Things to Remember when Surrendering your Home through Bankruptcy

Posted on March 14, 2013 by

Surrendering a home through a bankruptcy can seem like a simple solution to rid yourself of your responsibilities with a home; however, surrendering your home through a bankruptcy can become somewhat complicated.  One of the most important things to remember regarding surrendering a home is that even though you have surrendered your interest in the mortgage, your name is still on the deed of the house until it is foreclosed on and put into someone else’s name.  This means that even though you may not want the house, and may not even live in the house anymore, you are still responsible for the following things:

Continuing to pay any HOA (Home Owner’s Association) fees that are incurred post-filing.  While you may not be responsible for any unpaid HOA fees that were incurred prior to filing, you will be responsible for any HOA fees that are incurred AFTER filing.  This is important to remember because the home owner’s association can go after you for anything that you do not pay post filing.

Maintain insurance on the property.  Maintaining insurance on the property you are surrendering is extremely important because, as stated above, your name will still be on the deed of the house until it is foreclosed on and put into someone else’s name.  If something should happen to the house while it is still in your name, you are responsible for any damages.  TheSaint Louis and Southern Illinois area is notorious for poor weather conditions, so it is important to protect yourself and the property from any damages.

Maintain the upkeep of the property. While it may seem silly to go to your old home solely to mow the lawn, this is important to do until the home is out of your name.  Many towns and cities have codes enforced by ticketing that regard to the outside appearance of your home.  If multiple tickets pile up over time, police can even issue a warrant for your arrest to obtain those funds from you.  It is also important to remember to prepare the home for upcoming seasons.  Make sure the heat is on during the winter to ensure pipes do not freeze and/or burst, and in the summer make sure the home is adequately protected as well.

Surrendering a house is not as simple as writing down you do not want it anymore; there is work that you need to make sure is done to protect yourself until the home is officially out of your name.  If you have questions regarding surrendering your home, contact a St. Louis Bankruptcy attorney today!

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Myths and Truths About Bankruptcy

Posted on March 14, 2013 by

-“I won’t have to pay for my student loans anymore if I file for bankruptcy”

This, unfortunately, is false.  Many people will hear or read on the internet that it is possible to discharge, or no longer be responsible for, student loans when they file for bankruptcy. While in the technical context of the bankruptcy code this is true, it is virtually impossible to actually qualify to have your student loans discharged.  This is in large part due to the reforms made to the Bankruptcy code in 2005. Because many people were abusing the bankruptcy system, changes were made to also protect creditors and lenders.  So, to qualify to discharge your student loans you must meet a three part standard. First, you must show that you are in a state of permanent disability or poverty, next you must show that there is no possible way this state will ever change in the future, and finally that you have made a good faith effort to pay back your student loans.  To many, this section of the bankruptcy code seems to be a Catch 22, in that if you are in a state of poverty, how can you possibly be able to pay back any of your loans.  While there are some people who have managed to discharge their student loans, they are of only a hand full of people who have managed to do this.  It is extremely uncommon to qualify to do this.  In the overwhelming majority of cases, debtors will still be responsible for repaying their student loans post-filing bankruptcy.

-“I won’t be able to keep my house”

This is will actually depend on a couple of things, including what type of bankruptcy you are interested in filing, and if you are current on your house.  If you are current on your house and do not have a large amount of equity in it, you will most likely be able to file a Chapter 7 or a Chapter 13 bankruptcy.  However, if you are behind on your house and still want to keep it, a Chapter 13 bankruptcy would most likely be the better option for you.  A Chapter 13 bankruptcy will allow you to take any mortgage arrearage and pay that through a chapter 13 plan.  This will break up the arrearage amount over the length of your plan (3-5 years) and make the amount owed on the home more manageable.

-“can I keep my car?”

Cars are treated very similarly to houses in bankruptcy.  If you have a loan on your car, and are current on your car payments, you should be able to do a Chapter 7 or a Chapter 13 bankruptcy (assuming you qualify for either in all other areas).  However, if you are not current on your car and would like to keep it, a Chapter 13 may be the better option for you.

