The court may dismiss your Chapter 13 bankruptcy if you fail to make payments to the Trustee or if your debts exceed your ability to pay. If your bankruptcy is dismissed by the court you will be responsible for all your debts and the creditors may proceed with collection actions against you as well as proceed with foreclosure and/or repossession.
Each month the Trustee receives a payment from you, he will distribute payments to your creditors based on a priority as established by the Chapter 13 plan. If you do not make a payment to the Trustee, he will not distribute payments to your creditors.
These are common questions that many people have about bankruptcy. In an effort to provide you with information we have provided these frequent questions. However, it is important to realize that each state has different rules and these answers are not meant to be legal advice. Contact a bankruptcy attorney to learn more.
Now I know most people will look at this question like, “why in the world would I want to keep my cards if I’m eliminating my debt?!” But occasionally, you will have one company in which you are still in good standing and will want to keep that card in hopes of somewhat holding on to what bit of credit that you have left. It’s just not as simple as that.
Have you ever been in a wreck? The next few days following the wreck, you will be bombarded with advertisements from attorneys claiming that they can help you in whatever service you may need from being in the accident. Many wonder how they even knew about the wreck in the first place! Well filing bankruptcy is a similar situation, once you file it is public knowledge and your creditors, whether they were included in the bankruptcy or not, will likely find out about the bankruptcy and will cut the usage of your account off. Most creditors’ fear violating the bankruptcy’s automatic stay so they will discontinue usage of the credit card. So in the situation of a credit card in which you wish to keep, you may have never missed a payment and have been in good standing and they will still cut the usage of the card off, which is why we recommend that you list ALL of your debts.
Should you wish to try to keep a credit card out of the bankruptcy and wish to continue making the payment, then you need to contact that credit card company and give them a heads up on what your intentions are and ask for permission to have that card be kept out of the bankruptcy filing. It will be completely and solely the discretion of the company whether or not they allow you to keep the card out of the bankruptcy and continue to make the payments, and report the standing to the credit reporting agencies.
If you don’t list down a credit card, with the hopes of keeping it, and then after filing the bankruptcy they shut it down anyways, you are still responsible for the debt. For example, if you have a Visa credit card with Wal-Mart and you talk with Visa and explain you are filing bankruptcy and they say they will allow you to keep the card but, after filing, they still shut it down, you are responsible for any remaining balance on the card. You may still be able to go back and amend the bankruptcy after the credit card company refuses to allow you to keep the card but there will be court costs involved in amending the bankruptcy.
Again, we always encourage our clients to list down all of their debts. You can rebuild your credit after bankruptcy and in order to get your fresh financial start it usually means wiping out all of your debts.
You must disclose all of your assets when you file bankruptcy, regardless of whether you file Chapter 7 bankruptcy or Chapter 13 bankruptcy. If you do not disclose all of your assets, they cannot be protected from the bankruptcy court and your creditors.
Let us begin by giving a brief over view of the term cash advance. Many of us have heard the term but don’t know exactly what it means. A cash advance is often referred to as a payday loan. A cash advance can be obtained through a credit card or charge card issuer. It is seemingly a loan taken out against a credit card that you already have. Those with a credit card and cash advance service are able to receive cash from an ATM, bank, or some other financial institution. This really depends on the type of credit card and whether their cash advance services are available. Many people often confuse the advance as free money, but it is certainly not. This has to be paid back to the creditor and one of the biggest challenges is the high interest. The interest on a cash advance tends to be much higher when obtaining it through a credit card. You are not able to take out a cash advance for the full available balance on the credit card. However, this doesn’t mean that you aren’t going to be charged high amounts of interest on the loan. This will cause the monthly payments on the credit card to eventually increase.
Generally speaking, cash advances made within 90 days of filing bankruptcy are not going to be wiped out. Cash advances within 90 days of filing not only pose a problem with court, but also the creditor, who could potentially seek an adversary proceeding.
Keep in mind, the Chapter 13 bankruptcy is also recognized as a repayment plan. In a Chapter 13 bankruptcy it isn’t likely that a creditor will file an adversary proceeding against you because of a cash advance. However, this doesn’t mean that a creditor can’t file an adversary proceeding if they choose to. The creditor may also have the option of objecting to confirmation of your Chapter 13 Plan, if your Plan does not to propose to repay the amount of the advance back to the creditor with whom you took the cash advance. This is obviously up to the creditor who the cash advance was taken out with. The most important thing to remember is generally speaking, cash advances within 90 days of filing may pose a problem with the bankruptcy court. For example, if you decide to file a Chapter 13 bankruptcy and have taken out a cash advance within 90 days preceding the filing, the court is going to look for any fraudulent behavior. If you took out a cash advance knowing that you were going to file bankruptcy, then you are going to have a tough time arguing that it was not fraudulent behavior. If it’s possible to wait, then the longer you wait after having taken out a cash advance to file, the better. Many people facing tough financial situations are already feeling stressed, there is no need to add something else to the mix.
