Chapter 7 Bankruptcy Information
Chapter 7 bankruptcy is a legal filing done when a person has too much debt and can't afford to pay off their creditors in a reasonable time period. Under bankruptcy protection, people that own money to creditors seek relief by filing for chapter 7 bankruptcy. Not all debt can be discharged in a chapter 7 bankruptcy. Student loans and income taxes owed to the government will still need to be paid, but all unsecured debt such as credit card debt will not have to be paid back.
Chapter 7 allows people to get back on their feet financially and protects consumers who have gone overboard with their spending habits in the past. People who file chapter 7 bankruptcy will see their credit score go down temporarily, as their creditors file claims with all the major credit bureaus.
What is a Statement of Financial Affairs? Sounds pretty simple and harmless, right? Actually, it can be very detailed and complicated. If you have filed a Chapter 13 or Chapter 7 Bankruptcy, you have had to complete a Statement of Financial Affairs for Individuals Filing for Bankruptcy and, most likely, your attorney has stressed the importance of accurately answering all of the questions asked on the Statement of financial affairs. What Does This Statement Consist Of? The statement consists of only twenty eight yes or no questions. A “yes” answer requires elaboration. Therefore, this can be one of the most…Read More
Updated: 10/25/2017 by Nick Gajewski One of the most common concerns my clients have is whether or not filing a bankruptcy case will affect their job. The short answer is: no, filing a case should not have any impact. The Bankruptcy Code at 11 U.S.C. §525 explicitly prohibits employers from discriminating against any person who has filed for bankruptcy relief. Your employer would be breaking a federal law if they fire you or discriminate against you as a result of your bankruptcy. Protection Against Discriminatory Treatment (a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and…Read More
When someone files chapter 7 bankruptcy and owes money on a secured debt (i.e., car note, furniture loan), they must make a decision by stating their intentions on what they want to do with the collateral securing those type loans. The options to choose from are: Reaffirm the debt and keep the collateral To reaffirm a debt, one must sign a reaffirmation agreement, a contract, agreeing to pay the debt back at the terms outlined within the reaffirmation agreement. The reaffirmation agreement is filed in your bankruptcy case to let the court know that you intend keep the property and…Read More
The bankruptcy code defines an insider as either a relative, a relative of a general partner, a general partner of the person filing bankruptcy or a corporation in which the person filing bankruptcy is an officer, director or personal in control. When filing bankruptcy you must answer whether you have made a payment on any debt owed to an insider within the last 12 months of filing bankruptcy. The trustee will ask you this question, under oath, at your 341 hearing. Why does the trustee care whether I have repaid an insider money within the last year? The bankruptcy code…Read More
Todd Chrisley, the star of Chrisley Knows Best filed a chapter 7 bankruptcy in August 2012. The Chapter 7 Trustee who administered Chrisley’s bankruptcy estate filed an adversary proceeding in February 2014 asserting Chrisley had not disclosed all of his assets and transferred assets to his wife prior to the filing of the bankruptcy. [i] The Trustee sought to avoid those transfers as a fraudulent transfer. Subsequently, the Trustee and Chrisley entered a settlement agreement whereby Chrisley was to pay the bankruptcy estate $150,000. This settlement was approved by the Bankruptcy Court in March 2015. Motion for Contempt In January…Read More
At this time of year in particular, we often see a large number of Chapter 13 clients that are considering converting to a Chapter 7 case. At the start of the New Year, people often re-evaluate where they are financially, and with many people receiving their income tax refunds this can be a great time to make a new financial start with a Chapter 7 case. Switching to Chapter 7 Converting an existing Chapter 13 case to a Chapter 7 case is, in many ways, like filing a new Chapter 7 case from scratch. When you convert, you can include any…Read More
After sitting down with your bankruptcy attorney and discussing the pros and cons of filing either a Chapter 7 or Chapter 13, you have decided that it is in your best interest to file a Chapter 7 bankruptcy. You have given your attorneys all the information they need, and you have reviewed and signed your bankruptcy petition. What should you expect after that petition is filed? The Automatic Stay First, with the filing of your bankruptcy, the automatic stay comes into effect. The automatic stay has been discussed previously in this blog, but basically the automatic stay prevents creditors from…Read More
Before deciding if a debt can be discharged in a bankruptcy, it must be determined whether the debt is a type that can or cannot be discharged. This sounds simple enough but when it comes to divorce and whether or not a debt is a domestic support obligation, it can be much more complicated. As previously discussed in Cynthia Lawson’s blog post of 3/1/2013, there are two types of debts owed to an ex-spouse 1) a domestic support obligation which is defined in 11 U.S.C. §101(14A) and 2) a property settlement obligation. Domestic support obligations are not dischargeable in either…Read More
Irony has a funny way of rearing its head. One of Kanye West’s most successful songs is called “Gold Digger”. The song details the lives of people that use other people just for their money. In a strange twist of fate, Kanye West now seems to be doing the very thing his song criticizes. News reports from this past weekend state that Kanye West owes nearly $53,000,000.00. In an effort to ease his financial problems, Kanye West reportedly reached out to Facebook creator and multi-billionaire Mark Zuckerberg for financial help. While the average individual does not have this much debt,…Read More
On the means test, only a small portion of your children’s tuition can be deducted from your income. Congress currently allows $156.25 per child as a deduction on the means test. Specifically, Bankruptcy Code § 707(b)(2)(A)(ii)(IV) states: “[T]he debtor’s monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,875 per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not…Read More