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What Can Happen to Me If I Hide Assets when Filing a Chapter 7?

Filing for a chapter 7 bankruptcy helps a debtor discharge debt and get a fresh start. The bankruptcy protection essentially wipes out most debts. However, when filing this repayment plan, you must list all your assets and liabilities in the paperwork. Failing to do so can land you into legal trouble.

Here we will explain the legal repercussions of hiding assets when filing for chapter 7 repayment plan.

Legal Repercussions of Hiding Assets Explained

Hiding assets means not divulging all assets in the Schedule of Assets section of the bankruptcy petition paper. Many debtors hide assets in various ways.

  • Lying about the asset’s ownership
  • Transferring of an asset to another person
  • Creating fake documents to show the asset has zero value

Here are some of the things that might happen if you hide assets when you file for a repayment protection plan.

Reverse Decision to Discharge Debts

When hidden assets are discovered, the trustee may reverse the decision to discharge debts. The trustee may order to take back all or some of the debts up to one year after the discharge date.

As a result, you will still owe the debts that you wanted to discharge by filing for Chapter 7 repayment plan. In addition, you won’t be able to discharge these debts in subsequent bankruptcies.

Sell Assets

The trustee may also order to sell the assets that you had tried to hide. The proceeds from the assets will be used to discharge the debts. Moreover, you will owe any debts that are left over after that. In this way, you may lose ownership of your personal assets such as your house or a car.

Criminal Charges

When you file for a bankruptcy protection, you state that all information is true and accurate. In case hidden assets are discovered, later on, you could face a criminal conviction for committing bankruptcy fraud. This can result of imprisonment of up to twenty years, a fine of up to $250,000 or both.

An exception is when you had made a genuine mistake when filling the paperwork. The trustee would understand if you are able to convince him that you had no intention of committing a fraud. For this, you need to hire an experienced bankruptcy attorney. A bankruptcy lawyer will help convince the court that no deception was attempted and that assets were not divulged due to confusion when filling the paperwork, if that is the case.

You should talk to an experienced bankruptcy lawyer before you file a Chapter 7 bankruptcy protection.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

When filing for Divorce, What Debts are Discharged in Chapter 7 and Chapter 13?

In this article, you will learn debts that are discharged in these bankruptcy protection plans when filing a divorce.

1. Attorney Fees

Attorney fees incurred during a divorce case can be discharged in Bankruptcy.

2. Non-Divorce Related Debts

Chapter 13 allows you to discharge certain non-support related divorce debts. For instance, debts that relate to the division of property can be discharged under the protection plan. Other types of non-support related debts that can be discharged include the following.

  • Debts incurred for the malicious and willful destruction of property that does not result in personal injury
  • Debts incurred due to divorce proceedings
  • Debts incurred due to the payment of non-dischargeable tax obligation
  • Retirement account loans
  • Certain fines owed to the government
  • Homeowner association fees after the filing date

The above debts can be discharged under the Chapter 13 protection plan as ‘general unsecured debt’. However, these debts cannot be discharged in case of a Chapter 7 bankruptcy. In addition, you should note that support-related debts such as alimony, child support payments, can be paid over a period of time in Chapter 13 but not in Chapter 7.

3. Joint Marital Debts

Joint marital debts can be discharged in Chapter 7 and Chapter 13 bankruptcy case after a divorce. But the divorce decree should contain the language that the partner will hold harmless or indemnify the other party to a joint debt. If no such provision is made in the divorce settlement, the other partner who has not filed for a bankruptcy protection plan will still be liable.

Summing it Up

Chapter 13 bankruptcy option plan helps more in easing the personal and divorce debt burden. Under this protection plan, you can also stop your partner from putting a lien on your home for payment of non-support financial obligations. In this way, you will be able to make payments on your home loan. These obligations are not discharged in a chapter 7

To understand the best option for bankruptcy protection when filing a divorce, you should speak to an experienced bankruptcy attorney.

_____________________________

Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

What Kinds of Debts are Discharged in a Chapter 7 Bankruptcy?

