Category Archives: Chapter 13 Bankruptcy

Can My Chapter 7 and Chapter 13 be Denied by the Court?

Bankruptcy filings result in the discharge of debts in the majority of cases, butsometimes the application for the bankruptcy discharge is rejected. As a result, you won’t get any legal protection to prevent creditors from collecting their debts.

What you will read below are some of the situations when a bankruptcy court may decide to reject the application for a discharge from debt.

1. Not Declaring All the Assets

U.S. Code § 727 is strict about any abuse of the system. You need to be transparent and declare all your assets. Falsifying any assets may result in rejection of the application. If the court finds that the application does not declare all possessions and property, and intends to defraud, hinder, or delay payment to the creditor, the bankruptcy application will be rejected.

The court could also reject your application if it’s found that you have destroyed or transferred property to avoid payment to the creditors.

2. Not Complying with the Court Order

You need to comply with every court requirement after you have filed a bankruptcy application. If you don’t comply with the court orders, such as not filing required documents or paying prescribed fees, your application for Chapter 7 or Chapter 13 may be rejected by the court.

3. Failing the Eligibility Criteria

Certain requirements are present for a person to be eligible for bankruptcy protection. The requirements for Chapter 7 are stricter than that for Chapter 13 protection. In order to qualify for Chapter 7 bankruptcy, you need to meet the income test criteria.

The income test involves assessing your income, the median income, and the number of individuals in the household.

If your medium income is more than the median income for a similar number of household in the area, your application for bankruptcy will be denied. In this case, you can file for a Chapter 13 bankruptcy protection, instead.

However, only Individuals or sole proprietorships are allowed to file Chapter 13 bankruptcy. Partnerships and companies are not eligible for this protection. Moreover, the unsecured debts should be less than $394,725, and secured debts should be less than $1,184,200 to become eligible for Chapter 13 bankruptcy.

4. Not Showing Proof of Tax Filing

You need to show proof of your tax filings when you submit a bankruptcy petition. You should show that you have paid state and federal income taxes for the past four tax years before filing the bankruptcy petition. Your case for bankruptcy could be rejected if you don’t show copies of transcripts or returns for the previous four years.

5. Not Attending First Meeting of Creditors

Every bankruptcy applicant needs to attend First Meeting of Creditors. Not attending the meeting may result in rejection of your application. In case of filing a joint petition, both the partners must appear in the court.

6. Not Taking Required Instructional Courses

The US Bankruptcy Code also requires that applicants of Chapter 7 and 13 bankruptcy plan take two instructional courses. The first course is a credit counseling course that must be taken before filing an application. The second course is a financial management course that must be completed after the case is filed. Both the courses are the requirement for getting bankruptcy protection. The cost of the courses can vary from $10 to $100 depending on the location where you file.

Most of the applications for bankruptcy are accepted. However, lack of honesty or not fulfilling the court requirements can result in rejection of the application. You should consult with a professional bankruptcy lawyer to increase your chances of a successful bankruptcy application.

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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.

How Does Chapter 7 and Chapter 13 Affect My Garnishment?

Garnishment is a legal process that allows creditors to deduct money from a debtor’s wages or a bank account. If you are facing severe financial difficulties, you may be able to prevent creditors from garnishing your wages by filing for bankruptcy.

But how does a bankruptcy affect your garnishment? Will you receive back money from the court when you file bankruptcy, and going bank how long? Will the trustee let you keep the money once you file? You will find the answers to these questions here in this article.

How a Bankruptcy Affect Garnishment?

After filing for bankruptcy, you will be protected from the creditors. The court will notify your creditors about the bankruptcy filing preventing them to collect any debt.

Your garnishment will be affected differently depending on the type of bankruptcy you file. Here are the ways in which your garnishment will be affected by a Chapter 7 and Chapter 13 bankruptcy.

Garnishment when Filing Chapter 7 Bankruptcy

The court imposes an automatic stay on your creditors after you file a Chapter 7 bankruptcy. Your creditors won’t be able to collect any debts from you. They will be ordered by the court to immediately stop any wage and bank account garnishment.

