Sunday, May 29, 2011

What is an asset?

Often people are confused about what an asset is for purposes of bankruptcy.  In initial consultations, potential clients often tell me that they have no assets.  However, they are either mistaken or do not understand the concept.  An asset is anything you own, or that you have a right to.  Your bankruptcy schedules must reflect all of your assets.  So, whether it is your home, a timeshare, a bank account, or the clothes on your back, its an asset.  Depending on which type of bankruptcy you file, and what assets you own, you might be able to file bankruptcy and keep all of your assets. 
Something is an asset whether you owe money on it or not.  If you might possibly lose
an asset in your bankruptcy, you could lose it to a secured creditor, or you could lose it to the bankruptcy trustee who will sell it and give some money to your creditors.

Be sure to disclose all of your assets to your attorney before you file your case, so you can
be well informed on how your assets are to be treated. 

Friday, May 20, 2011

Do all creditors have to be listed in the bankruptcy?

People often tell me that they have a debt that they wish to continue to pay and that
they do not want to list it in their bankruptcy.  This is not possible.  Regardless of which
type of bankruptcy you file, you have to list all of your debts, whether you
desire to continue to pay them or not.  If you are filing a chapter 7, it may be possible
to "reaffirm", or agree to continue to pay the debt.  This is fairly common with cars.

When you sign your bankruptcy schedules you will be signing under oath, under penalty
of perjury, that the documents are true, correct, and complete.  If you intentionally
leave a debt off of your schedules, you are violating this oath and could subject yourself
to criminal or civil penalties, or as they say at the U.S. Trustee's offices, possibly jail time.

If you want to keep a debt, discuss it with counsel and we will advise you whether that is
possible, and how it works.  Don't put yourself in jeopardy by swearing your documents
are true and correct when they are not.

Saturday, May 14, 2011

What is Chapter 11 Bankruptcy?

Chapter 11 Bankruptcy can be filed by an individual, married couple, corporation, or llc.  Chapter 11 is ideal if you do not qualify for chapter 7 or chapter 13, or if you are trying to retain property that you cannot retain in chapter 11.  Chapter 11 is a type of reorganization or repayment plan.  It is possible to strip liens or to modify mortgages in a chapter 11.  In most cases the chapter 11 debtor will greatly reduce its unsecured debt.

Unlike chapter 13, chapter 11 does not have a bankruptcy trustee assigned to the case to collect money. The Office of the United States Trustee will review the case but will not intervene unless the debtor or "debtor-in-possession" performs activities that endanger the estate or violate fiduciary responsibilities.  In chapter 11 a plan to repay creditors is proposed, and hopefully approved by the court.  The plan sets forth how creditors will be paid.  The debtor-in-possession will pay creditors directly in accordance with the plan.

Chapter 11 is more expensive than Chapters 7 or 13 and it has requirements to file monthly reports with the court and to pay quarterly fees to the Office of the United States Trustee.

Chapter 11 can be filed by large companies or by mom and pop wage earners, or anywhere in between.  If you do not qualify for chapter 7 or chapter 13, you should seriously consider chapter 11. 


Thursday, May 5, 2011

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is for folks with some sort of regular income who do not qualify for chapter 7, or cannot accomplish what they need to accomplish in chapter 7. 
Only individuals or married couples can file a chapter 13 case.  Companies cannot file for chapter 13. 
Chapter 13 is often referred to as the "wage earner plan", but your income does not have to be wages in order to file.  It could be retirement income, social security, self-employment income, rent, or even unemployment.  Your income has to be enough to accomplish the goals of the chapter 13 plan.
Common goals of filing a chapter 13 are 1) to stop a foreclosure and force your mortgage company to accept payments,  2) to strip off second or third mortgage liens,  3) to stop a vehicle repossession,  4) to stop lawsuits or wage garnishments, 5) to stop IRS or state tax levies, garnishments, or actions, 6) to stop high credit card interest, 7) to keep property that you might otherwise not be able to keep if you filed a chapter 7.
Chapter 13 requires you to make monthly payments to a chapter 13 trustee based on a plan created by your bankruptcy attorney.
Keep in mind that not everyone qualifies for chapter 13.  If  you do not have enough income to accomplish your goals, you may not be able to fund a chapter 13.  There are secured and unsecured debt limits.