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Tag: Chapter 7 bankruptcy filing

  • How Much Debt is Too Much For Chapter 7 Bankruptcy?

    How Much Debt is Too Much For Chapter 7 Bankruptcy?

    Debt does not need any reason to pile up. One missed payment followed by another and the debt just keeps piling without your knowledge. Having too much debt is a scary thing, but sometimes, one might just land there without choice. Bankruptcy, however, can help you kickstart your life once more instead of facing undue harassment from the lenders and dissolving all your assets, it is one of the better options. Most people use bankruptcy to start fresh amongst a pile of debt that probably would not be released even after several years of hardship. How much debt will lead to bankruptcy? Should you apply for bankruptcy or not? Get all your questions answered at Recovery Law Group.

    Where does the debt limit apply?

    The debt has to be limited for Chapter 13 type of bankruptcy. Chapter 13 bankruptcy is a system or a code that brings together, the legal system (in the form of the bankruptcy trustee and court) and affected parties (you and the lenders) to an agreement. This agreement usually is a payment plan that lasts for about 3-5 years depending on various factors like income threshold, type of debts, etc. Since a payment plan has to be implemented, there is a limit of different types of debt (secured and unsecured) below which the debtors could be eligible to file under Chapter 13 bankruptcy. There is no limit for Chapter 7 bankruptcy and hence, if you have too much debt and do not qualify for Chapter 13, Chapter 7 is an obvious choice.

    What counts in a Chapter 7 bankruptcy?

    As understood recently, the amount of debt is not an issue for Chapter 7 bankruptcy filing but there are some eligibility criterions for filing the bankruptcy. The income holds the key in the case of Chapter 7 bankruptcy. If the filer has too much income that could relate to excess disposable income with some standard deductions for common expenses, the filer would most likely not qualify for Chapter 7 system code. The income to qualify for this section code should be lower than the average income of a family/person in California. This is also referred to as a ‘means’ test. This rule was passed by the Congress in the year 2005 as the credit card companies rallied for it due to the release of unsecured debts quite easily under Chapter 7 bankruptcy code.

    Switching from one bankruptcy code to another?

    It is important to select the right Chapter to file the bankruptcy. A qualified attorney is just a call away, who can guide you with which Chapter would be best based on your specific scenarios. Reach out to +1 888-297-6203 to select the right chapter in the first place. However, if you feel switching can help you gain a better position or save you a few dollars, you need to qualify for both Chapter 7 and Chapter 13 to do so. The most common reasons for switching or converting can be listed as follows-

    • The process of bankruptcy could last up to 5 years in Chapter 13 while it can be almost immediate depending on the type of non-exempt assets in the case of Chapter 7. Time can be a factor why someone would like to switch from Chapter 13 to Chapter 7
    • Mortgage or home loan can face foreclosure under Chapter 7, and you do not have so authority or control over the home However, under Chapter 13, foreclosure is more controllable and shall not be subject to foreclosure until and unless the payments are being made as per the payment plan
    • If you did not realize you might end up losing some of your necessary assets like car, home, etc., you might want to safeguard it by switching to Chapter 13 from Chapter 7
    • If your job is not consistent, or you fall ill too often and are on sick leave often, it might be difficult to payout the monthly payments as per Chapter 13. Loss of job and similar factors shall make you incline towards Chapter 7 a bit more
    • Finally, you might end up paying back a good chunk of debts in full under Chapter 13 which is good but not ideal after filing for bankruptcy. This might also want you to consider for Chapter 7 switching

    Switching fee and procedure

    Switching from Chapter 7 to Chapter 13 is usually an easy process. There is no conversion or switching fee. Also, there is no pre-requisite for any permission; but a motion or referendum has to be passed in the court to notify about the switch. To switch from Chapter 13 to Chapter 7 there is a fee of $25. Conversion is only possible if there hasn’t been any release of debt under Chapter 7 in the recent 8 years. A motion has to be passed for Chapter 13 to Chapter 7 switch also. For all this to happen, one has to be eligible for Chapter 7 as well as Chapter 13 guidelines. In case of ineligibility to switch and ineligibility to keep up with the existing Chapter program, a filer can request the court to dismiss the case. This will release the automatic stay shelter on you, and you shall be exposed to the lender’s ways of extracting their debt from you. Expert solutions and expert guidance are just a call away. Manage your bankruptcy in the best way possible by reaching out to +1 888-297-6203 now!