-“Will filing for bankruptcy stop a garnishment?”

Filing for bankruptcy will stop a garnishment of wages due to the protection debtors receive from the automatic stay that goes into effect immediately upon filing.  If you are going to have a garnishment starting but it has not yet started, filing a bankruptcy will stop the garnishment.  If you have an ongoing garnishment, the filing will also stop it from continuing. If your garnishment is ongoing, it may take a couple of weeks before it actually stops being pulled from your check, due to processing time and when your pay periods fall, but anything garnished post filing has to be returned to you.

If you have questions regarding your situation, and how a bankruptcy would work for you, contact a St. Louis Bankruptcy attorney today!

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Common Notices you Will Receive from the Bankruptcy Court

Posted on March 14, 2013 by

After filing for bankruptcy, the court will send you notice of anything that is filed in your case through the mail, and many times these notices can be very confusing. Instead of worrying about what some of those notices may mean, here is a list of common notices you may receive from the court, and an explanation of what they mean.

Notice of Bankruptcy Filing and 341:  This notice will be sent to you almost immediately after your case is filed.  It has important information regarding your case including your case number, when your case was filed, and when your meeting of creditors is scheduled to be. Your meeting of creditors is often referred to as “341 meeting”, and is extremely important to be aware of.

Proof of Claim:  If you have filed a Chapter 13 bankruptcy, you will receive notices that say “proof of claim” often.  This refers to something that your creditors have to file in order to be paid through your chapter 13 plan.  It is nothing that you need to worry about or pay attention to.

“Motion for Relief from Automatic Stay”:  Creditors will file a motion for relief from automatic stay for a number of reasons, and whether or not you should pay attention to it depends on your specific case.  If you are surrendering a home or a car through your bankruptcy, the creditor who held the loan agreement with you is required to file a motion for relief to be able to take the property back from you.  If you surrendered the property, you do not need to be concerned about a Motion for Relief being filed.  However, if you are not surrendering property and a motion for relief is filed, you should pay close attention to that and contact your attorney.  If you kept a house through your bankruptcy, but were not paying the current, ongoing payments on it, the creditor will most likely file a motion for relief to either foreclose or repossess.  Some creditors are willng to work out another repayment plan, called a “stipulation agreement” to help you catch back up with payments, but the majority of the time once a motion for relief is filed, you will need to catch up with your payments before a hearing is held on it.  Some motion for relief’s also have hearing dates and times on them; you will not have to attend the hearing as this is something your attorney will do for you.

Order Discharging Debtor:  If you receive this in the mail, that is a good thing. It means that your case is on the track to being closed, and that your debts were discharged.

Motion to dismiss for Failure to make Plan Payments: If you are not current on your plan payments by the time they are due, your trustee will file a Motion to dismiss for failure to make plan payments.  Usually this will not be filed until you are at least two plan payments delinquent.  If this notice is received, you should get in touch with your attorney to discuss your intentions on becoming current with your plan payments.  Your attorney will then need to file a response to this motion, which will set the motion for hearing, giving you more time to become current with your plan payments.  Once the motion to dismiss is set for hearing, you will need to become current with your plan payments before the date of the hearing, or your case will be dismissed.

Order Dismissing Case: This is something that you will receive if your case is dismissed for some reason. Typically, this will happen in a Chapter 13 case when you have failed to do things like pay your plan payments or have failed to provide documents required by the trustee or Department of Revenue. If your case is dismissed, you have a fourteen day window to get it reinstated, or your case will be closed.

