Tag Archives: chapter 7 bankruptcy

Understanding Chapter 7 Bankruptcy

If you are in Ohio and are contemplating about filing a bankruptcy under chapter 7, you need to understand some of the statutes under this chapter. In essence, a Chapter 7 bankruptcy is known as liquidation wherein as a debtor, you will be able to pay off all your debts by selling all your assets and dividing its proceeds according to the number of creditors. A court appointed trustee will be selected by the bankruptcy court that will serve as the administrator of all your assets up until it is converted into cash and repay all your financial obligations. They will also have the major responsibility of monitoring the bankruptcy cases and supervising all activities between a debtor and his or her creditor.

 
If you receive a bankruptcy discharged, it means that the creditors are no longer legally allowed to collect the debts you accumulated and you are no longer compelled to pay back all your discharged debts once your bankruptcy case is over. However, not all debts are dischargeable. A creditor can object to the discharge of your debts if they have the reason to believe that a fraud was committed in connection with the filing of bankruptcy of the debtor. Also, there are debts that cannot be discharged such as payday loans or cash advances with a total of more than $925 obtained within seventy days prior to the filing of bankruptcy and purchase of luxury goods using credit cards among others.

 
Except in cases where the person in debt can prove remarkable conditions to bypass public policy, the following financial obligations are regarded as automatically nondischargeable:

 

  • Unscheduled
  • Debts for child support or alimony
  • Arrears to government agencies
  • Student loans with a few exceptions
  • Financial liabilities for personal injury obtained by the debtor while operating a motorized vehicle while intoxicated
  • Criminal restitution including court penalties and related fines

 

As discussed with your bankruptcy attorney, before an individual can file for Chapter 7 Bankruptcy, he or she is required by the law to meet the minimum amount of unsecured debt loads and must not exceed the amount of secured debts required by law. During filing, applicants are also required by Chapter 7 bankruptcy code to furnish a comprehensive proposal of repayment scheme and this can be done with the help of an experienced bankruptcy lawyer which has years of experience when it comes to performing his duties focusing on Chapter 7 bankruptcy. The debtor is also allowed to continue operating his business during the stage of Chapter 7 and this allows the debtor to engage in trading and selling even without the permission of the court which under any circumstance, cannot be done without the code of Chapter 7 that will be filed with the help of your bankruptcy attorney.

 
DESCRIPTION
This blog discusses the Chapter 7 bankruptcy as well as specific debts that are considered dischargeable and not dischargeable.

 

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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 Rehabilitate My Credit Report after Bankruptcy, and How?

Yes, you can rehabilitate your credit report after bankruptcy. Even though the bankruptcy details remain on your credit report for as much as ten years, you can immediately begin to improve your score after filing for bankruptcy. This is quite important considering the fact that credit companies, including car finances and mortgagors, will examine your credit report. Credit reporting companies generally look at your outstanding debt, your payment history, your length of credit history, and also how much new credit you are seeking; all of these are put together to determine your credit score.

 
The American economy in a sense is paradoxical: While one goes into bankruptcy because he or she has defaulted in paying off debts, one of the fastest means of rehabilitating your credit report is to spend even more and establish a better credit history. It is believed that your power to spend more after bankruptcy translates into increase earning power to show you are more credit worthy and responsible.

 
But before applying for new credit cards, try to purchase within your means, paying off your bills in full at the end of every month; the essential thing is to improve your repayment habit. Paying off debts in full when they are due, and making sure your debt is as low as possible when compared to your available credit, will enhance your ability to earn more, and that will put you in a better light when it’s time to borrow money. In other words, always try to spend within your means before you borrow more money. Adopting this approach when you assume more debt will help to rehabilitate credit report as you will make your payments in full and on time; and eventually, if this process is continued and improved upon, your credit report will become much better.

 
Talk to a professional bankruptcy attorney or credit counsel to properly guide you in your quest to rehabilitate and improve on your credit rating. Going into bankruptcy is not an end in itself, but an opportunity to make a fresh start, and will need to make wise financial short and long term decisions.

 
Summary
The blog explains that it is possible to rehabilitate and improve on the credit report. It also highlights the steps necessary to be taken to achieve this over time.

 

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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 the Trustee Take My Tax Refund?

Possibly, the trustee can take your tax refund according to the rules in Chapter 7 bankruptcy. This depends on whether the tax refund is protected under the Bankruptcy law by what are called “exemptions.” The trustee is like the lawyer for the creditors you who own the debt you are trying to discharge in your bankruptcy. His job, as their lawyer, is to try to get as much money from your assets so that he can to pay off the debts you are discharging; however, the law protects most of your non-luxurious assets in what are called “exemptions.” Exemptions are like pockets of money that the law allows you to keep, and which the trustee cannot take. These exemptions include $450.00 for cash, $1,225.00 for a wild card that can be applied across the board to any asset of you choice, child credits exemption and earned income exemptions. You can “stack” or add exemptions together to pay any single debt. Your attorney will try to protect your tax refund under one or more of these exemptions so you can keep as much of your refund as possible.

 

However, if your refund is above what is protected by these exemptions, the trustee may still be able to take the difference. To protect your tax refund from being collected by the trustee, wait to file until you collect it before filing for bankruptcy. In other words, once bankruptcy is filed, tax refunds automatically become liable for collection by the trustee for settling of your debts. Tax refunds which are from the prior year are included in the total property owned by you and are considered part of the assets to be used to service the debts. However, as stated above, you may be able to protect you refund or a large portion based on these exemptions.
There are different ways a trustee can attach a refund. In some cases, the refund is sent directly to you, and you will be expected to hand over the check to the trustee when you receive it. In other cases, the trustee notifies the Internal Revenue Service of your bankruptcy condition to intercept your tax refund; so, when it’s time to receive the tax refund, it goes directly into the trustee.
The best way to go about protecting your tax refund from being taken by the trustee is to talk to a Bankruptcy attorney before you file for Bankruptcy.
Summary
The blog explains that the trustee is authorized to take your tax refund unless it can be protected under exemption. Exemptions are like pockets of assets that the law allows you to keep which are protected from the trustee and from your creditors. It also advices you in such to seek the help of an attorney to better understand the whole process before you file a bankruptcy.

