Category Archives: Questions

Frequently Asked Questions category on the bankruptcy and foreclosure defense blog will explain answers to common questions about debtor defense.

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.

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.

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.

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 Mediate My Foreclosure Case if a Sheriff Sale Has Already Been Set?

Yes.  The Court may approve your request to mediate even though a sheriff sale has been set.  While the mediation will not stop the sale, that sale will not be approved or “confirmed” by the Court.  The Court will first wait to see what the outcome is of the mediation; ie., whether a deal can be worked out with the bank.

Nevertheless, you should still check the court’s docket periodically because at times the court can make a mistake and still confirm the sale. This has happened to me on occasion and I have had to file motions to vacate the sale in emergency hearings.

Summary

While mediation will stop the foreclosure process, it will not stop a sheriff sale; that sale goes forward as scheduled, but the court will generally not confirm the sale and will wait to see the outcome of the mediation.

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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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