Bankruptcy can be a solution for solving financial problems faced by individuals and businesses.   It is sometimes the only workaround to the debt problem. Financial experts recommend considering this option as a last resort to ease the debt burden.

In a Chapter 7 bankruptcy, a lawyer will represent you in the court to discharge debts. Debts that are discharged no longer require any payment. This will ease the burden of having too many debts that you cannot repay.

An important consideration when choosing Chapter 7 bankruptcy is the kinds of debts that will be discharged. Here you will learn about the debts that can be discharged when you file.

Debts that Can be Discharged in a Chapter 7 Bankruptcy

You can discharge certain pre-petition debts when you file for the bankruptcy protection. Pre-petition debts are those obligations that have incurred before the filing date. Some of the pre-petition debts that you can discharge include the following.

  • Medical bills
  • Credit card debt
  • Personal loans including car, truck or other vehicle loans
  • Promissory notes
  • Lines of credit
  • Mortgages including second and third mortgages
  • Certain lawsuit judgments
  • Obligations under contracts and leases owed by a sole proprietor including residential and commercial property leases
  • Unsecured business debts owed by a sole proprietor to consultants, suppliers, and professionals such as architects or accountants.

All the above types of debts are dischargeable under the Chapter 7. Once you file the protection plan you may be able to discharge these loans. It’s advisable to contact a professional bankruptcy lawyer who can help you discharge maximum loan amount.

Debts Not Dischargeable Under Chapter 7 Bankruptcy

You should also know about the loans that can’t be discharged when you file for the Chapter 7 bankruptcy plan. Post-petition loans that you rack up after filing the paperwork are not dischargeable. In addition, certain financial obligations can’t be discharged whether you obtain them prior to or after submitting the paperwork for initial bankruptcy, such as:

  • Alimony
  • Child support
  • Student loans (unless there is extreme hardship)
  • Fines and penalties owned to government
  • Payment for driving under the influence
  • Divorce settlement agreements
  • Loan from pension plans
  • Personal injury judgments

You should discuss your options with a professional bankruptcy law attorney.

_____________________________

Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

What are the Benefits of a Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows the debtor to pay some or all of the debts. The debts can be paid over a period of three to five years as per a court-approved repayment plan.

The decision to file a Chapter 13 Bankruptcy should be weighed carefully. You should consider the benefits before making a move. Here are five benefits of this debt relief option that you should consider to make an informed decision.

1. Flexible Payment Terms

The trustees of chapter 13 bankruptcy are usually flexible about payment terms. You may be allowed to reduce debt payments, extend the payment period, or give up an asset that you are making payments on.

When you file a chapter 13 bankruptcy, you may also consolidate some debts. The debts can be reorganized into one affordable payment that you can pay in up to five years.

2.  Bankruptcy Shown on Credit Report

An advantage of chapter 13 bankruptcy over chapter 7 bankruptcy is that it’s shown on the credit report for a lesser period.

With chapter 7 bankruptcy, bankruptcy is shown in the credit report for 10 years. On the other hand, it’s shown for just 7 years in the chapter 13 bankruptcy. As a result, creditors will know about the bankruptcy for a longer period if you file chapter 7 bankruptcy as opposed to a chapter 13 bankruptcy. This is important since the report is viewed by house loan, vehicle loan, and credit card companies.

3. Save Your Property

Another benefit of a chapter 13 bankruptcy is that you may be able to save your home if you file before the foreclosure date. The mortgage payments due known as arrearages can be paid back over a period of three to five years.

In addition, if you have a second or higher mortgage, you may only have to pay the first mortgage through a process known as ‘lien stripping’.  To become eligible for this option, the home value must be equal to or lower than the amount owed on the first mortgage when the bankruptcy was filed.

4. Lower Payments

In some cases, chapter 13 bankruptcy will reduce the balance owned. In this way, you can continue to make payments for your personal loans such as a car loan. It will prevent repossession of your asset and you can catch up on the loan payments.

5. Reduce Tax Amount

Your taxes can be paid through a chapter 13 payment plan. The IRS will not hound you to make payment in full, and accept the amount is agreed by the bankruptcy court.