Notice of Default/Notice of Breach:  If you had a motion for relief from stay for failure to pay ongoing mortgage payments, you were given the option of entering into a Stipulation Agreement.  This stipulation agreement put all of your post-petition arrearage into a six month repayment plan that was due in addition to your current ongoing mortgage payments and your Chapter 13 plan payments. A notice of default, also referred to as a notice of breach, is filed when you have fallen behind on your stipulation agreement payments.  If a notice of default is filed, you have a very limited window of time to become caught up on your payments, or the original motion for relief that was filed will be granted.  If this happens, your mortgage company would be able to move forward with foreclosure.  Typically, you will have 14 days from the date the notice was filed to become current on your stipulation agreement payments.  If your attorney files a response to this motion, it will set it for a hearing.  If the Notice of Default is set for hearing, it will give you additional time to catch up on late payments; however, you will have to be current on your payments at the time of the hearing or your case will be dismissed.

If you are concerned about a notice you receive in the mail from the bankruptcy court, it is always best to call your St. Louis Bankruptcy attorney and ask him or her to clarify what the notice means.

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What Types of Documents are Needed to File For Bankruptcy?

Posted on March 1, 2013 by

Often, clients will ask their attorneys what types of documents are needed to assist with preparing a bankruptcy petition.  Some things required by your attorney and your trustee include:

-6 months of your most recent paystubs

-a copy of your most recently filed Federal and State Income Tax Returns

-a copy of your Social Security card and picutre ID

-a copy of your bank statement from the date of filing your case

Many people wonder what happens if they do not have some of the items listed above.  For example, if you are unemployed or work as a private contractor and do not receive paystubs, the trustee will allow an affidavit to be signed stating this.  If you have filed taxes but do not have copies of the returns, you can request copies be sent to you from the IRS and from your State Revenue Department.   If you need your case to be filed before you can retrieve copies of your returns, however, an affidavit stating this will suffice.  If you do not have a copy of your social security card, one can be requested; however, if you have something issued from the government with your social security number on it, such as a W-2, this will be allowed in place of a social security card.  Finally, if you do not have a bank account at the time of filing, the trustee will allow you to sign an affidavit stating that you did not have one.

As stated above, if you do not have all of the required documents for a bankruptcy case, there options to help assist you.  If you want to start a bankruptcy case, contact a St. Louis Bankruptcy attorney today!

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Can Taxes be Discharged Through a Bankruptcy?

Posted on March 1, 2013 by

Two of the most common creditors that debtors list on their bankruptcy petitions are the Internal Revenue Service (IRS) and State Revenue Departments for past Income taxes owed.  While most taxes are priority claims, and non-dischargeable through a bankruptcy, some taxes can be discharged.  Taxes are only eligible for discharge based on the year they were due and the time in which they were filed.  Typically, any taxes owed that are over three years old are dischargeable.  This three year time period is based on when the IRS requires taxes to be filed by (April 15th), unless the debtor was granted an extension from the IRS.  This is also based on the tax year, not the year it currently is.  So, in 2013, taxes that would be eligible for discharge after April 15th would be for years 2009 and earlier.

This rule only applies if the taxes were filed in a timely manner.  If you have taxes owed from the year 2008, but didn’t file your 2008 taxes until 2010, those taxes would not be eligible for discharge.  If taxes are not filed timely and are less than two years before the filing of the bankruptcy, the taxes cannot be discharged through the bankruptcy.  If taxes are unable to be discharged through the bankruptcy, debtors must then contact the IRS (or State Department of Revenue if State Taxes are owed) to discuss and arrange a repayment plan.

If you are unsure about amounts owed to the IRS and/or amounts owed for each specific year, the IRS and State Revenue Department can provide you with copies of your past Income tax returns to assist you with finding this information.  Even if you think your past income tax owed will not be dischargeable, it is important to list the IRS and State Revenue Department on your bankruptcy petition so that they will receive notice of your filing.  While you are in an active bankruptcy case, the IRS and State Revenue Department will not be able to contact you for collections.

If you have questions about if your tax debt is dischargeable through a bankruptcy, contact a St. Louis Bankruptcy attorney today!

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Should I Reaffirm my Debts?

