Tag: bankruptcy

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In most cases of bankruptcy, the debtor is not expected to part with the assets that he bought with the credit card. However, there are a few exceptional scenarios, in which parting with the charged assets is inevitable.

Security Agreement in Credit Card Contracts

Your ownership of the item, bought with a credit card, depends on the ‘clause of security’ in your credit card agreement. You get the same security agreement while getting a car loan. The bought stuff acts as collateral for your debt, and you cannot be its legal owner unless you clear your complete debt. The stuff in question is forfeited and is repossessed by the creditor, in case of the debtor’s inability to pay the said amount.

Typically, the inclusion of a security agreement in a credit card contract depends on the type of credit card lent by the creditor. Normally, there is no security agreement for debtors with major credit cards, like MasterCard, Visa or American Express. On the other hand, jewelry stores or departmental stores like Best Buy or Macy’s, provide security agreement to their debtors.

What Happens to Items Subject to a Security Agreement?

In case of bankruptcy, the security agreement requires the debtor to either pay the money for the bought stuff or to return the stuff to the creditor. However, there are a few circumstances, under which you can still keep the property in question.

• Personal property items can be retained by working out a good deal, in case you want to keep any of them.
• Old and obsolete items are usually undesirable by the creditors.
• Department store creditors usually claim the repossession of major purchases, called ‘white goods’, like television or washing machines. They don’t take back the ‘soft goods’, like clothes, video games, mattresses or DVDs.

Owning the Charged Items

When you pay a certain amount of money to the department store creditor, it discharges the oldest unpaid balance. As soon as you make the payment for the oldest bought item, it legally becomes yours. Your next payment gets credited against the next oldest balance, and so it goes on.

When you purchase things using major credit cards, the bank pays the store for them, and thus they automatically become yours. The store doesn’t hold any claim over them. Moreover, all the major credit card debts get discharged in bankruptcy, and all the bought things like furniture, normal appliances and clothes become your “exempt” property.

What Happens to the ‘Non-exempt’ Assets bought using Major Credit Cards?

In case of a Chapter 7 bankruptcy, the bankruptcy trustee is allowed to sell your ‘non-exempt’ assets, in order to pay the debts to your creditor. Inexpensive and daily-use items like clothes, furniture, etc. are exempted, but you may have to part with your expensive jewelry and other assets which don’t come under the ‘exempt’ category by the state law. For more information, visit the website https://www.staging.recoverylawgroup.com/ or contact 888-297-6203.

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Heavy debts can cause numerous problems. Threatening phone calls and emails from debt collectors apart, you could lose your wages, your car or your home to repossession or foreclosure if timely intervention is not done. Filing for personal bankruptcy (Chapter 7 or Chapter 13) puts an automatic stay in place which not only stops the threatening phone calls but also halts repossession or foreclosure proceedings. However, if you file for bankruptcy just on the eve of your foreclosure sale, Los Angeles based bankruptcy law firm https://www.staging.recoverylawgroup.com/ lawyers say things could be a bit tricky. There are always chances of you being unable to contact people at the lender’s foreclosure office to notify them either in person or through email/ fax or phone about your bankruptcy filing to hold the foreclosure proceedings.

You need to be quick if you wish to stop the foreclosure sale from taking place. In case, you are unable to do so, the transaction can be voided, say lawyers, but it takes time. Here’s what you can do to save your property in case of foreclosure sale:

1. Attend the foreclosure sale yourself or send a reliable person there early to show your bankruptcy filing papers to the auctioneer prior to the commencement of the sale.
2. In case you are unable to attend the foreclosure sale, you can record a Notice of Bankruptcy in the county recorder’s office where the property is located.
3. In case no previous bankruptcy had been filed by you, filing of a bankruptcy will result in an automatic stay that can prevent foreclosure proceedings to take place. A foreclosure sale can be voided if it is in violation of the automatic stay. This can be a bit difficult when the sale has already been conducted and the property bought by a bona fide purchaser (BFP). The court decision in this respect is that the foreclosure sale is voidable despite the property being bought by a BFP. However, getting the sale rescinded is a litigator’s worst nightmare.
4. In case the sale is held, you could still record the bankruptcy notice before the trustee’s deed is recorded; the latter typically takes a few days after the sale. The recorded notice is a constructive notice which removes all defenses raised by a BFP to seek legal action against voiding of sale.

A bankruptcy attorney can work things around for you to save your property from foreclosure. You can call 888-297-6023 to discuss your case with experienced bankruptcy lawyers.

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Many times, life throws curveballs at you because of which you might have to take a harsh decision like bankruptcy. Los Angeles based bankruptcy law firm https://www.staging.recoverylawgroup.com/ handled a case where the petitioner had taken over his mother’s home as she was unable to make payments. The property had no equity when this transaction occurred. Since then the client paid all delinquent house payments, mortgage, and taxes for many years. During this duration, the value of the property increased. However, before selling it for a profit, it was discovered that there were 5 judgment liens against the property. Thus, if the property was to be sold, it could only be done after the liens were paid off. Since the liens amounted to $50,000 it was a tough call, one that would require the assistance of bankruptcy lawyers since bankruptcy is probably the only legal way out of this.

When you file for bankruptcy, judicial liens can be removed from the property. however, to have the liens removed you need to utilize the exemptions entitled on the property. this could have been done by the bankruptcy filer’s mother when she filed for bankruptcy too. Many people do not exercise the option of lien avoidance, especially when they cannot afford to keep the property. you will be surprised to know that avoiding liens is very simple. All you need to do is file a motion and attend court hearings regarding the issue. In the case of the transferred property too, you can avoid liens. Alternately, a previously closed bankruptcy case can be reopened to seek financial relief that was earlier not taken. Since these are complicated processes, having help from professionally qualified lawyers is a boon. Experienced bankruptcy lawyers at 888-297-6023 can help you in sorting out any dilemma you have regarding your bankruptcy paper filing.

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Charity begins at home, and your home is where your heart lies. Many people believe in donating to causes which are dear to them. If the debts become too much, bankruptcy might be the only way out say Los Angeles based bankruptcy law firm https://www.staging.recoverylawgroup.com/. However, there may be concerns about whether they will be able to continue making donations to their favorite charity, or whether previously made donations could affect their bankruptcy? This was taken care of by the amendment made by Congress in 2006. The Religious Liberty and Charitable Donation Clarification Act has been added to the U.S. Bankruptcy Code which has different implications in personal bankruptcy chapters.

Chapter 7

As long as there is an established history of donations, with the amount being reasonable compared to monthly gross income, it won’t be an issue as per the Religious Liberty and Charitable Donation Clarification Act, when it comes to Chapter 7 bankruptcy. in fact, they might assist you in qualifying for Chapter 7 bankruptcy. the means test, which is a parameter to calculate whether you have enough disposable income to pay for the Chapter 13 repayment plan, allows for certain monthly deductions from gross income. Regular charitable donations are deductions which are allowed and as a result of it, you could qualify for Chapter 7 bankruptcy.

Chapter 13

If you can prove that the monthly charitable donations are a regular routine, they can be included in your monthly expenses. Essentially, it means that you can continue to make those donations even during bankruptcy.

However, it should be kept in mind that bankruptcy trustees are skeptical regarding abuse of Religious Liberty and Charitable Donation Clarification Act. Thus, you should have the paperwork essential to prove your charitable contributions were regular and continued over a long period of time before you even considered a bankruptcy filing. A letter of contribution from the organization is helpful in this case.

Another factor to keep in mind is that according to Religious Liberty and Charitable Donation Clarification Act, you can only donate 15% of your gross income to charitable organizations. If you make donations which are more than the mentioned amount, the court might be forced to turn them over. In case you are worried about your donations to a religious organization while in the middle of or contemplating bankruptcy, you need to consult with experienced bankruptcy attorneys at 888-297-6023 and discuss your case.

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Getting an inheritance can be overwhelming, especially if your debts are piling high. However, many people fail to keep in mind that if they get an inheritance while their bankruptcy proceedings are underway, they might end up losing all of it. As per Dallas based bankruptcy law firm https://www.staging.recoverylawgroup.com/, any inheritance received within 6 months of bankruptcy filing becomes a part of your bankruptcy estate. The bankruptcy trustee may take away that inheritance and use it to pay your creditors. Since most people never think of inheritance and bankruptcy in the same duration, being prepared for it is next to impossible unless you are consulting lawyers. In case you are expecting to receive any inheritance within a timeframe of 6 months, you need to put your bankruptcy papers on hold for some time if you don’t wish to lose the money to your creditors.

However, sometimes, delaying bankruptcy filing is not an option, especially in circumstances when foreclosure and repossession are imminent. In such cases, you need some other method to protect your inheritance. While estate planning, provisions could be made to protect the inheritance in case of a bankruptcy. This is done using the “spendthrift provision.” In this case, the personal representatives of the will/trust document or the trustee of the fund will need to ensure that if the beneficiary is in the middle of a bankruptcy proceeding or are planning to file for one, then essential steps are taken to protect the inheritance. If the financial situation is clear, then the inheritance is handed over to the beneficiary.

Most attorneys who are dealing with bankruptcy are not involved in inheritance protection. If you are expecting to land an inheritance amidst your bankruptcy proceedings and don’t wish to lose it to your clients, you need to consult with experienced bankruptcy attorneys at 888-297-6023.

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One of the major concern people have while filing for bankruptcy is whether they will be able to protect their vehicle or not. According to Los Angeles based bankruptcy law firm https://www.staging.recoverylawgroup.com/ lawyers, it depends on various factors. The primary factor which helps decide whether you can keep your vehicle during bankruptcy is the equity in the vehicle. Another point of consideration is whether the equity is exempted using either federal or state exemption. To save your vehicle you could either use the vehicle exemptions or you could use other exemptions to protect more equity.

In case you are leasing your car or taking a loan to purchase the vehicle, and you owe the lender full value of the car or more than what the vehicle is worth, then you can hold on to it by reaffirming the lease or loan. However, if you don’t wish to keep your vehicle (not reliable, costs more than its worth, etc.) you might prefer to let it go in the process to buy another. the million-dollar question is whether to buy one before filing for bankruptcy or after your bankruptcy filing. Though you can purchase a new vehicle before the bankruptcy filing, you must have a legitimate reason for buying a new vehicle close to your bankruptcy filing.

Unless you wish the bankruptcy trustee to raise a red flag regarding your purchase, you need to be prepared to answer the following questions:

• Why you purchased the car? Was the previous vehicle unreliable or the new vehicle was purchased to hide assets?
• In case you are filing for Chapter 7 bankruptcy, were you able to qualify for Chapter 7 without the new car loan or was the loan taken in order to help you qualify for the same?
• Can you exempt the entire value of the new vehicle if you are buying it with cash?

Though sounding simple, these questions can be tricky and discussing these with a bankruptcy attorney before proceeding with either filing for bankruptcy or purchasing a new vehicle is an excellent idea. Discussing the pros and cons of the decision is very important, especially if you are contemplating bankruptcy. you can discuss your case with experienced bankruptcy attorneys at 888-297-6023.

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People who are on the verge of the bankruptcy filing are often worried about their life insurance policies. This is something, they simply cannot afford to lose. Dallas based bankruptcy law firm https://www.staging.recoverylawgroup.com/ lawyers say that generally your life insurance policies are not considered a part of your bankruptcy estate. However, in case, they are included in your bankruptcy estate, there are exemptions available to protect them. Whether the insurance policy becomes a part of your bankruptcy estate depends on which type of insurance policy it is. Another important consideration is who is the beneficiary of your policy?

Term life insurance

This type of insurance has no cash value while the insured is alive. On the death of the insured, the beneficiary gets the proceeds. Since no money is involved until the insured’s death, there won’t be any available to disburse to the creditors. Hence, this type of insurance policy is not considered a part of the bankruptcy estate.

Whole life insurance

This type of insurance has a cash value attached to it as you can borrow against it after a specified time has lapsed (as mentioned in the policy). It becomes a part of your bankruptcy estate as it can be cashed to pay your debts. In case the beneficiary of the policy is your child or spouse, it might not become a part of the bankruptcy estate. Federal exemptions can protect up to $12,250 of the cash surrender value of the policy.

Receiving insurance benefits in bankruptcy

If anyone who has listed you as a beneficiary of Term Life or Whole Life Insurance dies, and you are during bankruptcy, then the money could possibly become a part of your bankruptcy estate. In case you receive any life insurance policy benefit within 180 days of the bankruptcy filing, the proceeds become a part of your bankruptcy estate and are used to pay your creditors. However, using estate planning techniques, you can protect the money you received in case of bankruptcy. in case you have a life insurance policy or are the beneficiary in someone else’s insurance policy, it would be beneficial if you consult with experienced lawyers regarding their fate in bankruptcy proceedings. To find out if life insurance will be part of your bankruptcy estate or you can save it, you can consult with experienced bankruptcy attorneys at 888-297-6023.

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Individual bankruptcy is different from corporation bankruptcy. Unlike personal bankruptcy, when the corporations file for bankruptcy under Chapter 7, they don’t get a bankruptcy discharge. A bankruptcy discharge informs creditors that you are not liable for your owed debts. In the case of corporations, it will mean that they are still liable for debts which were not paid off when bankruptcy estate was completely administrated and closed. Dallas based bankruptcy law firm https://www.staging.recoverylawgroup.com/ says that corporations are also not allowed any exemptions i.e. they cannot protect any assets unlike individuals.

What can lead to corporations filing for bankruptcy?

A corporation might opt for bankruptcy as it provides time for the partners to look for an alternative source of income (employment). The primary aim of a trustee in business bankruptcy is to close the business and pay the corporation’s creditors anything possible. The payment is made by accumulating the assets of the corporation and selling them. The proceeds so generated are distributed among the creditors. In case any creditor is not paid fully, the corporation remains liable for the unpaid debt. This can be helpful as it takes away the responsibility of the corporation’s partners for closing the business.

Irrespective of your situation, speaking with a bankruptcy attorney is important if you are contemplating filing for bankruptcy. Your corporation’s recent transaction, business assets, and other relevant information can be used by the lawyers to determine whether filing for bankruptcy is the best way to close your business. In case you haven’t hired one, you can consult with experienced bankruptcy attorneys at 888-297-6023. In case you don’t wish to close your business but are looking to get rid of your debts to get back on financial track, you can opt for the reorganisation of your debts through Chapter 11 bankruptcy.