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    • Family Member Debts and Bankruptcy

      Family Member Debts and Bankruptcy

      There are several reasons for taking a loan from family members. Just before bankruptcy or during bankruptcy its quite common to have some loans from relatives, parents, siblings and other family members. The debts have piled up big time and before you file for bankruptcy is there something that you can do with your family member debts? The process of bankruptcy makes you list all your creditors/lenders so that may also include your friends, family members and all lenders irrespective of the debt type. Under chapter 7, if you do not have any non-exempt assets, your lenders might not get anything. The debt hence is written off or eventually settled at a nominal payment.

      The Chapter 13 payment plan will focus on prioritizing debts under the Bankruptcy code or rule. Your family members may or may not receive part or any repayment for their debts. In most situations, the unsecured credit is released as 99% of the payment plans do not cover 100% of the debts. To know more about Chapter 13 and Chapter 7 differences, check Recovery Law Group now.

      Repayment of debt, problems, and concerns

      The debt of family members and friends could be repaid after the bankruptcy situation also. But, the biggest hindrance to that could be potential taxes. Since, the debt is officially done, regarded as bad debt, repayment would be recorded as a gift. This could result in gift tax or some other legal reporting requirement. An individual can gift $14,000 per year an additional cover of $ 5.34 million which can be exhausted over the lifetime. One cannot simply manufacture loans from parents divert money to parents or family members. There is a need for proper documentation and paperwork before listing a person as a creditor before the bankruptcy court.

      When you decide to pay off your family debts before declaring bankruptcy, you are not off the hook either. This looks like an attractive option as you might end up paying nothing to your family members and friends during the bankruptcy process. However, this not a great option either. The law and court consider all creditors equally and it focuses on treating all creditors fairly. The bankruptcy trustee tracks all your financial transactions for ‘preferential transfer period’. The preferential transfer period is a bankruptcy term which is a period of 90 days before declaring bankruptcy. The bankruptcy trustee has the right to propose a reversal of any suspicious transaction of over $600 to a particular creditor. This rule prevents a borrower to transfer the debt to one or few debtors.

      Exceptions in the preferential transfer period and repayment options

      There is also an ‘insider’ term in the bankruptcy procedure. The term ‘insider’ is referring to business associates, immediate family members, friends, etc. The preferential transfer period for such people is one year. The court can claw back any loan repayment of say $10,000 8 months back, that you made to your parents for the bankruptcy procedure. Repaying any creditor or a family member just before bankruptcy is not a crime or an illegal activity. However, they won’t be able to hold that money for long once the bankruptcy procedure begins. Any sort of hidden transactions that include the transfer of assets/properties is illegal and that could certainly block any sort of release of debt whatsoever.

      Paying back your relatives, family members and friends can work only in the case of Chapter 7 bankruptcy procedure. The debtor in this scenario loses all his non-exempt assets. Also, the money earned after the bankruptcy process is completed under Chapter 7 is not under scanner as it is in the case of Chapter 13. So, paying off family debt after bankruptcy becomes a great option if Chapter 7 bankruptcy has been applied for. It is quite obvious to have loans from family members before declaring bankruptcy and everyone wants to payout their family first before all creditors. We can provide professional help to solve your bankruptcy woes legally. Just call +1 (888) 297 6203 to address all your questions and concerns.


        *Are you more than 60 days past due on your mortgage?

        *Do you own a home?

        Are you currently working?

        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

      • Bankruptcy is a Powerful Tool for Debtors

        Bankruptcy is a Powerful Tool for Debtors

        If you’re dealing with extreme debt troubles, submitting for financial ruin can be a powerful remedy. It stops maximum collection moves, inclusive of telephone calls, salary garnishments, and complaints (with a few exceptions). It additionally eliminates many kinds of debt, together with credit score card balances, clinical bills, personal loans, and more.

        However it doesn’t stop all creditors, and it doesn’t wipe out all obligations. as an example, you’ll still need to pay your pupil loans (except you could show a hardship) and arrearages for child support, alimony, and maximum tax debts. examine on to examine more about the matters that financial ruin can and can’t do.