Posted on March 1, 2013 by

When filing for bankruptcy, debtors are faced with several important decisions.  Some of the most important decisions made apply to what they are going to do with the property they own.  Through bankruptcy debtors can choose to surrender property without any penalties and without facing any deficiencies; This even applies to property that has a remaining loan balance on it.  Or, if they want to keep their property, debtors are also able to retain it; they can even keep property that has a remaining loan balance on it.  Typically, debtors will decide they need to keep their cars or homes.  If a debtor chooses to keep certain property with remaining loan balances, many times the lender that has the loan and holds the property as collateral will require the debtor to sign a reaffirmation agreement.

Reaffirmation agreements are a voluntary agreement between a debtor and a lender that must be filed within sixty days of the meeting of creditors, or before the bankruptcy case is closed.  A reaffirmation agreement states that the debtor is agreeing to continue to make payments on the item they want to keep as they would have if they did not file for bankruptcy. In other words, the debtor will be making payments in accordance with the terms of the original agreement.  If a debtor chooses to sign a reaffirmation agreement, he or she is completely responsible for the particular debt.  However, once a debtor signs a reaffirmation agreement, they still have the option to withdraw the agreement, but they must do so within sixty days of when it was filed.

Deciding to sign a reaffirmation agreement is a very important decision and there are many factors that debtors should consider when doing so.  If you desire to keep certain property that has sentimental and/or practical value, like a house or a car, a reaffirmation agreement will allow you to do so.  However, debtors need to take into account whether or not they can actually afford to make payments on those properties.  If a debtor signs a reaffirmation agreement and consequently cannot make payments, he or she can find  his or her self back in financial trouble once again.  A reaffirmation of a debt will essentially eliminate the fresh start aspect of Chapter 7 bankruptcies.  Reaffirming a debt is not a requirement; however, sometimes it may be in your best interest.  By reaffirming a debt, the payments you make towards your property will be reported to credit bureaus. This is a positive way to begin re-building your credit history post-filing.  Conversely, however, if you reaffirm and are unable to keep up with payments post-filing, it could negatively effect your credit once again.   If debtors are unsure if they can make the same payment post-filing, they should consider whether or not signing the reaffirmation agreement is the best option for them. Some debtors decide to reaffirm debts solely because they think that they will not be able to find another lender who will help them finance something like a car post filing; however, there are lenders that specialize in helping people who have filed for bankruptcy.

If you have questions about reaffirming your debt, contact a St.Louis Bankruptcy attorney today!

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What will be Discharged in a Chapter 7 Bankruptcy?

Posted on February 15, 2013 by

After you receive your notice of discharge from the Bankruptcy Court, there are certain types of debt that will be discharged; In other words, there are certain types of debt that you will no longer be responsible for paying back to creditors.  While there are some types of debts that cannot be discharged, filing a Chapter 7 Bankruptcy will wipe out a majority of your unsecured debt.

The vast majority of people filing for bankruptcy are trying to get rid of credit card debts, and thankfully, Chapter 7 will succeed in clearing most credit card debts.  The only exceptions to this statement are if the case involves fraud or if the debtor purchased luxury items immediately before filing.  However, if neither of those two situations apply, credit card debt will be discharged.

The next most common reason people decide to file for Chapter 7 Bankruptcy is a direct result of medical bills.  With the rising cost of medical treatment and the large amount of people with inadequate or even no medical insurance, many people today find themselves overwhelmed by medical bills.  Fortunately, medical bills will be discharged through filing for Chapter 7 Bankruptcy.  In fact, billions of dollars in medical bills are discharged every year through bankruptcy.

In addition to credit card debt and medical bills, lawsuit judgments are also an extremely common reason individuals file for bankruptcy.  Most civil lawsuits that are filed are about money owed, and if someone wins one of these lawsuits against you, the court will issue a judgment that states you need to pay.  If you do not pay once this judgment has been granted, the judgment holder is entitled to collect it. They can do this numerous ways, including seizing your bank account, garnishing or levying your wages, or by placing a lien on your home. Most judgments are discharged in Chapter 7 Bankruptcy; however, there are some exceptions to this.  Generally speaking, though, if you have a garnishment on your paycheck filing for bankruptcy may be an option for you.

