Category: Chapter 7 Bankruptcy

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Debtors looking for liquidation and a fresh start always file for a Chapter 7 bankruptcy. With a headlong fall in the economy, bankruptcy is becoming more popular as a way to recover financially. The most common question that troubles the bankruptcy filers is whether they will lose their house in bankruptcy or not. However, the main determining factor of it is equity.

Equity is the main factor that determines whether you can keep your home or not. So, if you have equity on your home which cannot be covered by exemption, your bankruptcy trustee might decide to sell your home to repay your creditors. However, if your equity amount will not cover the costs of selling your home or if it will be covered by exemption, you might be allowed to keep the house. This does not mean you will get a free home. This means you will be allowed to stay in the house as long as you will make your mortgage payments.

You must be wondering that why should you file for bankruptcy if you might still lose your house. The answer is that losing your house is situational. You will be allowed to keep your house, if you will keep up with your payments even after filing for bankruptcy. But if you fail to keep up with your payments again, the bank can rightfully have a foreclosure on your home. However, you won’t be responsible for any kind of lack between the amount owned and the selling, the way you were before the bankruptcy. When you file for a bankruptcy, your personal liabilities get separated from the mortgage. This means you will be liable for the house only till the time you will pay for it. If you will stop making the payments, the bank can only take the house away and nothing else. Moreover, these payments will not harm or benefit your credit as they will not be reported to the credit bureau.

Filing for bankruptcy can be overwhelming so it is always better to consult a bankruptcy attorney before making any decision. You can contact the best bankruptcy attorneys of Los Angeles & Dallas, TX, at Recovery Law Group or by calling on 888-297-6203.

Call: 888-297-6203

In Chapter 7 bankruptcy, the bankruptcy trustee is allowed to sell your non-exempt assets or properties and use the proceeds to repay your debts. However, you can protect some or all of your property by using certain exemptions. If you have collectible assets, your trustee can collect the administrative fees (taken from your collected assets) once the bankruptcy case closes, which is not an out-of-pocket expense.

The collection of administrative fees as per the 11 U.S. Code § 503 is as follows:

• There can be a timely or tardy filing (permitted by the court) of a request for administrative fees, by an entity, to be paid.
•  After a hearing, administrative expenses along with other claims (section 502 (f) of this title) shall be allowed, including—

(1)

(a) Necessary expenses to preserve the estate, including—

• Salary and commission for services provided after the case began.
• Wages and benefits granted to the National Labor Relations Board or the judicial proceedings.

(b) Any tax—

• Secured or unsecured given to the estate, including property taxes whose liability is in rem, personam, or both, leaving the kind of tax mentioned in section 507 (a)(8) of this title.
• Attributable to a lavish allowance of a tentative adjustment received by the estate whether the taxable year related to it had ended before or after the case began.

(c) Any fine, or a tax-related credit reduction mentioned in sub-paragraph (B) of this paragraph in this title.

(d) A governmental unit shall not request an expense (mentioned in sub-paragraph (B) or (C)) to be paid, if unable to fulfill the requirements of subsection (a).

(2) Reimbursement and compensation granted under section 330 (a).

(3) The necessary expenses specified in paragraph (4) of this subsection, given to—

(a) A creditor

• Filing a petition under section 303 of this title.
• That recovers the transferred or hidden properties (by the debtor) with the court’s
• Connected with the prosecution of the debtor’s case, business or property related criminal offense.
• For substantially contributing in Chapter 9 or 11 cases of this title. The same also works for an equity security holder, an indenture trustee, or a representative committee (of creditors or equity security holders).

(b) Compensation for the services of a custodian replaced under section 543.

(c) A committee member chosen under section 1102 of this title.

(4) Reasonable compensation and reimbursement for professional services provided by a lawyer or an accountant of an entity with allowable expense under subparagraph (A), (B), (C), (D), and (E) of paragraph (3) of this sub-section.

(5) Compensation for the substantial contribution of an indenture trustee in chapter 9 or 11 case.

(6) Mileage and fees payable under the 119^th chapter of title 28.

(7) In regard to a non-residential real property lease, earlier assumed under section 365 but later rejected, a sum equal to all the due monetary obligations (excluding the ones related to an operational failure or a penalty provision) for 2 years’ period, following the rejection date or the date of premises’ actual turnover, without any reasonable reduction except for the ones actually received or about to be received from an entity apart from the debtor, and the claim for remaining due sums for the balance of the lease’s term shall be a claim under section 502 (b)(6).

(8) The necessary costs and expenses given to a trustee or a Federal agency (section 551 (1)) or a state or a political sub-division agency for disposing of patient records under section 351 or for transferring patients from an about to be shut health care business to another health care business.

(9) The price of any goods that the debtor received within 20 days before the case commenced.