Since a Chapter 7 bankruptcy is different than a Chapter 13, and not a repayment plan, we will focus on a couple of different points. If the cash advance was made within 90 days of filing, the debt is most likely not going to be wiped out in a Chapter 7 bankruptcy. First of all, it looks suspicious to the courts when a recent cash advance was made before the filing. This may also pose a problem with the creditor who may decide to pursue an adversary proceeding for a cash advance that was made around the same time as the filing of the bankruptcy. An adversary proceeding is also known as a lawsuit in bankruptcy court. If the cash advance was made well past the 90 days, then there is a possibility of the debt being wiped out. This would depend on a couple of things, timing and amount. A large cash advance taken out shortly before filing bankruptcy is obviously going to look suspicious. The courts are not only going to look at the amount, but also the timing between the actual withdrawal and filing of the bankruptcy. As mentioned above, the longer you are able to wait to file the bankruptcy, the better.
If you have any questions about any cash advances you have taken out in the last year, you should speak with your bankruptcy attorney. If you are contemplating filing bankruptcy, it is best not to take out any cash advances.
Fraudulent transfer of an asset in a Chapter 7 bankruptcy or a Chapter 13 bankruptcy usually occurs when a person knowingly transfers an asset – house, car, equipment, business, cash, stock, etc. – to another person or company to avoid losing the asset to a creditor or to the bankruptcy court. A fraudulent transfer can be reversed or voided by the bankruptcy court resulting in the loss of the asset after all. Any transfer of an asset prior to filing bankruptcy should be avoided, since it will most likely be scrutinized by the bankruptcy court. The transfer of an asset to an insider, such as a relative or a business partner, will be scrutinized even more
Yes, you can file for bankruptcy if you have recently sold a home. You will, however, need to wait at least 90 days. You may even have to wait a bit longer depending on how much money you had received from the sale. Make sure that you discuss this with your attorney. He or she will probably ask to see a copy of the closing papers so that they can determine how long you may need to wait before filing. Usually the court will not have a problem with you selling your home so recently as long as it was not sold to an insider, such as a family member.
Also be prepared that the bankruptcy Trustee may want to know what you did with the excess money that you received from the sale of your home. Be prepared to be able to explain this. It is a good idea to keep excellent record of where this money goes. Keeping copies of bank statements and cancelled checks will help with this. The court will want to be able to see that the money was used for necessary expenses, such as food, and not on something such as a vacation or other luxury items.
If you try to file bankruptcy immediately after selling your home and you have a large amount of money in the bank, used the money to purchase non-necessities or gave it to family then you may not be able to file for bankruptcy. As always, it’s in your best bet to contact a bankruptcy lawyer in your area to see what they recommend.
Generally speaking, bankruptcy will not stop an eviction. In 2005, the bankruptcy laws were changed under the Bankruptcy Abuse Prevention Consumer Protection Act. This act prevents bankruptcy from stopping evictions on rental properties, which are properties that are being leased. In other words, if you are facing an eviction from an apartment or rental property bankruptcy cannot stop that eviction process. However, bankruptcy may still be an option for you to consider. Depending upon your landlord, they may come after you for the past due rent. They could sue you and get a judgment against you on the amount past due. Filing for bankruptcy will wipe out the amount owed to your landlord and stop them from getting the judgment or wipe out the judgment if they had already obtained it.
What if you have a house that is facing a foreclosure though? If you have been given a notice of sale or foreclosure on your home, then bankruptcy may be an option to consider. Here is more information on how bankruptcy can stop the foreclosure of a home. Be sure to contact an attorney as soon as possible to explore your different options.
In a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, the court will send a Notice of Meeting of Creditors within a few days of your filing. This is the official notification to your creditors of your bankruptcy filing and it provides them with the date of the creditors meeting. It also creates the automatic stay which keeps your creditors from taking legal action against you.If you discover that you failed to list a creditor you owed when your Chapter 7 bankruptcy was filed, you may be able to add the creditor to your bankruptcy prior to your discharge. It is important for you to contact your bankruptcy attorney immediately to see if you can add the creditor to your bankruptcy. If you have not received a discharge, you may be able to add the creditor and still have the debt discharged in the Chapter 7 bankruptcy. Once the discharge has been entered, you may not add any additional creditors without reopening your bankruptcy.
If you filed a Chapter 13 bankruptcy and discover that you failed to list a creditor that you owed when your bankruptcy was filed, you should also contact your attorney. Depending on whether your Chapter 13 bankruptcy has been confirmed by the Court will depend on what actions are needed. If your case has not been confirmed, you may be able to simply add the creditor with the bankruptcy court. If your case has been confirmed, it may be necessary for you, through your attorney, to file a motion to modify your bankruptcy and add the creditor.
