Posts Tagged ‘Chapter 7’

How Often Can I File Bankruptcy?

May 25, 2011 • No Comments • Bankruptcy, Chapter 13, Chapter 7

If you have filed a previous bankruptcy and you received a discharge, the Bankruptcy Code specifies certain time limits as to when you can file bankruptcy again and obtain a discharge. If your case was closed or dismissed, however, and you did not obtain a discharge in your previous bankruptcy case, then you can file another bankruptcy again without restriction.  The following time limits are built into the Bankruptcy Code.

Previous Chapter 7 Bankruptcy: If you have previously received a Chapter 7 bankruptcy discharge, you can file bankruptcy again and be entitled to another discharge in the following situations:

  • Filing a Chapter 7 Bankruptcy: If you need to file for Chapter 7 bankruptcy after you have obtained a Chapter 7 discharge, you will have to wait 8 years from the date you filed your previous Chapter 7 bankruptcy. The 8 year time period starts from the date that you filed your previous Chapter 7 bankruptcy. Example: if you filed your previous Chapter 7 bankruptcy in  May of 2004, then you would be eligible to file another Chapter 7 bankruptcy and obtain a complete discharge in May of 2012.
  • Filing a Chapter 13 Bankruptcy: If you need to file for Chapter 13 bankruptcy after your have obtained a Chapter 7 discharge, you will need to wait 4 years to obtain a complete discharge.  There are certain situations in which it may be advantageous for you to file a Chapter 13 right after a Chapter 7, even if you cannot obtain a full discharge in the subsequent Chapter 13.  If  you file within 4 years, however, any unsecured debts not discharged in the previous Chapter 7 will also not be discharged in the Chapter 13.  The 4 year time period starts to run from the date you filed your previous Chapter 7 bankruptcy. Example: If you filed your Chapter 7 in June of 2008, then you would be eligible to file a Chapter 13 bankruptcy and obtain a complete discharge in June of 2012.

Previous Chapter 13 Bankruptcy: If you have previously received a Chapter 13 bankruptcy discharge, you can file bankruptcy again and be entitled to another discharge in the following situations:

  • Filing a Chapter 7 Bankruptcy: If you need to file a Chapter 7 bankruptcy after you have received a Chapter 13 discharge, you will need to wait 6 years from the date of filing your Chapter 13 bankruptcy to receive a full discharge. You may be able to obtain a full discharge of your unsecured debts in a Chapter 7 bankruptcy, even if you file within 6 years, but you must have paid your unsecured creditors 70% or more during your previous Chapter 13 bankruptcy. Otherwise, you will need to wait at least 6 years from the date of filing your previous Chapter 13 bankruptcy to file a Chapter 7 bankruptcy and receive a discharge.  Example: If you filed your Chapter 13 in July of 2006, then  you would be eligible for to file a Chapter 7 bankruptcy and obtain a complete discharge in July of 2012.
  • Filing a Chapter 13 Bankruptcy: If you need to file another Chapter 13 bankruptcy after you have received a Chapter 13 discharge, you will need to wait 2 years from the date of filing of your previous Chapter 13 bankruptcy. Example: If you filed your Chapter 13 in August of 2010, then you would be eligible to file another Chapter 13 bankruptcy and obtain a complete discharge in August of 2012.

If you file a new bankruptcy case before the statutory time period has elapsed since your previous bankruptcy, you will not be able to obtain a complete discharge of your debts in your new bankruptcy case.  Achieving the maximum benefit from the bankruptcy discharge should be your main goal for filing a D.C. or Virginia bankruptcy.  Consult an experienced bankruptcy attorney to ensure that all of your eligible debts are discharged in your bankruptcy.  Call Lee Legal at (202) 448-5136 or or (703) 879-2870 for more information.

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Should I Stop Paying My Bills?

May 8, 2011 • No Comments • Chapter 7, Debt Collection

I often get asked the question, “If I am filing Chapter 7 bankruptcy, should I stop paying my bills?”  The answer is Yes and No.

First the No. You must continue to pay certain bills, like your rent or mortgage, vehicle loans for any cars you intend to keep post-bankruptcy, most student loans, utilities, and other basic living expenses.  In most cases, you will indicate in your Statement of Intention that you intend to reaffirm the debt on your car, and that you intend to continue living in your home or apartment.  In addition, while you may intend to erase past utility bills from a former address, you should continue to pay the utilities for your current address.