Increasingly today, things are leased rather than owned. When you break a lease agreement, subsequently, there are often severe penalties for doing so.  Additionally, so debtors have obligations under a signed contract doing something like selling real estate, buying a business or performing artistically.  When these contracts are broken, some debtors are sued for breach of contract damages.  While there are some rare exceptions to this, monetary damages to the debtor for breaching these types of contracts can also be discharged through bankruptcy.

Chapter 7 Bankruptcy is a feasible option for many people who are struggling under mass amounts of unsecured debt. It gives debtors a chance to start fresh with a clean financial slate, and get back on their feet again.  Should you have additional questions about if a Chapter 7 Bankruptcy is the right option for you, please contact a St. Louis Bankruptcy attorney today!

Posted in Bankruptcy filing, Bankruptcy General, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Discharge of Debt, Medical Bills and Bankruptcy | Comments Off on What will be Discharged in a Chapter 7 Bankruptcy?

Is it Beneficial to me to File for Bankruptcy?

Posted on February 15, 2013 by

There are many widespread misconceptions that filing for bankruptcy is one of the worst decisions an individual can make regarding their financial situation.  This, in large part, is due to places like the credit card industry and payday loan companies attempting to distract people from the truth about bankruptcy. Many places such as these have very aggressive collections efforts, and not only scare, but put down many of the clients that have debts with them.  They will say just about anything to scare people out of filing for bankruptcy, including telling people that filing for bankruptcy will hurt them more than it will help them.

If you are considering filing for bankruptcy, you need to make sure that you are receiving accurate information about what your options are and what the process entails.  As stated before, much of the information on the internet or in the media is sponsored by credit card companies or predatory debt consolidation companies that are attempting to sway your opinion.  If you would like to receive the most accurate information about if bankruptcy is an option for you, it would be very wise to meet with a bankruptcy attorney. Many attorneys offer free consultations, and would be able to take a look at your situation to let you know what your options are and to explain the process.  An attorney will have no interest in filing a bankruptcy for you that is not in your best interest, so it is a good place to get the most accurate information.

While there are some negative effects that come from filing for bankruptcy, most of the time, the positive effects outweigh the negative.  For example, some negative effects include a one-time hit to your credit score, and the potential for some lenders to deny you loans that you are interested in.  It is important to keep in mind, though, that are several companies and organizations that exist solely to assist people with rebuilding their credit; many of them do this through providing loans to assist people with financing cars and/or homes.  With all of this being said, bankruptcy can help people by reducing or even eliminating debts, stopping foreclosures, repossessions, and garnishments, and by putting a stop to constant creditor harassment.

Countless people have been able to eliminate their unsecured debts through a chapter 7 bankruptcy and many others have been able to save their homes through a chapter 13 bankruptcy. If you would like to speak to an attorney to find out the most accurate information about it filing a bankruptcy is the most helpful option for you, contact a St. Louis Bankruptcy attorney today!

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Can I Keep my Tax Refund if I File for Bankruptcy?

Posted on February 15, 2013 by

Many individuals wonder if they will be able to keep their Federal and State Income Tax Refunds if they are planning on filing a Chapter 7 bankruptcy.  The answer to this question depends on various circumstances including how much of a refund you expect to receive, what types of tax credits you receive on your income tax returns, how much property you own, how many dependents you have, and where you live.

When filing a Chapter 7 bankruptcy, there is a certain amount of exemptions you can receive to help you keep certain property.  Exemptions are the laws set forth by the bankruptcy code that allow certain amounts of property to be protected through a bankruptcy.  Exemptions are determined from state to state, meaning that different states have different exemptions that can be used. Exemptions also vary within a state, depending on if you are married or single, and depending on the amount of dependents you have.  In Missouri, you get higher exemption amounts for every dependent you have that is under age 21 (*Until recently, the exemption only applied to dependents ages 18 and under; however, the courts recently decided that most children/young adults are fully dependent until the age of 21). For Missouri residents, you are allowed $1250+ $350 for any additional dependents 21 years old or under. In addition to this, you are allotted separate exemptions for household goods/furnishings, jewelry, and other various types of personal property.  This is different than how the exemptions work inIllinois. InIllinois, you are allotted $4,000 of exemptions for any type of property.

