Home Archives for Exemptions & What You Get to Keep

Debtors Arrested for Ignoring Bankruptcy Court Orders, Spending Tax Refunds

Posted on February 1, 2009 Written by

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 [Read more…]

Filed Under: Chapter 13, Chapter 7, Discharge, Exemptions & What You Get to Keep, Kansas Bankruptcy News, Trustees

Tax Refund in Bankruptcy

Posted on January 10, 2009 Written by

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!

Filed Under: Bad Outcomes, Fraud, Crimes, Chapter 13, Chapter 7, Exemptions & What You Get to Keep

Can I Own Anything After Bankruptcy?

Posted on January 9, 2009 Written by

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.

Filed Under: Exemptions & What You Get to Keep, Filing Bankruptcy

What Will Happen to My Home and Car If I File Bankruptcy?

Posted on January 8, 2009 Written by

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. [Read more…]

Filed Under: Exemptions & What You Get to Keep, Filing Bankruptcy, Mortgages, Vehicles

What Property Can I Keep?

Posted on January 7, 2009 Written by

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). [Read more…]

Filed Under: Chapter 7, Exemptions & What You Get to Keep

Jane Bryant Quinn: Go Bankrupt in 2009

Posted on January 4, 2009 Written by

“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.” [Read more…]

Filed Under: Chapter 7, Exemptions & What You Get to Keep, Filing Bankruptcy

Chapter 13 (Reorganization)

Posted on January 3, 2009 Written by

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: [Read more…]

Filed Under: Chapter 13, Exemptions & What You Get to Keep, Filing Bankruptcy

Chapter 7 (Straight Bankruptcy)

Posted on January 2, 2009 Written by

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 case [Read more…]

Filed Under: Chapter 7, Exemptions & What You Get to Keep, Filing Bankruptcy

What Can Bankruptcy Do for Me?

Posted on December 30, 2008 Written by

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your debts.  This is called a “discharge” of debts.  It is designed to give you a fresh financial start.
  • Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments.  (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
  • Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed. [Read more…]
Filed Under: Exemptions & What You Get to Keep, Filing Bankruptcy, Mortgages, Vehicles

How Do I Find a Bankruptcy Attorney?

Posted on December 29, 2008 Written by

As with any area of the law, it is important to carefully select an attorney who will respond to your personal situation.  The attorney should not be too busy to meet you individually and to answer questions as necessary.

The best way to find a trustworthy bankruptcy attorney is to seek recommendations from family, friends or other members of the community, especially any attorney you know and respect.

You should carefully read retainers and other documents the attorney asks you to sign.  You should not hire an attorney unless he or she agrees to represent you throughout the case.

In bankruptcy, as in all areas of life, remember that the person advertising the cheapest rate is not necessarily the best.  [Read more…]

Filed Under: Exemptions & What You Get to Keep, Filing Bankruptcy

Courts Launch Bankruptcy Videos

Posted on November 30, 2008 Written by

The federal bankruptcy courts rolled out short web videos on basic bankruptcy topics for consumers considering filing bankruptcy.

The first video explains that bankruptcy is a legal process for individuals who cannot pay their debts, which stops debt collection and discharges the debts.

All eight videos can be viewed on bankruptcykansas.info or the courts website.

Filed Under: Exemptions & What You Get to Keep, Filing Bankruptcy Tagged: , , , , , , , , , , , ,

Topeka Debtors Allowed Means Test Deduction for Cars With No Liens

Posted on September 1, 2008 Written by

EDITOR UPDATE:  This post is out of date.  Judge Karlin reverted to her original ruling in In re Law after the Pearson decision was vacated.  This issue is currently pending the the U.S. Court for the Tenth Circuit  so we should have a binding ruling soon.  December 13, 2009.

Topeka Bankruptcy Judge Janice Miller Karlin announced last week that she is reversing course and will follow the Pearson decision to allow debtors a means test deduction for ownership of a car without a debt against it.

Judge Karlin had earlier disallowed the car ownership deduction in In re Law, 2008 WL 1867971 (Bankr. D. Kan. 2008), following the decision by Kansas District Court Judge John W. Lungstrum in Wieland v. Thomas, 382 B.R. 793 (D. Kan. March 4, 2008), reversing Judge Robert D. Berger of Kansas City, KS, in In re Thomas, 2007 WL 2903201 (Bankr. D. Kan. Oct. 02, 2007). [Read more…]

Filed Under: Bankruptcy Legislation, Bankruptcy Trivia, Chapter 13, Exemptions & What You Get to Keep, Kansas Bankruptcy News, Means Test Tagged: , , , , , , , , , , , , , , , , , , , , , , ,

Bankruptcy Income Guidelines to Increase Slightly October 1

Posted on August 31, 2008 Written by

It will be a little easier to qualify for bankruptcy relief when the income guidelines used for eligibility increase slightly on October 1.  A single Kansas earner will be able to make $894 more per year and qualify for chapter 7 bankruptcy relief.  A family of four will be allowed a $2036 more income per year in Kansas.

Here are the “means test” figures now in effect and the figures approved by the U.S. Trustee for bankruptcy cases file on October 1, 2008, or after.

  • 1 earner                       $38,594      $39,488
  • 2-person families    $52,989      $54,070
  • 3-person families    $58,075      $60,906
  • 4-person families    $69.831      $71,867
  • 5-person families    $76,731      $78,767
  • 6-person families    $83,631      $85,667
  • add $6,900 for each additional person [Read more…]
Filed Under: Bankruptcy Legislation, Bankruptcy Trivia, Exemptions & What You Get to Keep, Filing Bankruptcy, Kansas Bankruptcy News, Means Test Tagged: , , , , ,

EIC Exemption Pending in Kansas Legislature

Posted on February 3, 2008 Written by

A bill has been introduced in the Kansas legislature to exempt federal earned income tax credit. The law, if passed, would protect the funds from seizure by creditors.

Earned income credit is money the federal government gives to low-income individuals and families in the form of tax credit, which is paid in the form of a tax refund even if no taxes are paid or owed. [Read more…]

Filed Under: Exemptions & What You Get to Keep Tagged: , , , , , , , , ,
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