        What Bankruptcy Can Do

        Bankruptcy lets in people struggling with debt to wipe out sure obligations and get a fresh begin. the 2 primary financial ruin kinds filed—chapter 7 and bankruptcy 13 financial disaster—each provides different blessings, and, in some cases, treat debt and property otherwise, too. You’ll pick out the chapter that’s right for you relying on your income, belongings, and dreams.

        Here are some of the things you can expect bankruptcy to do.

        Stop Creditor Harassment and Collection Activities

        After you document, the court places in place an order known as the automatic life. The live stops maximum creditor calls, salary garnishments, and lawsuits, however now not all. for example, lenders can nonetheless acquire support bills and crook instances will continue to continue ahead.

        Stop a Foreclosure, Repossession, or Eviction (at Least Temporarily)

        The automatic stay will stop all of these actions as long as they’re still pending.

        Evictions. An eviction that’s nonetheless inside the litigation method will come to a halt after a financial ruin filing. but the stay will possibly be temporary. remember the fact that if your landlord already has an eviction judgment towards you, a bankruptcy won’t assist in most people of states. (research greater in Evictions and the automatic stay in financial disaster.)

        Foreclosure and repossession. Even though the automatic stay will prevent a foreclosure or repossession, filing for bankruptcy 7 gained assist you to hold the belongings. If you may carry the account current, you’ll lose the house or vehicle once the live lifts. by way of comparison, bankruptcy thirteen has a mechanism a good way to will let you trap up on past bills so you can preserve the asset. (See financial ruin’s automatic live and foreclosure and vehicle Repossession & bankruptcy.)

        Wipe Out Credit Card Debt and Most Other Nonpriority Unsecured Debts

        Financial ruin is very good at wiping out unsecured credit card debt (the debt is unsecured in case you didn’t promise to give lower back the bought property if you didn’t pay the invoice), medical payments, late application payments, personal loans, fitness center contracts. (when you have a secured credit card, together with from a jewelry, furnishings, or electronics shop, you’ll deliver the purchased item again.) In reality, submitting for bankruptcy can wipe out most nonpriority unsecured money owed other than college loans.

        How quickly your debt will get wiped out will depend on the chapter you file:

        Chapter 7 bankruptcy. This bankruptcy takes a mean of  3 to 4 months to complete. (study more on your Debt in chapter 7 financial ruin.)

        Chapter 13 bankruptcy. In case you file for chapter thirteen in preference to chapter 7, you’ll probably have to pay lower back some part of your unsecured money owed thru a 3- to the 5-yr compensation plan. however, any unsecured debt stability that remains after completing your compensation plan can be discharged. (See Your money owed in chapter 13 bankruptcy.)

        Wipe Out Secured Debt (But You’ll Have to Give Up the Purchased Property)

        If you couldn’t afford a charge that you secured with collateral—consisting of a mortgage or vehicle payment—you can wipe out the debt in bankruptcy. however, you received It be capable of hold the residence, automobile, pc, or different item securing price of the mortgage (extra underneath beneath “What bankruptcy Can’t Do”).

        What Only Chapter 13 Bankruptcy Can Do

        Chapter 7 and thirteen every provide particular solutions to debt problems. chapter 7 is in most cases for low-income filers, and consequently, it received help you hold assets if you’re at the back of on payments. but, if you have the income to pay at the least something to lenders, then you definitely be capable of taking benefit of the additional blessings offered by means of chapter thirteen.

        Here are some of the things that Chapter 13 can do.

        Stop a mortgage foreclosure. Submitting for chapter 13 bankruptcy will stop a foreclosure and force the lender to accept a plan that will let you make up the missed bills over time (you’ll additionally stay contemporary on your normal month-to-month bills). To make this plan paintings, you must be able to exhibit that you have enough income to aid the sort of repayment plan. (For greater data, see your house and loan in chapter thirteen bankruptcy.)

        Allow you to keep property that isn’t protected with a bankruptcy exemption. No person gives up the whole lot that they very own in bankruptcy. You’re allowed to protect (exempt) gadgets you’ll want to paintings and stay using financial disaster exemptions. A bankruptcy 7 debtor gives up nonexempt assets, however no longer a chapter thirteen filer. This doesn’t imply which you get to maintain extra belongings, but. You’ll want to pay the value of any nonexempt assets on your creditors on your reimbursement plan.

