecka — Wed, 18 Jan 2012 03:07:45 +0000

Can I file Chapter 13 to stop a foreclosure sale to buy more time to work out a short sale with the bank, and then dismiss the case? This is a a real life question that keeps coming up more and more often in this new economic reality. The answer is “no”. Why? Because this is a classic example of bad faith filing. You take up precious judicial resources and exploit bankruptcy system for the purpose for which it was not designed. But, more importantly, it is because the Bankruptcy Code presumes any subsequent bankruptcy filing within the preceding one year period as being filed not in good faith. What it means is that, when you file a case, and your case is dismissed either by you, voluntarily, or by the court for failure to provide required documents, for example, any subsequent bankruptcy case that you may file within that same year is presumed to be filed in bad faith. The consequence of such filing is that the automatic stay, which protects you from certain actions by creditors when you file bankruptcy, is in place for only 30 days. Such actions may include foreclosure sale, vehicle repossession, filing of a lawsuit or proceeding with a pending lawsuit against you, recording a lien against your property, and seizing your personal property or income, such as garnishment of your bank account or your wages. To continue the automatic stay beyond the 30 days, you have to file a motion with the court, and show that your current case was not filed in bad faith. One of the factors that the bankruptcy court may consider in its decision on your request to continue the stay is, among other factors, whether or not you filed more than one prior bankruptcy in the past year.

So, if you’re remotely considering filing Chapter 13 to stop foreclosure to buy yourself more time to either negotiate a short sale with the bank, or to remain in your home, you should consider it very carefully, and explore other possible alternatives. Filing multiple bankruptcies can land you in a big trouble. When the court spots bad faith filers, it has the power to ban them from future filings, and refer them to the US Attorney’s Office for a perjury prosecution, if they made any significant misstatements in their petition.

If you’re interested in learning more about bankruptcy terms beginning with letter “B”, follow these links:

Bankruptcy Petition Preparers

Bar Date

Best Interest of the Creditors

Beware of these Credit Card Offers

Borrow

Business

Business Bankruptcy for Individuals

Business Bankruptcy

Buy Low Sell High

Bankruptcy Alphabet – A is for Amendment

Dorota Trzeciecka — Tue, 27 Dec 2011 18:16:53 +0000

I considered it very fitting to begin the bankruptcy alphabet with a word “Amendment” for the first letter of the alphabet. By amendment, I specifically mean amendment to creditor information. This topic is near and dear to my heart, and it underscores the importance of providing the correct and up to date creditor information to your bankruptcy attorney.

The correct creditor information is important for two reasons. First, it may affect dischargability of your debts. And second, it is costly and time consuming for your bankruptcy attorney to amend the creditor information after the original filing of the petition and schedules. But, most importantly, it translates into more money in attorneys’ fees and court costs for you to correct the information that you were required to provide to your attorney in the first place.

This is the reason why your bankruptcy attorney always asks for at least 2 statements from creditors, which you received during the last 90 days prior to the commencement of your case. This is not arbitrary — the notice provided to such creditors, in accordance with the information in such a statement, is presumed to be a good notice pursuant to Section 342 of the Bankruptcy Code. That section also instructs us that “[n]otice provided to a creditor by the debtor or the court [...] shall not be effective notice until such notice is brought to the attention of such creditor”. It means that if a creditor is not notified in accordance with that Section 342 of the Bankruptcy Code, you risk that one of your debts may not be discharged. If possible, you should always locate and turn over any communication from the creditor received during the previous 90 days. If that is not available, you should call the creditor, and request a statement to ensure that you have the most current creditor information.

Once the Petition and the Schedules are filed, the only way to amend, and to add creditor information is through the lengthy amendment process. This process involves amending the bankruptcy schedules, filing Notice of Compliance with the Requirements for Amending Creditor Information, filing new Declaration Regarding Electronic Filing (one that you have previously signed under penalty of perjury), and serving all these amended documents on the affected creditors. In other words, it means your attorney, and/or his staff, will have to spend time preparing all these documents for filing. For you, it means that you will have to pay for your attorneys’ time to do the amendment, and the court’s fee for processing the amendment.

E – is for equitable distribution

Dorota Trzeciecka — Tue, 06 Dec 2011 17:55:12 +0000

Equitable distributions are payments that a family court may order from one former spouse to another, and which are not in the nature of alimony and child support. They are named “equitable” because they serve to equally divide the marital property and financial obligations between the former spouses. Like alimony and child support, equitable distributions are not dischargeable in Chapter 7 bankruptcy, but may be dischargeable in Chapter 13. As it usually happens, there is an exception to this rule, as there is to most other rules. In Florida, that exception comes into play when “the court awards a cash payment for the purpose of equitable distribution of marital assets, to be paid in full, or in installments,….” According to Florida Statute sec. 61.075 (2), such equitable distribution award vests when the judgment is awarded. What does this mean to a former spouse, who was ordered to make a cash payment equitable distribution. It means that such equitable distribution is not dischargeable in Chapter 13. And, unlike alimony, it does not terminate upon remarriage or death of either spouse. At least one bankruptcy court in Florida (in an unpublished opinion in In re Rieger), interpreting section 61.075(2) Florida Statutes, ruled that ex-spuse’s equitable distribution, which vested before filing of the bankruptcy petition, had to be included in, and paid through, Chapter 13 plan.

Everything you need to know about bankruptcy that begins with the letter E: