Home Archives for Discharge

Do I Have Other Options for Secured Debts Other than Reaffirmation?

Posted on February 16, 2009 Written by

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.

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

Should I Reaffirm a Debt?

Posted on February 15, 2009 Written by

If you are thinking about reaffirming, the first question should always be whether you can afford the monthly payments.  Reaffirming any debt means that you are agreeing to make the payments every month, and to face the consequences if you don’t.  The reaffirmation agreement must include information about your income and expenses and your signed statement that you can afford the payments.

If you have any doubts whether you can afford the payments, do not reaffirm.  Caution is always a good idea when you are giving up your right to have a debt canceled.

Before reaffirming, always consider your other options.  For example, instead of reaffirming a car loan you can’t afford, can you get by with a less costly used car for a while?

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.

Filed Under: Discharge, Mortgages, Vehicles

Do I Have to Reaffirm the Same Terms?

Posted on February 14, 2009 Written by

No.  A reaffirmation is a new contract between you and the lender.  You should try to get the creditor to agree to better terms such as a lower monthly payment or interest rate.  You can also try to negotiate a reduction in the amount you owe.  The lender may refuse but it is always worth a try.  The lender must give you disclosures on the reaffirmation agreement about the original credit terms, and any new terms you and the lender agree on must also be listed.

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.

Filed Under: Discharge, Mortgages, Vehicles

Can I Change My Mind After I Reaffirm a Debt?

Posted on February 13, 2009 Written by

Yes.  You can cancel any reaffirmation agreement for sixty days after it is filed with the court.  You can also cancel at any time before your discharge order.  To cancel a reaffirmation agreement, you must notify the creditor in writing.  You do not have to give a reason.  Once you have canceled, the creditor must return any payments you made on the agreement.

Also, remember that a reaffirmation agreement has to be in writing, has to be signed by your lawyer or approved by the judge, and has to be made before your bankruptcy is over.  Any other reaffirmation agreement is not valid.

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.

Filed Under: Discharge, Mortgages, Vehicles

Do I Have to Reaffirm Any Debts?

Posted on February 12, 2009 Written by

No.  Reaffirmation is always optional.  It is not required by bankruptcy law or any other law.  If a creditor tries to pressure you to reaffirm, remember you can always say no.

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.

Filed Under: Discharge, Mortgages, Vehicles

What Is Reaffirmation?

Posted on February 11, 2009 Written by

Although you filed bankruptcy to cancel your debts, you have the option to sign a written agreement to “reaffirm” a debt.  If you choose to reaffirm, you agree to be legally obligated to pay the debt despite bankruptcy.  If you reaffirm, the debt is not canceled by bankruptcy.  If you fall behind on a reaffirmed debt, you can get collection calls, be sued, and possibly have your pay attached or other property taken.

Reaffirming a debt is a serious matter.  You should never agree to a reaffirmation without a very good reason.

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.

Filed Under: Discharge, Mortgages, Vehicles

Do I Still Owe Secured Debts (Mortgages, Car Loans) After Bankruptcy?

Posted on February 10, 2009 Written by

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, [Read more…]

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

Which Debts Do I Still Owe After Bankruptcy?

Posted on February 9, 2009 Written by

When your bankruptcy is completed, many of your debts are “discharged.”  This means they are canceled and you are no longer legally obligated to pay them.

However, certain types of debts are NOT discharged in bankruptcy.  The following debts are among the debts that generally may not be canceled by bankruptcy:

* Alimony, maintenance, or support for a spouse or children.

* Student loans.  Almost no student loans are canceled by bankruptcy.  But [Read more…]

Filed Under: Discharge, Filing Bankruptcy

I Want to File a Medical Bankruptcy

Posted on February 8, 2009 Written by

The high cost of health care is one of three primary causes of individual bankruptcy.  Frequently, people are left with unaffordable medical bills even if they have health insurance.  We get lots of inquiries about  “medical bankruptcy“.  But you can file bankruptcy just for medical debt.

There really is no such thing as a “medical bankruptcy“.  People think there is because they want to get rid of their medical debts in bankruptcy, yet keep their house and car payments.  This is a misunderstanding.

Most consumer bankruptcies discharge all unsecured debt such as medical bills and credit cards so it may seem like a medical bankruptcy.  But, all creditors must be listed as creditors on the bankruptcy paperwork and notified of the bankruptcy filing.  The house and car lender must know about the bankruptcy and those loans must be paid to keep the house and car.

Filed Under: Discharge, Filing Bankruptcy

Can I Keep One Credit Card Out of My Bankruptcy?

Posted on February 8, 2009 Written by

Clients sometimes ask me if they can keep just one credit card out of the bankruptcy?  They want to omit it from the bankruptcy paperwork and keep paying the credit card payments after the bankruptcy filing so they can have one credit line.  Usually, this request is prompted by the fear of not having credit after the bankruptcy filing for emergencies.