        “Cram down” secured debts when the debt balance is more than the value of the property that secures them. Chapter 13 has a procedure that lets in you to reduce a debt to the substitute price of the belongings securing it (however you’ll repay the debt in full thru your plan). for instance, in case you owe $10,000 on an automobile mortgage and the auto is really worth most effective $6,000, you could suggest a plan that will pay the creditor $6,000 and discharge the rest of the loan. however, exceptions exist. for instance, you can not cram down a vehicle debt if to procure the auto at some stage in the 30-month length before you filed for financial ruin. also, you received be capable of use the cramdown provision at the loan of your residential domestic. (To research extra about cramdowns, test out reducing Mortgages and Loans in bankruptcy 13 (Cramdowns).

        What Bankruptcy Can’t Do

        Bankruptcy doesn’t cure all debt problems. Here’s what it can’t do for you.

        Prevent a secured creditor from foreclosing or repossessing property you can’t afford.  A bankruptcy discharge gets rid of money owed, but it doesn’t take away liens. Alien permits the lender to take belongings, sell it at public sale, and practice the proceeds to a mortgage balance. The lien stays at the belongings until the debt gets paid. when you have a secured debt (a debt in which the creditor has a lien on your home), bankruptcy can cast off your obligation to pay the debt, however, it won’t take the lien off the property—the creditor will still be capable of getting better the collateral. as an instance, in case you report for chapter 7 financial ruin, you can wipe out a domestic mortgage; but, the lender’s lien will stay on the house. as long as the loan stays unpaid, the lender can foreclose on the house (as soon as the automatic live lifts, of course).

        Eliminate child support and alimony obligations.Infant help and alimony responsibilities continue to exist bankruptcy so that you’ll maintain to owe those debts incomplete, simply as if you had never filed for bankruptcy. And if you use chapter 13, you’ll have to pay this money owed in full via your plan.

        Eliminate student loans, except in very limited circumstances. Student loans can be discharged in financial ruin best if you could show that repaying the loan could purpose you “undue difficulty,” that’s a totally hard wellknown to fulfill. You have to show that you couldn’t have enough money to pay your loans presently and that there’s little or no chance you could accomplish that inside the destiny. (For details on the undue hassle popular, see scholar loan Debt in financial ruin.)

        Eliminate most tax debts. Removing tax debt in a financial disaster isn’t smooth, however, it’s once in a while possible for older unpaid tax money owed. (discover the requirements in casting off Tax money owed in financial ruin.)

        Eliminate other nondischargeable debts. the subsequent debts aren’t dischargeable under either chapter:

        • money owed you neglect to list on your financial disaster papers (except the creditor learns of your financial disaster case)
        • money owed for personal injury or death due to intoxicated using, and

        fines and penalties imposed as a punishment, including traffic tickets and crook restitution.

        – if you file for bankruptcy 7, this money owed will stay when your case is over. In bankruptcy thirteen, you’ll pay this money owed in full thru your reimbursement plan.

        Debt related to fraud might, or might not get eliminated. A fraud-related debt won’t be discharged if a creditor files a lawsuit (called an adversary proceeding) and convinces the judge that the debt ought to continue to exist your financial ruin. Such money owed is probably the end result of mendacity on a credit utility or passing off borrowed assets as your very own to use as collateral for a loan. (analyze more in what’s financial disaster Fraud?)


          *Are you more than 60 days past due on your mortgage?

          *Do you own a home?

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          By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

        • Eligibility For Chapter 7 Bankruptcy Filing

          Eligibility For Chapter 7 Bankruptcy Filing

          It is an imperative process to understand at first whether as individuals we can file for Chapter 7 bankruptcy and get our debts discharged or not. The ability to file for bankruptcy under Chapter 7 clauses majorly depend on your household income (drawn monthly at the time of filing). The monthly income includes

          • The average gross income (prior to taxes deduction) that you have drawn in the last six months
          • The gross income of your spouse
          • All contributions to household expenses by other members of the family

          The monthly income excludes the amount arising out of

          • Unemployment
          • Social Security Benefits
          • Compensation for victims of crime or terrorism

          It is also important to note that if there is a portion of your spouse’s gross income that is not channelized for the household expenses, then that value cannot be counted for the available amount towards repaying your debts. In this case, the spouse’s income information is purely for documentation needs and it does not have any effect on the Chapter 7 bankruptcy filing ability.

