Can I File Bankruptcy Again?

You have filed a bankruptcy before and now you need help with your debts again.  You are wondering when you can file a bankruptcy again and if you can get a discharge of your debts in the new bankruptcy case.

To determine if you can get a discharge in a subsequent bankruptcy, you should follow the 2 – 4 – 6 – 8 rule.  You count from the filing date of the old petition to the filing date of the new petition.

                                     2 years between 13s –1328(f)(2)

                                     4 years between an old 7 and a new 13  –1328(f)(1)

                                     6 years between an old 13 and a new 7  –729, 727(a)(9)

                                     8 years between 7  –727(a)(8)

Thanks to my blogging colleague from Bankruptcy Law Network, attorney Andy Miofsky of Southern Ilinois, who coined the term 2 -4 -6 – 8 rule.

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Reconversion Fails, No Discharge Bankruptcy Dismissed

CONVERSION CONFUSION
In re Fry, Case No. 04-16887
October 2008 Judge Nugent

Debtor converted from 13 to 7 and then learned she was not eligible for a 7 and attempted to converted back to 13. Case dismissed as an “end run” around 7 discharge.

Digest by:  Jan Hamilton, Trustee

What If Debtor Destroys Collateral?

INTENTIONAL DESTRUCTION OF COLLATERAL?
In re Murrow, Case No. 07-41061
March 2008, Judge Karlin

Creditor was give an additional time to amend its complaint. Debtor took the 5th but the intimation of the discussion in the decision is that debtor likely intentionally destroyed the vehicle but insufficient facts were alleged.

Digest by:  Jan Hamilton, Trustee

Debtor May Be Converted to 7 with No Discharge

DEBTORS MAY BE CONVERTED TO 7 EVEN THOUGH NOT ELIGIBLE FOR
7 DISCHARGE
In re Rogers, Case No. 08-21487
January 2009, Judge Somers

In a case in which assets may be liquidated, a 13 may be converted to a 7 even though debtors may not be eligible for a 7 discharge.

Digest by:  Jan Hamilton, Trustee

What Happens to Divorce Debts in Bankruptcy?

Debts in the nature of support of child or former spouse are not discharged in either chapter 7 or 13 bankruptcy.

What about property settlement debts?  If the divorce decree contains a hold harmless obligation that makes one spouse indemnify the other spouse, then the hold harmess oglibation is a separate debt to the spouse and is not dischargeable in chapter 7 bankruptcy 523(a)(5) or 523(a)(15).

The hold harmless obligations can be discharged in chapter 13 bankruptcy as long as the debt to the former spouse not a Domestic Support Obligation (DSO).  This is possible because property settlement debts under 523(a)(15) are not excepted from discharge in chapter 13 cases.  See Schuett v. Finkey, 2008 Bankr. Lexis 1555 (Bankr. D. Neb. May 21, 2008).

Help for Student Borrowers When School Closes

Student loans are not generally discharged in bankruptcy, but what happens when the school closes and the student does not receive the education she borrowed the money for? As long as the school closed within 90 days of enrollment or the last day attended, there is a remedy for student loan borrowers (but it is not a bankruptcy remedy).

Check out this link to search for closed schools. The regulation is 34 C.F.R. § 682.402(d). More help for student borrowers is available at www.studentloanborrowerassistance.org.

What Does Charged Off Mean?

Charged Off: This is an accounting term that means the creditor does not expect to collect on the debt. It relates to the creditor’s taxes. It starts time periods under the Fair Credit Reporting Act. It does not mean that the debt is no longer legally enforceable.

Video: What is the Bankruptcy Discharge?

Bankruptcy Won’t Discharge These Debts

Will I Lose My Bankruptcy Case?

Bankruptcy Crimes

Video: What Happens at Bankruptcy Court Hearings?

Video: What are Bankruptcy Crimes?