Now the Yes. If you intend to file for Chapter 7 bankruptcy, you should stop paying most unsecured debts, including credit cards, medical bills, and personals loans.  (“Unsecured” debts are debts that aren’t tied to an asset like a home that can be foreclosed upon, or car that can be repossessed, once you stop paying.)  Since these debts will be discharged in your bankruptcy, making payments to your creditors is just sending good money after bad. Moreover, the Bankruptcy Code prohibits payments of more than $600 within three months of filing a bankruptcy, especially to family or friends. If you make a large payment within a year prior to filing of your bankruptcy, the bankruptcy trustee assigned to your case may sue the person to whom you made the payment to get back that payment for your creditors.

Of course, once you discontinue paying, your creditors will send your accounts to collection agents, who will attempt to harass you into paying. For this reason, you should file your bankruptcy as quickly as possible. Otherwise, creditors will move forward with collection efforts, including obtaining judgment, garnishing your wages, and filing liens against your real property and bank accounts.

Once you retain Lee Legal, our office will begin take your creditor calls up to two weeks before you file your Chapter 7 bankruptcy.  When your case is filed and the Automatic Stay kicks in, you will be protected from all collection efforts by operation of law.  If you are considering filing bankruptcy in Virginia or D.C., call attorney Brian Lee at (202) 448-5136 and schedule a free consultation.

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Can the Bankruptcy Trustee Take My Tax Refund?

Mar 10, 2011 • 2 Comments • Chapter 13, Chapter 7

Your income tax refund is basically an interest-free loan to the government. If you have paid more in taxes than you owe, the government must repay you for your overpayment.  Around this time every year, I often get asked the question, “What happens to my tax refund if I file bankruptcy?”

The trustee assigned to your case may be able to seize your income tax refund, depending upon when you file and whether your refund is fully exempted.

In most Chapter 7 cases, your tax refund can likely be fully exempted, which means the Chapter 7 trustee will “abandon” your refund and you will be able to keep it. If you do not correctly exempt your refund, however, the trustee will request that the IRS send the refund directly to the trustee’s office.  Even if you are due some portion of your refund post-distribution, the possibility of a long delay makes this an unattractive option.

Chapter 13 cases are a bit more complicated. If you have a confirmed Chapter 13 Plan that requires repayment of only a percentage of your debt, your trustee will likely seize your refund over the course of the Plan and use the proceeds to increase the percentage paid to unsecured creditors.  Income tax refunds in Chapter 13 are considered “property of the estate,” so your trustee will want to apply this money toward payment of your Plan.

In 100% repayment cases, however, the trustee has no interest in seizing your tax refund.  If your income is demonstrably sufficient to satisfy your confirmed Plan, the trustee will allow you to keep your tax refund.  Often adjusting income tax withholdings upon filing a Chapter 13 is appropriate.

Tax refunds are the assets most frequently captured by bankruptcy trustees. An experienced bankruptcy attorney can assist you in finding the maximum exemption or strategy to protect your tax refund.

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What is a Reaffirmation Agreement?

Sep 12, 2010 • No Comments • Bankruptcy

A “reaffirmation agreement” in bankruptcy refers to an agreement made between a bankruptcy debtor and his or her creditor that waives the discharge of a debt that would otherwise be discharged in the debtor’s bankruptcy proceeding.  Reaffirmation agreements are usually executed for the purpose of keeping collateral that would otherwise be subject to repossession.  They must in most cases be filed within sixty (60) days after the first date set for the meeting of creditors.  Reaffirmation agreements are strictly voluntary.

Reaffirmation agreements essentially allow you to keep your property (the creditor’s loan collateral) even after the legal discharge of your debt in the bankruptcy.  Under these agreements, debtors agree to “reaffirm” liability for the debts owed on the property they wish to keep.  Reaffirmation agreements are essentially new contracts between the debtor and the lender.

Debtors like reaffirmation agreements because they get to keep their property; creditors like reaffirmation agreements because they continue (or begin) to get paid for the loan secured by the property.  After all, repossessing (even in cases of voluntary surrender) and auctioning property is also time-consuming and expensive for creditors.

As an example, should you default on your car loan payments, your creditor will take steps to repossess the vehicle.  For any number of reasons, you may want to retain the car.  You therefore file for bankruptcy protection and execute a reaffirmation agreement with the vehicle loan lender.  The new contract will allow you to keep the car as long as you promise to pay (or “reaffirm”) the remaining debt by the terms of the new agreement.

If you reaffirm a debt and fail to make the payments as agreed, however, the creditor could take action against you to recover any property that was given as security for the loan.  Moreover, you will remain personally liable for any remaining debt once the repossessed property has been sold at auction.  For this reason, it is important that you thoroughly discuss your options with your bankruptcy attorney before deciding to execute a reaffirmation agreement.

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