To learn more about the administrative fees in Chapter 7 bankruptcy, consult the Recovery Law Group at www.staging.recoverylawgroup.com or on 888-297-6203.

Call: 888-297-6203

Unlike chapter 13 where reorganization of debts takes place and a repayment plan is involved, chapter 7 is a no-asset case. However, you can protect some of your property using exemptions provided by state or federal laws. All non-exempt property of the filer is at the disposal of a bankruptcy trustee who can liquidate them to pay your creditors. Lawyers of Los Angeles based bankruptcy law firm Recovery Law Group say chapter 7 bankruptcy is the best way to get financial relief no matter how much the debt provided you can qualify for it.

Who can qualify for chapter 7 bankruptcy?

Debt relief through chapter 7 bankruptcy is available for people having low income. In this case, the monthly income is calculated as an average of the previous 6 months before the bankruptcy filing. If the monthly income is less than the state median income for a household of similar members then you can file for chapter 7 bankruptcy. However, if your income is higher than the state median, you need to pass the means test. This test is used to determine if you have enough disposable money to pay some of your debts. In case you do, you cannot qualify for chapter 7 bankruptcy.

Presumption of abuse will be considered if the amount available to pay creditors (more than 25% of unsecured debt) to be paid in five years is more than $12,850. However, if you can show that due to certain circumstances you won’t be able to pay this, only then you can file for chapter 7 bankruptcy, else the case will either be dismissed or converted into a chapter 13 bankruptcy.

Other requirements that can affect your chapter 7 bankruptcy eligibility are the dismissal of a previously filed bankruptcy case (180 days prior to filing) due to failure to appear or comply or because the debtor voluntarily dismissed the petition. Additionally, you should have attended the mandatory credit counseling course from an approved agency within 180 days prior to a bankruptcy filing.

What do you need to file for chapter 7 bankruptcy?

After filing a petition in bankruptcy court, the debtor must also file the following documents:

• Financial account statement
• List of assets and liabilities
• Schedule for income and expenditures
• Any contracts or unexpired leases
• Proof of any payment received in 60 days prior to a bankruptcy filing
• Credit counseling certificate and copy of repayment plan etched out
• Monthly net income along with any expected increase in either income or expenses
• Any qualified education or tuition accounts the debtor has

Bankruptcy lawyers are your best bet if you wish to get rid of the huge mountain of debts. Call 888-297-6023 to speak with experienced bankruptcy lawyers regarding your options.

Chapter 7 bankruptcy has no debt limit for individual bankruptcy filers. Thus, any increase in debtor decrease in income is not going to affect your Chapter 7 bankruptcy eligibility. However, say lawyers of Dallas based bankruptcy law firm Recovery Law Group, you are obliged to disclose your finances as well as update them (if there have been any changes) when you file your bankruptcy papers. Chapter 7 requires this more than Chapter 13 as your income is the primary criterion that determines whether you can qualify for this bankruptcy chapter or not.

In case you are filing for bankruptcy and you anticipate any change in income around your bankruptcy filing, you should intimate it to the court. If you have lost your job, you should add this information to the pertinent documents. Once you have filed the papers, check whether the updated information is included in them or not. You will be asked questions related to income changes by the bankruptcy trustee in the 341 hearing or meeting of creditors. This is important as any increase in income might disqualify you from Chapter 7 eligibility.

In case you are amending any document, you should intimate the bankruptcy trustee of the amended schedule. The same holds true for property too. According to Section 1306 of Bankruptcy Code, any property which is purchased after the beginning of bankruptcy case but before it ends, is dismissed or converted should be included as a part of the bankruptcy estate. Additionally, you should also report any inheritance, bonus, or life insurance received. If the debtor does not follow the rules of disclosure, there can be serious repercussions with respect to the bankruptcy case. Any discharge obtained by fraud means can be revoked. Also, if you fail to disclose financial assets, this could lead to criminal prosecution too (for bankruptcy fraud).

Any individual who is filing for Chapter 7 bankruptcy needs to include their statement for current monthly income. If their monthly income is more than the average state median, they have to undergo a means test. This test is used to gauge the ability of the debtor to pay the creditors through their disposable income. Disposable income is calculated by deducting any and every monthly expense essential for surviving like food, clothes, medical, transportation, utilities, taxes, and housing apart from any secured debts (mortgage, car loan) and court-mandated payments like taxes, childcare, alimony, etc. from the monthly income. If your disposable income is enough to make payments towards unsecured creditors your bankruptcy is converted into a Chapter 13 bankruptcy. thus, any change in your income or expenses might affect your bankruptcy chapter. It is therefore important that you consult with expert bankruptcy lawyers. You can call 888-297-6023to to discuss your case with experienced bankruptcy lawyers.