Eligibility for Chapter 13

Only individuals can file for chapter 13 bankruptcy. Businesses are not allowed to file for this repayment plan. However, sole owners and partners can file for the relief option individually.

To be eligible for the chapter 13 bankruptcy, you must have enough income to repay the debts as per a court-approved repayment plan. In addition, unsecured debts must be less than $394,725 to be eligible for chapter 13. For more information about the other benefits and also the eligibility criteria, you should contact a professional bankruptcy law attorney.

______________________

Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can I Keep My Tax Refund if I File a Chapter 7 Bankruptcy?

If you are contemplating about filing for a bankruptcy, you probably have a lot of questions regarding the aftermath. At the top of the list will probably be questions about your tax refund.

Before you file, it’s important you understand that it could affect your refund. In this article, you will learn how chapter 7 could affect your tax refund and also what measures you can take to protect it.

Tax Refund and Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, a court-appointed trustee who is a representative of your creditors will collect your assets and liquidate them. The proceeds are used to pay your creditors.

All your assets will be transferred to the bankruptcy estate when you file chapter 7. This includes both tangible assets like your house and car, and intangible assets such as tax refund that is owed to you, but not yet paid.

If you have filed at a time when a tax refund is due, the trustee can claim it or a portion of it along with other assets. Even if your tax return is to be prepared a few months after filing, it will be claimed by the trustee if the refund is owed to you.

The fact that you didn’t know that a tax refund was due does not mean that a refund is not due.

How to Prevent Your Tax Refund from Being Transferred to a Trustee?

Proper timing is important if you want to protect your tax refund. You can prevent your refund from being collected by the trustee if you receive and spend the refund BEFORE you file a Chapter 7 as long asyou spend the money for necessities and you do not pay back money you owe to relatives, and also you do not pay back any creditor more than than the usual payment.  Be prepared to tell the trustee how you spent the money at the 341 creditor’s meeting.

However, you should consult with a bankruptcy attorney before using this strategy to protect your refund. You can easily spend the refund in ways that may seem sensible but can raise red flags upon close evaluation.

Another way you can protect your tax refund after filing for bankruptcy protection is through exemptions. Congress and state laws have established exemptions. The federal or state exemptions can be claimed by filing Schedule C: The Property You Claim as Exempt (individuals).

You can use cash-on-hand exemption ($475..00) or wildcard exemptions ($1,250.000) for protecting your tax refund, However, you can use the exemptions only if they have not been used to exempt other assets. Also, you should note that to claim exemptions in a particular state, you must have lived in the state for about two years prior to filing for bankruptcy.

Moreover, earned income credit (EIC) and child tax credit (CTC) are exempted from the bankruptcy estate without the need to claim them. EIC is a benefit for individuals with low to moderate income. On the other hand, CTC provides a credit of up to $1,000 per child under the age of 17.

You should consult with an experienced Cleveland bankruptcy lawyer to understand you options about protecting your tax refund when filing a chapter 7.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience as an attorney in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can Taxes be Discharged in Bankruptcy?

It is a general misconception that taxes can’t be discharged in bankruptcy. While you cannot eliminate all taxes, there is a possibility of discharging some.

In this article, you will know the cases when you are allowed to reduce your tax liability in bankruptcy.

Taxes in Bankruptcy: What You Should Know?

Bankruptcy can provide you relief from the tax debt. How much relief you can get depends on different factors. Some of the factors that determine which taxes can be eliminated include the following.

  • Age of taxes — The tax amount due that you wish to discharge must be due at least 3 years before you file for bankruptcy.
  • Assessment of taxes — The IRS must have assessed your income tax due at least 240 days before filing for bankruptcy.
  • Type of taxes involved — Only income and sales taxes can be discharged in bankruptcy. You cannot discharge other types such as payroll or property taxes when you file for bankruptcy.
  • Timely submission of taxes —The tax return for the amount due must have been filed at least 2 years prior to filing a bankruptcy petition.
  • Apart from the above rules, you should also note that bankruptcy won’t help if a person has tried to evade taxes using a fake social security number or other fraudulent manner in the past. However, this exception applies only to willful evasion of taxes. If a person has made an honest mistake in entering the wrong information, the tax liability can be discharged through bankruptcy.