Examples of bankruptcy crimes:

Fraudulent transfer of assets

Hiding property from the bankruptcy trustee

Making false statements in bankruptcy

Disobeying a bankruptcy court order

Video: Bankruptcy Won't Help With These Debts

What Is NOT Discharged in Bankruptcy  Video:  Running Time 4:34

Child support, alimony

Student loans

Most federal and state income taxes

Employer payroll taxes and sales taxes

Loans obtained by fraud or false pretenses

Liens on property such as homes and cars

What Would Jesus Say About Debts and Bankruptcy?

The Old Testament teaches the legal and moral obligation to pay just debts must be balanced with compassion and a call for cancellation of debts.  Jesus promoted debt forgiveness and preached the importance of placing love and compassion above greed and wealth.

In Luke 6:34-35, Jesus said: “And if you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies and, do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High; for he is kind to the ungrateful and the selfish.”

“The consistent teaching of both the Old and New Testaments is that compassion, mercy and justice are to override purely economic concerns, such as loans. Religious people are to be gracious to all, even debtors,” according to the essay, Forgive Us Our Debts.

Bible verses on debt and bankruptcy

Beware of “Disguised” Reaffirmation Agreement

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

“Disguised” Reaffirmation Agreement

Carefully read any credit card or other credit offer from a company that claims to represent a lender you listed in your bankruptcy or own a debt you discharged.  This may be from a debt collection company that is trying to trick you into reaffirming a debt.  The fine print of the credit offer or agreement will likely say that you will get new credit, but only if some or all of the balance from the discharged debt is added to the new account.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

Should I Reaffirm Department Store Credit Cards?

Some department store credit cards may be secured.  The things you buy with the credit card may be collateral.  The store might tell you that they will repossess what you bought, such as a TV, washer, or sofa, if you do not reaffirm the debt.  Most of the time, stores will not repossess used merchandise.  So, after a bankruptcy, it is much less likely that a department store would repossess “collateral” than a car lender.

However, repossession is possible.  You have to decide how important the item is to you or your family.  If you can replace it cheaply or live without it, then you should not reaffirm.  You can still shop at the store by paying cash, and the store may offer you a new credit card even if you don’t reaffirm. (Just make sure that your old balance is not added into the new account.)

For Example

Some offers to reaffirm may seem attractive at first.  Let’s say a department store lets you keep your credit card if you reaffirm $1000 out of the $2000 you owed before bankruptcy.  They say it will cost you only $25 per month and they will also give you a $500 line of credit for new purchases.  What they might not tell you is that they will give you a new credit card in a few months even if you do not reaffirm.  More importantly, though, you should understand that you are agreeing to repay $1000 plus interest that the law says you can have legally canceled.  That is a big price to pay for $500 in new credit.

Another option for keeping property with a purchase money security interest is redeeming it from the creditor for a lump sum cash payment.

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.

Should I Reaffirm Credit Cards?

It is almost never a good idea to reaffirm a credit card.  Reaffirming means you will pay bills that your bankruptcy would normally wipe out.  That can be a very high price to pay for the convenience of a credit card.  Try paying cash.  Then in a few years, you can probably get a new credit card, that won’t come with a large unpaid balance!

If you do reaffirm, try to get something in return, like a lower balance, no interest on the balance, or a reasonable interest rate on any new credit.  Don’t be stuck paying 18/-/21% or higher!

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.

Do I Have to Reaffirm Car Loans, Home Mortgages?

If you are behind on a car loan or a home mortgage and you can afford to catch up, you can reaffirm and possibly keep your car or home.  If the lender agrees to give you the time you need to get caught up on a default, this may be a good reason to reaffirm.  But if you were having trouble staying current with your payments before bankruptcy and your situation has not improved, reaffirmation may be a mistake.  The collateral is likely to be repossessed or foreclosed anyway after bankruptcy, because your obligation to make payments continues.  If you have reaffirmed, you could then be required to pay the difference between what the collateral is sold for and what you owe.

If you are up to date on your loan, you may not need to reaffirm to keep your car or home.  Some lenders will let you keep your property without signing a reaffirmation as long as you continue to make your payments.  Sometimes lenders will do so if they think the bankruptcy court will not approve the reaffirmation agreement.

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.