Garnishment when Filing Chapter 13 Bankruptcy

When you file a Chapter 13 bankruptcy, all debt collection actions including garnishment must be stopped by creditors. The debts are reorganized in order to be paid over a period of three or more years. However, any remaining debts after the completion of the payment period will be discharged by the court.

You can also get bank money garnished by creditors in certain situations after filing a bankruptcy. While the specific rules differ in each state, generally, you can get back the money, if:

  • The debt is dischargeable, or exempted in the bankruptcy petition
  • Money was garnished within 3 months (90 days) of filing for Chapter 7 or 13 bankruptcy
  • The amount taken was greater than $600

Other Things to Remember Regarding Garnishment and Bankruptcy

Keep in mind that it may take a few days to a few months before you can get back the garnished money. Also, you should remember that there are certain exemptions to this rule — most notably student loans and child support collections.

Furthermore, whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, the Trustee has the legal right to claim the money. In most cases, the Trustee does not claim the garnished money that you get back unless the amount is greater than $2,000. But if the Trustee makes a claim, the amount will be used to pay back your creditors.

Lastly, you should remember that if your bankruptcy request is denied within a year of filing, an automatic stay will last for 30 days. The automatic stay won’t kick in when you file a bankruptcy for a third time during a year.

Contact a professional bankruptcy attorney to know more about how a bankruptcy will affect your garnishment. An experienced attorney will offer you qualified legal guidance based on your specific situation.

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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.

How Do Judgement Liens Affect a Bankruptcy?

A judgement lien is a court ruling that gives security interest to a creditor against a debtor’s property. Once a creditor obtains a judgement lien, the property can be sold to fulfill debt obligations.

An important question that comes up quite often when filing a bankruptcy is: how does a bankruptcy affect a debt that is now a judgment lien? In this article, you will learn what happens to a judgement lien after filing for a bankruptcy, and also whether you can avoid it.

Here are some important facts that you should know regarding bankruptcy and judgement Liens.

1. Judgement Lien is Not Discharged After a Bankruptcy

Judgement liens generally pass unaffected after a bankruptcy discharge. The lien will not be released until the debt has been repaid by the debtor.

A bankruptcy discharge only gets rid of a debtor’s personal liability. A lien on a property that is liable for fulfilling debt obligations will remain.

2. Debtor Must Make a Request to Avoid a Lien

While a judgement lien is not discharged, a debtor can file for a formal motion in the bankruptcy court to eliminate the judgement lien. The motion should specifically mention the statutory elements as per the Bankruptcy Code that gives the right to the debtor to avoid the lien.

A bankruptcy judge may grant the request to avoid judgement lien in case the following two conditions are met.

  • The judgement lien was ordered on debt that was presented before you had filed for bankruptcy
  • The property does not have a significant equity to pay the judgement lien

Remember that the right to avoid judgement lien is available for both Chapter 7 and Chapter 13 bankruptcies. If you have filed Chapter 7 Bankruptcy, you should check the “Property is claimed as exempt” on the Statement of Intention to claim the exemption.

Sometimes a judgement lien is overlooked when filing a bankruptcy, and it pops up only when you are about to refinance or sell a house. In such as a case, you need to reopen a bankruptcy case to gain exemption.

An order to void a judgement lien may take about 45 to 60 days after filing a motion. So, you need to plan appropriately. In case you can’t wait long to refinance or sell your house, you should consider requesting an escrow to hold the money until a court order is made in this regard.

3. Statutory Judgement Liens Cannot be Eliminated

Statutory judgement liens cannot be eliminated in Chapter 7 bankruptcy. For instance, you cannot claim exemption from tax liens when filing the bankruptcy.

In a Chapter 13 bankruptcy, you can avoid statutory tax liens if the lien is greater than the value of the underlying asset.

Summing it All Up

Judgement liens are not eliminated after filing for bankruptcy. The liens survive the discharge during a bankruptcy. However, you have the right to request for the lien to be voided.

You can request a court to void a judgement lien on a property that has little or negative equity. A professional bankruptcy lawyer will help you make a successful request in court. The legal professional can advise you whether you can eliminate the judgement lien by filing a motion.

Getting the help of a professional bankruptcy attorney will be worth it as it will help you in keep possession of your property when 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.

Meeting of Creditors: What is It and How do I Prepare?

