The Kansas median income has increased giving debtors a raise on the bankruptcy means test for cases filed on or after March 15, 2009. The new figures by family size are:
* Add $6,900 for each individual in excess of 4.
You may be able to keep the collateral on a secured debt by paying the creditor in a lump sum the amount the item is worth rather than what you owe on the loan. This is your right under the bankruptcy law to “redeem” the collateral.
Redeeming collateral can save you hundreds of dollars. Because furniture, appliances, and other household goods go down in value quickly once they are used, you may redeem them for less than their original cost or what you owe on the account.
You may have another option if the creditor did not loan you the money to buy the collateral, like when a creditor takes a lien on household goods you already have. You may be able to ask the court to “avoid” this kind of lien. This will make the debt unsecured.
Source: Your Legal Rights During and After Bankruptcy: Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.
Yes and No. The term “secured debt” applies when you give the lender a mortgage, deed of trust, or lien on property as collateral for a loan. The most common types of secured debts are home mortgages and car loans. The treatment of secured debts after bankruptcy can be confusing.
Bankruptcy cancels your personal legal obligation to pay a debt, even a secured debt. This means the secured creditor can’t sue you after a bankruptcy to collect the money you owe.
But, and this is a big “but,” the creditor can still take back their collateral if you don’t pay the debt. For example, if you are behind on a car loan or home mortgage, Continue Reading
Spending a tax refund that belongs to a bankruptcy estate or ignoring court orders may get you arrested by the U.S. Marshals Service and brought before the bankruptcy judge for contempt of court.
The moral of the story is don’t spend your tax refunds without talking to your bankruptcy lawyer first to make sure they are your refunds to spend. Spending a refund that belongs to the bankruptcy estate can get you in a lot of hot water including denial of your discharge, judgment for the money and arrest if you ignore court orders to appear.
If you have made a mistake and spent refunds inappropriately, don’t ignore court orders. Let you lawyer know so a plan can be made to make amends. Getting arrested does not have to happen to you.
Judge Janice Miller Karlin of the U.S. Bankruptcy Court for the District of Kansas, Topeka Division, issued a new policy regarding bench warrants on January 26, 2009:
To assure the sanctity of this Court’s orders for turnover, appearance, etc., the Court will occasionally issue a Bench Warrant Continue Reading
Cathy Moran on the Bankruptcy Soapbox reminds us of an important asset in bankruptcy: tax refunds.
Your federal and state income tax refunds are property of the bankruptcy estate when you file bankruptcy in Kansas. That is true for all refunds you are entitled to receive on the date your bankruptcy is filed, which includes the refunds for the year you filed that you will not receive until the following spring.
Example: You file bankruptcy in January 2009. The tax refunds for 2008 you will receive in 2009 belong to the bankruptcy trustee. The trustee also will be entitled to a pro rata share of the 2009 refund you receive in 2010.
Kansas has no bankruptcy exemptions for tax refunds or earned income credits. Some states do.
In chapter 13 bankruptcy, your tax refunds for years after you filed, we call post-petition years, are also property of the estate.
It is a federal crime to spend a tax refund that should be turned over to the bankruptcy trustee. Your bankruptcy discharge can be denied. It does not matter how much you need the money. The refunds will be sent to you and it is very tempting to keep the money. Stop and call your lawyer to make sure you understand exactly what you are required to do with your tax refunds!
Yes! Many people believe they can not own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.
Source: Answers to Common Bankruptcy Questions Pamphlet
National Consumer Law Center, Boston, MA
www.nclc.org
Remember: The law often changes. Each case is different. This pamphlet is meant to give you general information and not to give you specific legal advice.
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.
However, some of your creditors may have a “security interest” in your home, automobile, or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
In a chapter 13 case, you may be able to keep certain secured property by paying the creditor the value of the property rather than the full amount owed on the debt. Or you can use chapter 13 to catch up on back payments and get current on the loan.Continue Reading
In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors.
It is important to check the exemptions that are available in the state where you live. (If you moved to your current state from a different state within two years before your bankruptcy filing, you may be required to use the exemptions from the state where you lived just before the two-year period.)
In some states, you are given a choice when you file bankruptcy between using either the state exemptions or using the federal bankruptcy exemptions. If your state has “opted” out of the federal bankruptcy exemptions (Kansas has), you will be required to chose exemptions mostly under your state law. However, even in an “opt-out” state, you may use a special federal bankruptcy exemption that protects retirement funds in pension plans and individual retirement accounts (IRAs).Continue Reading
“The right time to go bankrupt is when you’re financially, stuck but still have assets to protect,” Newsweek financial columnist Jane Bryant Quinn tells her readers. “If you are reaching the end of your rope, don’t try to hold on. Save what you can.”
Saying she normally would tell readers to “suck it up, cut spending and repay your consumer debt,” this year she is risking her “good-girl reputation with a subversive idea: go bankrupt in 2009″. It is not always possible to pay debt “especially with an economic tsunami rolling over your home, job and health insurance.”Continue Reading
In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors.
In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:Continue Reading
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors.
If you want to keep property like a home or a car and are behind on the mortgage or car loan payments, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
If your income is above the median family income in your state, you may have to file a chapter 13 caseContinue Reading