          Eligibility check through the medium family income by family size

          If the debtor’s current monthly income that is calculated as above, is less than the state median family income for a household of the number of members, then the debtor automatically qualifies for Chapter 7 bankruptcy. If the household income is greater than the median income, then the debtor may or may not be eligible towards the filing of Chapter 7 bankruptcy

          MEDIAN FAMILY INCOME BY FAMILY SIZE

          Family Size         California      Nevada            Texas
          1-person families  $49,983            $43,685              $42,908
          2-person families  $64,779            $56,367              $58,666
          3-person families  $68,917            $59,346              $61,502
          4-person families  $79,418            $69,672              $71,973

          Referring to the above data, if your current monthly income is greater than the state median family income, then the court checks your allowable expenses. Remember the allowable expenses may or may not be the actual value that you spend on your basic living expenses. After deducting these allowable expenses from your current monthly income, the balance money is assessed for its repayment capacity towards certain debts over a period of time. If that condition is met, then you may file for Chapter 13 bankruptcy.

          Living in Los Angeles? Desperately seeking skilled bank attorney, Los Angeles area for assisting you with Chapter 7 bankruptcy filing check? Then stop at Recovery Law Group – they have wide expertise handling Chapter 7 cases in the states of California, Nevada, and Texas.


            *Are you more than 60 days past due on your mortgage?

            *Do you own a home?

            Are you currently working?

            By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

          • Know your Bankruptcy Trustee in Chapter 7 Bankruptcy

            Know your Bankruptcy Trustee in Chapter 7 Bankruptcy

            A Chapter 7 Bankruptcy trustee is appointed by the court for every Chapter 7 bankruptcy filed with them. These trustees mostly work in favor of the creditors. The prime responsibility is to go over all the paperwork to ensure that they have been submitted in order, to reverse any recently performed financial transactions that may be invalid in the context of bankruptcy and for liquidating viable assets in order to repay the creditors.

            A bankruptcy trustee is paid a fee by the court for examining all the associated paperwork. In addition to this, if the trustee is able to find assets that can be liquidated, then he can claim a percentage of it too – the assets under purview include those that have been sold or transferred ahead of the bankruptcy. Hence it indicates that the trustee will be more inclined towards the creditors and not the petitioner who is dealing with the bankruptcy situation.

            Here is a sneak peek of the tasks that are generally carried out by your Chapter 7 Bankruptcy Trustee

            1. Meticulous review of the bankruptcy petition – Every detail in the bankruptcy petition is revisited by the trustee. Verification of your claims is also their responsibility and a part of this job requires them to check if you have recently transacted a valuable asset for a lesser price or no money. The trustee also requests that claims are to be backed up with pay stubs, tax returns, bank statements or a list of all assets expenses. They will also need to know which debts are expected to be discharged

            2. Chair of the meeting of creditors – The 341 hearing or the meeting of creditors is presided by the bankruptcy trustee after the Chapter 7 bankruptcy case has been filed. The majority of the questions on your provided paperwork is generally asked by the trustee as the creditors generally do not attend these hearings. If the paperwork is in place, the meeting is generally conducted concisely

            3. Evaluating the viable assets for liquidation – A Chapter 7 bankruptcy trustee evaluated all assets of the petitioner to understand if there are any that can be liquidated so as to pay the creditors. The advantage is that they enjoy a percentage of the money from this liquidation. It has to be noted that Chapter 7 permits certain properties to be exempted from liquidation – home and car equities are common exemptions. The trustee has to work around these exemptions. As most of the cases are ‘no asset’ cases, which means that there are no properties for liquidation, a trustee has the power to question an exemption given to an asset. In those situations, the judge has the final say to determine whether the debtor can avail exemption or not

            The need for a right bankruptcy attorney

            Since the bankruptcy laws are complicated, it generally takes time to process a bankruptcy filing. Loss of time eventually amounts to a loss of money – hence the right guidance helps debtors save time. A right law firm like Recovery Law Group puts to use their experience of streamlining and handling of Chapter 7 bankruptcy filing cases and in turn, save a lot of time for their clients. They regulate the entire ordeal of filing with the correct paperwork, gaining an exemption for their most important assets and also protecting their properties from liquidation.


              *Are you more than 60 days past due on your mortgage?

              *Do you own a home?

              Are you currently working?

              By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.