So, how does this apply to your tax refund? Your tax refund is considered part of the bankruptcy estate. So, being able to determine how much of your refund you will be able to keep will depend on the amount of exemptions you have to use.  InMissouri, you can use the head of household exemption and the wildcard exemption to help keep your tax refund.  InIllinois, you can use part of your wildcard exemption to keep your refund.

There were also recently changes to the amount of a tax refund that debtors who receive certain tax credits can keep.  Until recently, individuals who received Earned Income Credit tax credits on their tax refunds had to turn the unexempt portion over to their trustee.  However, with the changes to the law, now the Earned Income tax credit is protected through a bankruptcy, meaning the trustee will not take that portion of the refund. This change is extremely beneficial to lower income families who depend on their tax refunds to make it through the year.

If you are interested in finding out how much of your tax refund you will be able to keep through your bankruptcy, contact a St. Louis Bankruptcy attorney today!

Posted in Bankruptcy filing, Bankruptcy General, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Exemptions, Taxes | Comments Off on Can I Keep my Tax Refund if I File for Bankruptcy?

What is an Automatic Stay, and will it Help me?

Posted on February 15, 2013 by

Filing a bankruptcy case will offer immediate relief from the constant harassment from collection agencies and representatives that debtors suffer from prior to filing.  As soon as you file your bankruptcy petition, the automatic stay goes into effect. An automatic stay is an injunction that takes effect as soon as the case is filed with the court. You do not need to file any additional documents or appear for a hearing to make the automatic stay go into effect; once you file your bankruptcy petition, your creditors must stop almost all collection efforts.

Once an automatic stay has been issued, creditors may not contact debtors, demand repayment, file a lawsuit or attempt to seize a debtor’s property. The only option a creditor has to be able to collect from you is to file a motion for relief from automatic stay, and argue at a hearing why the automatic stay should not apply. Motions for Relief are typically filed by mortgage companies or car creditors when ongoing payments are not being made.

As soon as the bankruptcy case is filed, the court will notify your creditors via mail.  This means that typically, your creditors will receive notice of your bankruptcy within one week of the date your bankruptcy case was filed.  Debt collectors who knowingly violate a stay can be sanctioned after your bankruptcy attorney files a motion with the court. In almost all cases, violation of the automatic stay results because of lack of notice. As soon as your creditor has notice of your bankruptcy, they typically will stop any collection efforts to avoid being sanctioned by the court. If the creditor was unaware of the stay, however, the court will not impose any sanctions.  If your creditor unknowingly seizes some of your property, such as collecting from a garnishment or repossessing a car, they will have to return your property, regardless of if they received notice from the court or not.

While the automatic stay does protect you from most collection efforts, an automatic stay will not stop collection efforts on certain debts including:

-Criminal sanctions – Criminal defendants are often ordered to pay the costs of their prosecution, fines and/or restitution costs. Automatic stays do not interrupt payment of these obligations.

-Child and spousal support – If you are obligated to pay child support or spousal support, especially if you are behind on it, you will have to continue making these payments.

-Taxes-  If you are obligated to pay the IRS or state for prior income taxes, you will still need to continue making these payments.

The automatic stay is in place as long as your bankruptcy case is ongoing. If your case is dismissed, your creditors can resume their collection efforts.  The automatic stay is one of the many positive benefits to filing a bankruptcy.  If you are interested in finding relief from collection efforts, contact a St. Louis Bankruptcy attorney today!

Posted in Automatic Stay, Bankruptcy filing, Bankruptcy General, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Collection Harassment, Uncategorized | Comments Off on What is an Automatic Stay, and will it Help me?