Another important thing you should note is that you can’t eliminate tax lien on your property when you file for bankruptcy. You need to pay the tax lien if you want to sell your property. However, the IRS sometimes agrees to lift the lien. You can request the IRS to lift the lien by filing tax Form 12277.

 

Final Remarks about Taxes in Bankruptcy

Taxes in bankruptcy is a complex topic. Make sure that you have all tax records before filing. The court will ask you to submit a copy of the most recent tax return.

Getting the help of a bankruptcy lawyer will help you navigate through these complex laws

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

What Happens to All my Debts on My Credit Report after I File a Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy is a viable option when you’re overwhelmed with financial difficulties. It releases you from personal liabilities for most debts, depending on your financial situation. However, before you file, you should know about the aftermath.

One important question that you need to consider when filing a Chapter 7 is what happens to your debts on your credit report. Knowing the answer to this question will ensure that you don’t face unexpected financial problems after filing.

Debts on Credit Card Report After Chapter 7 Bankruptcy

After you file a Chapter 7 bankruptcy, there is a Stay imposed by the Court whereby creditors are prohibited from engaging in any more collection activities.  About 3 months after you file, or about 2 months after the 341 creditors meeting, the Court will issue an order, discharging you of you debts.

But discharge of a debt after a Chapter 7 does not erase your financial history.

All your debts will still show on your credit report. However, the report will also show that your debts are discharged and you have zero debt.

But why are your debts shown in the credit card report? Shouldn’t the debts be wiped out from the credit report once they are discharged?

To understand why credit card report shows discharged debts, you should know the purpose of the report.

Information in the credit report is used by credit agencies to assess your credit worthiness. In order to help credit agencies to properly assess your risk, the credit reporting agencies don’t wipe out debts that are discharged in bankruptcy.  The debts will remain in the credit report for 10 years after filing for bankruptcy protection.

How Will Bankruptcy Status Affect Your Credit Score?

A  bankruptcy can have a negative effect on your credit score;  However, it is possible to Repair your credit score over time. The most effective way to restore your credit score is for a creditor to report to the credit bureau that you paid a bill. . You should consider paying your bills as early as possible as this will have a major impact on your credit score.

In conclusion, a bankruptcy will have a negative impact on your credit score. But the negative consequence will wear off with time, and you will be able to rebuild your credit. For more information on how debts will affect your credit history after filing a Chapter 7, you should contact an experienced Cleveland bankruptcy attorney.

A bankruptcy lawyer will help you not only discharge debts quickly, but also provide guidance on how to improve your credit score. You can get information on how to discharge both secured and unsecured debts by filing a Chapter 7.  Moreover, he will assist you in removing false status reported in your credit report. This is a time-consuming and extremely difficult process that can only be solved with the help of an attorney.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can I Keep My Car if I File a Chapter 7 Bankruptcy?

Chapter 7 bankruptcy involves the discharge of most, if not all, debts. The code gives power to the trustee to liquidate i.e. sell your assets, and give the proceeds to your creditors; however, depending on the value of your car, it can usually be saved when you file.

Let’s take a look at how you can retain your car in two different situations when you file for Chapter 7.

Scenario 1 — You Own Your Car or Have Outstanding Loan on Car

In case you own your car or have an outstanding loan on the vehicle, you can keep your vehicle if the equity value (after deducting the amount of the lien) is $3,750.00 or less.  That is the value in a car that is exempted or protected under the U.S. Bankruptcy Code for a car that you are currently driving. In considering the value of your vehicle, the trustee will take into account its condition as well as the number of miles you have on it.   If the value is greater than $3,750.00, the trustee may require you to pay him that additional amount, and use the proceeds to pay off your creditors.

If you are financing your car, subtract the value of the car from the amount you owe; as long as the remaining equity is $3,750.00 or less it will be protected under the Bankruptcy Code. If the equity in your car is over $3,750.00 it is possible the trustee will make a claim on your vehicle, and may require you to pay him that amount above.