Omitting a credit card account from the bankruptcy schedules generally BACKFIRES.  Most of the credit card lenders will FIND OUT out about the bankruptcy, even if the account is not listed, and CANCEL the credit line.  Lenders subscribe to electronic services such as Banko to tell them about all bankruptcies filed every day.

Many credit cards such as JC Penney and Dillards are actually the same creditor and notice to one account at GE Money Bank will result in cancellation of all accounts through that bank.  Often lenders run your name through the credit reporting agencies on a periodic basis.  The lender will FIND OUT, it is just a matter of when.

Once the lender finds out about your bankruptcy, the credit card account will be canceled, any post-bankruptcy payments will be forfeited, your account will be sent to collection for any post-bankruptcy charges and you will have negative post-bankruptcy credit history.

Omitting creditors from your bankruptcy schedules is wrong.  Intentially leaving off creditors in your bankruptcy case is fraud and a federal crime.  The discharge of debts is a reward for honest debtors who make full disclosure of their finances.  In addition to risking prosecution for perjury, you could be denied your discharge.

Can I list the credit card and keep it by reaffirming?  Generally, no.  Most creditors will not agree to a reaffirmation of unsecured debts and most bankruptcy judges will not approve such reaffirmations.  Your attorney is not likely to be willing to sign a required affidavit that reaffirmation of credit card debt is in your best interest.

Filed Under: Bad Outcomes, Fraud, Crimes, Discharge, Filing Bankruptcy Tagged: , , , , , ,

How Long Will Bankruptcy Stay on My Credit Report?

Posted on February 8, 2009 Written by

The results of your bankruptcy case will be part of your credit record for ten (10) years.  The ten years are counted from the date you filed your bankruptcy.

This does not mean you can’t get a house, a car, a loan, or a credit card for ten years.  In fact, you can probably get credit even before your bankruptcy is over!  The question is, how much interest and fees will you have to pay?  And, can you afford your monthly payments, so you don’t begin a new cycle of painful financial problems.

Debts discharged in your bankruptcy should be listed on your credit report as having a zero balance, meaning you do not own anything on the debt.  Debts incorrectly reported as having a balance owed will negatively affect your credit score and make it more difficult to get credit.  You should check your credit report after your bankruptcy discharge and file a dispute with the credit reporting agency if this information is not correct.

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.

Filed Under: Discharge, Filing Bankruptcy

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

What Else Must I Do to Complete My Case?

Posted on January 12, 2009 Written by

After your case is filed, you must complete an approved course in personal finances.  This course will take approximately two hours to complete.

Many of the course providers give you a choice to take the course in-person at a designated location, over the Internet (usually by watching a video), or over the telephone.

Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust.

In a chapter 7 case, you should sign up for the course soon after your case is filed.  If you file a chapter 13 case, you should ask your attorney when you should take the course.

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: Chapter 13, Chapter 7, Discharge, Filing Bankruptcy

Will Bankruptcy Wipe Out All My Debts?

Posted on January 10, 2009 Written by

Yes, with some exceptions.  Bankruptcy will not normally wipe out:

  • Money owed for child support or alimony;
  • Most fines and penalties owed to government agencies;
  • Most taxes and debts incurred to pay taxes which can not be discharged;
  • Student loans, unless you can prove to the court that repaying them will be an “undue hardship”;
  • Debts not listed on your bankruptcy petition;
  • Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
  • Debts resulting from “willful and malicious” harm;
  • Debts incurred by driving while intoxicated;
  • Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

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: Discharge, Filing Bankruptcy

What Bankruptcy Can Not Do

Posted on December 31, 2008 Written by

Bankruptcy can not, however, cure every financial problem.  Nor is it the right step for every individual.  In bankruptcy, it is usually not possible to:

  • Eliminate certain rights of “secured” creditors.  A creditor is “secured” if it has taken a mortgage or other lien on property as collateral for a loan.  Common examples are car loans and home mortgages.  You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money on the debt if you decide to give back the property.  But you generally can not keep secured property unless you continue to pay the debt.
  • Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes. [Read more…]
Filed Under: Discharge, Filing Bankruptcy, Mortgages, Vehicles

Free Web Videos on Filing Bankruptcy

Posted on December 14, 2008 Written by

Free web videos on about filing for bankruptcy are now available on the federal court website:

  1. Introduction
  2. Types of Bankruptcy
  3. Limits of Bankruptcy
  4. Filing for Bankruptcy
  5. Meeting of Creditors
  6. Bankruptcy Crimes
  7. Court Hearings
  8. The Discharge
  9. Legal Assistance
Filed Under: Bad Outcomes, Fraud, Crimes, Discharge, Filing Bankruptcy Tagged: , , , , ,
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