 

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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.

Means Test in Chapter 7 U.S. Bankruptcy Law

The Means Test is a method implemented under the new bankruptcy law to ensure that people who file for bankruptcy really cannot afford to pay their debts. The intent behind this law is to ensure that those individuals who really are in need, are afforded a fresh start under the law.

 
Under the means test an individual must determine his total gross monthly. The law includes virtually all income except payments you receive under the Social Security Act, such as SSI, SSDI, and TANF. Included also is the income that your spouse earns if you are living together, even though your spouse is not included with you in your bankruptcy . Under the means test, all of ones gross income is taken into account over the past six months to filing, and an average is taken. The larger your household, the larger that amount can be in order for you to “pass” the means test. The amount permitted for a household of your size is determined by the Census Bureau and the Internal Revenue Service.

 
The government computes the total gross amount you are permitted to make per month after taking into account the average necessary expenses for a household your size. If therefore, your household makes over this medium amount, you may still be able to file a bankruptcy by reducing your income with unusual necessary monthly expenses. Also expenses for your spouse can be included to reduce this total amount. If you pass the test you will be able to file a Chapter 7 bankruptcy. If you do not pass the test, you may still be able to file a Chapter 13 bankruptcy. If is important that you consult your eligibility to file a chapter 7 bankruptcy with a bankruptcy attorney to determine if you can pass the means test and will qualify to file a bankruptcy.

 
Summary
This blog discusses the means test and generally how one can determine if one’s income is under an amount determined for a household that is your size so that you will be eligible to file Chapter 7 bankruptcy.

 

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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 for Bankruptcy?

The law permits you to keep one vehicle whose value or equity after reducing any lien for financing is equal to $3,675.00 or less. You can determine the general value of your car by Googling NADA or Kelly’s Blue Book and checking it out there. The trustee may valuate your car differently than that amount, but it gives you a general idea as to the value. You should also reduce the value based on the number of miles driven and the condition of your vehicle. The vehicle exemption under Ohio law protects a vehicle with a value up to $3,675.00; you will be able to add onto that another exemption, called, “wild” car of up to $1,225.00.

 
If the equity in your car as discussed above is less than the combined exemptions listed, you will be able to keep your car. But if the equity in your is over that amount, and you still want to keep your car, then you may have to pay to the trustee the difference between the value and your exemptions. So, for example, if after your car is paid off in full from financing, it is worth $6,000.00; and you apply the car exemption of $3,675.00 and the wild card of $1,225.00, the total value of the car that will be protected totals $4,900.00. Subtract that amount from $6,000.00, the Blue Book value of your car. So in order to keep your vehicle, you will have to pay approximately $1,100.00. However, that amount may vary depending on how much the trustee has valuated your car. Usually the trustee allows installment payments to be made. If you do not pay the trustee, the trustee may file a motion in court to sell your car at an auction.

 
On the other hand, if your car is being financed you can also deduct the amount you owe on the note to further reduce the equity of the car. An important point to note is that you are behind in your car payments, a Chapter 7 Bankruptcy will only stall the collection proceedings temporarily, and the finance company may file a motion to repossess your car. Unless you get current on your payments before you file, the financing company may eventually repossess your vehicle, unless your Attorney works out a payment arrangement. A Chapter 13 bankruptcy on the other hand is designed to allow you to pay off the prearrange over a period of time, usually 3-5 years; in that case you would get long term relief for your car payments with a Chapter 13.

 
To get a better handle on what you are entitled to with respect of Ohio law and the total motor vehicle exemption ceiling, talk to an attorney proficient in bankruptcy laws and processes; this would give you a clear idea of what the status of your car before you file for bankruptcy.

 
Summary
The blog explains when the trustee can “take” your car and how you can avoid that. It avers that it depends on the condition of your vehicle at the time you file the bankruptcy and the exemptions that come into play to protect that 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.

Can I Disharge my Mortgage Note in a Chapter 7 Bankruptcy and Still Keep my Home?

Generally, yes you may if your loan is modified in mediation; but you should consult an attorney about your particular situation.  In many instances the bank will approve a loan modification even though you have already discharged your debts, including your mortgage note, in a bankruptcy; however, as will be discussed next, you will nevertheless be liable for that note if you sign a reaffirmation agreement with the bank during your Chapter 7 Bankruptcy.

Summary

While a homeowner generally can proceed to mediation after discharging the mortgage note in a Chapter 7 bankruptcy, there are exceptions to this rule, and one should consult with a bankruptcy 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 File a Bankruptcy and also Save My Home From Foreclosure?

Yes, you can file a bankruptcy and then afterwards try to mediate your mortgage note.

When you file a Bankruptcy,  all of your creditors must stop all collection activities, including the bank. This means that if there is a foreclosure against you that must stop, and your lawyer should tell the court about it. The bank will need permission from the bankruptcy court to foreclose on your home.

After the bank receives that permission and files a complaint, you can then request mediation from the court. However,  getting the Court to approve your request to mediate is only the first step; after that you must now get the bank to agree to modify your mortgage note.

Summary

The bank must ask the Bankruptcy Court for permission to file a foreclosure complaint against you. After you have been served with a complaint, you can then request the court to mediate.

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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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