Tag Archives: Cleveland Ohio

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 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.

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.

________________________________
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.

________________________________
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.

© 2018 Eli Tamkin | Cleveland Bankruptcy Lawyer | Cleveland Foreclosure Defense Lawyer | Legal Disclaimer | Site Map

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code as well as provide other representation.


The Law Offices of Eli Tamkin
850 Euclid Avenue, Suite 1021, Cleveland, OH 44114
(216) 333-1294-Tel | (866) 827-1288-Fax | emt@tamkinlaw.com