Everyone who files for bankruptcy must attend a meeting of creditors. Attending the meeting is a mandatory part of any bankruptcy proceeding in the US. Your application for bankruptcy will be denied if you don’t attend the meeting.

Here you will learn what is the Meeting of Creditors and how you can prepare for one after filing a bankruptcy plan.

Meeting of Creditors: An Overview

The Meeting of Creditors takes place between 20 to 45 days after filing for bankruptcy. The meeting is carried out to confirm that the assets you have disclosed in your bankruptcy petition are complete and accurate.

This meeting is also known as 341 Meeting of Creditors. The meeting is aptly named since it is required by section 341 of the Bankruptcy Code.

The meeting is generally held in a federal building, but it does not take place in the courtroom. Most likely you may be required to meet in a conference room. The Bankruptcy Trustee will conduct the meeting. While creditors may be present in the meeting, but this is not always the case.

How to Prepare for the Meeting of Creditors?

Here are some of the important things you need to do before you attend the Meeting of Creditors.

1. Verify Information

Before attending the meeting, you should verify that all the information in the application is accurate. Make sure that the personal information in the bankruptcy petition matches with the state issued identification card.

Also, you should double check that you have listed all the assets in the application. This is critical as your application will be rejected if you don’t declare all your assets.

2. Gather Required Documents

You should have with you all the documents that are mentioned in the letter sent by the Bankruptcy Trustee. The following are some of the documents that are generally required for the meeting.

  • Pay stubs
  • Tax returns (last two years)
  • Mortgage documents (copies)
  • Car titles
  • Property deeds

Apart from the above, you may also be required to bring documents that can be used to check your identity. These include government ID that mentions the name and social security number, driving license, US passport, resident alien card, etc.

3. Anticipate Questions

The Trustee can ask you anything during the Meeting of Creditors. However, generally, the question relates to the declared assets.

You may be asked to confirm under oath that you have declared all your assets. You may also be asked that all the information in the bankruptcy petition is accurate. You will be asked whether you want to make any changes in the document.

The Trustee may also ask if you have any claims such as personal injury or worker compensation claims. As well as if you have read the information in the Bankruptcy information statement and know the difference between different types of bankruptcy such as Chapter 7., 11., and 13.

Final Remarks

A Meeting of Creditors is a mandatory requirement when filing a bankruptcy application. The aim of the meeting is to ensure that the applicant has divulged all the information, and also that he/she understands the procedure moving on forward. The meeting is not a cross-examination but an attempt to ensure the applicant is honest and fully understands the purpose of filing bankruptcy.

You should consult with a professional bankruptcy lawyer. An experienced bankruptcy attorney will provide you detailed information and fully prepare you for the Meeting of Creditors.

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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.

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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 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.

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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 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.

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 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.

What is a Reaffirmation Agreement in a Bankruptcy?

Many times when a person files a Bankruptcy, the bank will send him or his attorney a document called a “reaffirmation agreement.” With this, the bank is asking him to reaffirm the mortgage debt if he wants keep his home.  Many times the reaffirmation agreement will include better mortgage terms than the original note—this is done by the bank to induce your agreement.

Under the law, when one is in a bankruptcy, he is not required to reaffirm this debt or any other, but it is another option for him to keep his home. One should file the signed reaffirmation agreement with the court prior to the discharge, or within 60 days after the 341 creditor’s meeting. If one reaffirm’s his mortgage note and then goes into default because he cannot afford to make the payments, he will be liable for the note even though he had filed a Chapter 7 Bankruptcy.

There are instances when mediation is better for a homeowner than signing a reaffirmation with the bank (see below, for discussion on mediation).  For example, sometimes a person can discharge his mortgage note in a bankruptcy and then continue on to mediate the terms of his monthly payment, even though he may not liable for the note if he defaults; whereas, if a person signs a reaffirmation agreement, he will still be liable for the mortgage note if he later defaults.

Summary

When a homeowner is in bankruptcy, he may sign a reaffirmation agreement; many times, the terms in the reaffirmation agreement will be better than the original note.  There are instances when it is better for a homeowner to mediate his mortgage terms in court than to sign a reaffirmation with the bank in 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.

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