If you are financing your car, and you want to keep it the car financer will require you to sign a Reaffirmation agreement.  By signing this agreement, you are reaffirming your car loan and agreeing to pay the car loan installments after the Bankruptcy. You are not required to sign a reaffirmation Agreement and you can instead surrender the vehicle and discharge the debt.

This agreement must also be approved by the Court.  For the Court to approve it, you must show that you can afford to make those payments; otherwise, the court can disapprove the agreement and you may lose possession of your car even if the value is under $3,750.00. You also have to maintain your regular payments and keep the car  insure if you want to keep your vehicle. You may want to consult a Cleveland bankruptcy lawyer about your options.

               

Scenario 2 — You Have a Leased Vehicle

If you have a leased car when you file for Chapter 7 bankruptcy,  you can continue that lease if you want.  You must sign a form known as the Statement of Intention for Individuals Filing Under Chapter 7 with the Court.  This form must be filed no more than 30 days after filing a petition.   This form should also be signed if you want signed a security agreement for furniture and jewelry and you want to keep those items after filing

The statement of petition tells the trustee what you want to do with the unexpired car lease.

  • You can decide to keep the lease and continue making timely payments until the lease expires.
  • You can reject the lease and let your creditor repossess your car. This is a good option if you have excess mileage or car damage since you will not be responsible for further installment and fees if you reject the lease.

Before filing for a bankruptcy protection, you should contact a qualified attorney. He will help you explore your options so you can keep possession of your car when you file.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

If the Bank Denies my Modification, what are My Options?

If the Bank denies your loan modification and you still want to keep your home, a  Chapter 13 may be an option; however, you will still need to show the U.S. Trustee that you can both afford to stay current on your mortgage payments as well as pay off your prearrange (the amount you are behind) over a 3 to 5 year period (see below for discussion on Chapter 13).

If you really cannot afford to keep your home, you should look into options to avoid the sale of your home at a sheriff sale, such as a deed in lieu or a short sale. If your home is sold at a sheriff sale, you will be liable to the bank for the total amount of the Court’s Judgment (the payoff); in addition, the foreclosure will hurt your credit score.

Summary

If a person does not qualify for a loan modification and still wants to keep his home, he can consider a Chapter 13 Bankruptcy.  If he cannot keep his home and wants to be free of liability on the mortgage note, he should look into a deed in lieu or a short sale
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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

The Court Approved My Request to Mediate; can the Bank still Refuse to Modify My Loan?

Yes. Getting the court to agree to mediate your case does not always mean that the bank will modify your mortgage note. Even if court approves your request to mediate, the bank will still want to verify through financial documents that you can afford your loan.

There are Federal programs which may assist a homeowner to qualify for a loan modification. For example, there is the HAMP program, or Obama Plan, where the bank will try to lower ones mortgage payments to 31% of his gross income. However, a person may still not qualify under this if his total debt to income ratio is beyond 55%. There is also a new program called “Hardest Hit” whereby an individual hardest hit by this economy may qualify for government subsidization of his mortgage payment; however as of the writing of this pamphlet, the terms for qualification of the program have not yet been determined.

If a person’s income is high enough that he does not qualify for one of the above Federal Programs, he may still qualify for an “in house (bank)” modification; however the bank may still deny the loan modification if the payoff of the home far exceeds the appraised value.

If the bank does not approve your loan modification, your case will go back onto the Court’s foreclosure docket and your home may be sold at a sheriff sale.  If you cannot keep your home should still consider doing a short sale or deed in lieu to try to avoid  liability on the note.  Because of the various obstacles involved with mortgage modification, it is important to seek the advice of an attorney with strong experience in these matters.

Summary

When determining if a homeowner qualifies for a loan modification, there are various questions and issues that arise, namely, first, whether a person qualifies under a Federal program; if a person does not because his income is too high, then he may qualify for an “in house” modification; but the bank may still deny the modification if the payoff of the home is well above its appraised value.

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Attorney Eli Tamkin is a Cleveland bankruptcy Lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

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