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Rebuilding Credit After Bankruptcy

Persons may expect to rebuild their credit over a period of time after a bankruptcy filing depending on their particular circumstances.  In reviewing a credit application, creditors look for steady employment, a history of making and paying for purchases on credit, and the maintenance of a checking and savings account.

Pursuant to federal law (the Fair Credit Reporting Act), accounts placed for collection or charged off, law suits, tax liens, and other adverse information may be reported on your credit report for 7 years for most purposes. For certain purposes (such as a credit transaction or life insurance policy involving $150,000.00 or more or for employment purpoes in a job paying $75,000.00 a year or more), it may be reported on your credit report for longer than 7 years.

Also pursuant to the Fair Credit Reporting Act, the fact of a bankruptcy filing may be reported on your credit record for 10 years for most purposes. Any note of bankruptcy on a credit report must specify the type of bankruptcy that was filed, ie. chapter 7 or chapter 13. It may be reported on your credit report for more than 10 years if the credit report is to be used for certain purposes (such as a credit transaction or life insurance policy involving $150,000.00 or more or for employment purposes in a job paying $75,000.00 or more.

By |December 11th, 2015|Uncategorized|0 Comments

Bankruptcy Discharge of Taxes

discharge taxes in bankruptcyThe Bankruptcy Code provides that federal income taxes are dischargeable in bankruptcy under certain circumstances.

Non-Dischargeability in Chapter 7

The following types of taxes are not discharged in a chapter 7 case:

  • Any tax for which a tax return, if required, was not failed
  • Any tax for which a fraudulent return was filed or the debtor willfully attempted to evade payment
  • Any tax with respect to which a late return was filed within two years before the filing of the bankruptcy case
  • Any tax for which a return was last due within three years of the filing of the bankruptcy case, assessed within 240 days before the filing of the case, or not yet assessed but yet assessable

Certains of the time periods are extended for periods after the pendency of an offer in compromise, the stay of collection in a prior bankruptcy case, after an appeal of collection actions.

Penalties related to nondischargeable taxes are also nondischargeable unless the penalty is punitive in nature or relates to a transaction that took place more than three years prior to the filing of the bankruptcy case.

Non-Dischargeability in Chapter 13

Some, but not all, taxes that are nondischargeable in chapter 7 are also nondischargeable in chapter 13.

 

By |October 2nd, 2015|Uncategorized|0 Comments

Confirmation of Chapter 13 Plan

chapter 13 bankruptcy

A chapter 13 debtor’s plan of reorganization is set forth in a chapter 13 plan.  Unlike chapter 11, only the debtor is allowed to file a plan.  A chapter 13 plan must include the mandatory provisions set forth in the bankruptcy code and may also include other permissive provisions. A chapter 13 plan is usually three to five years long.

Chapter 13 Plan Confirmation

A chapter 13 debtor’s proposed chapter 13 plan is set for hearing before the Bankruptcy Court for confirmation at a confirmation hearing. The parties to the case, including the creditors, receive notice of the confirmation hearing and have the opportunity to object to confirmation. If the plan is approved, the Bankruptcy Court will issue a confirmation order.

Pursuant to the bankruptcy code, the confirmation order is binding upon the debtor and all creditors.  This means that creditors are required to abide by the terms of the plan and are barred from taking actions that are inconsistent with the plan.

Chapter 13 Discharge

Upon completion of the payments provided for in the chapter 13 plan,  the debtor is generally entitled to the issuance of his discharge order. In some cases, a debtor may obtain a “hardship discharge” even though all required payments are not made.

 

 

 

 

By |September 28th, 2015|Uncategorized|0 Comments

Chapter 7 Bankruptcy

Chapter 7 bankruptcy may be considered by persons facing serious debt and financial distress. One of the purposes of bankruptcy is to discharge certain debt and to provide an honest debtor a “fresh start.”

Eligibility for Chapter 7

Individuals, partnerships, corporations, and other business entities are eligible to file for relief under chapter 7.  With certain exceptions, an individual is required to receive credit counseling from an approved credit counseling agency prior to filing.  This credit counseling may be done over the internet.

Automatic Stay

The filing of chapter 7 bankruptcy petition puts into place the “automatic stay”. The automatic stay stops most collection activities against a person and his property. Certain types of actions though are not stay or the stay may only be in effect for a limited period in some situations. As long as the stay as in effect, creditors are prohibited from starting or continuing many types of collection actions, including starting or continuing lawsuits, garnishments and telephone calls demanding payment.  The Clerk of the Bankruptcy Court provides notice of the filing of the case to all creditors listed in the bankruptcy schedules.

Creditors Meeting

Between 21 and 40 days after the bankruptcy petition is filed, a creditor’s meeting – sometimes referred to as a “341 meeting” – is held by the chapter 7 trustee.  In the majority of personal bankruptcy cases, no creditors attend. During the creditors’ meeting, the trustee and creditors may ask the debtor questions regarding his financial affairs and property.  Bankruptcy Judges do not attend creditors meetings.

Chapter 7 Trustee

Upon the filing of a chapter 7 case, the U.S. trustee appoints a chapter 7 trustee to administer and liquidate any nonexempt assets. Assets that are “exempt” are not subject to administration by the chapter 7 trustee.  A chapter 7 debtor is required to cooperate with the chapter 7 trustee and to provide any requested financial records.

A chapter 7 trustee may attempt to recover property that the debtor has transferred prior to the filing of the case under the trustee’s “avoiding powers.” The trustee’s avoiding powers include the power to set aside “preferential transfers” made to creditors within 90 days prior to the filing of the case and to pursue fraudulent transfers.

Chapter 7 Discharge

Subject to certain exceptions, a discharge releases the debtor from personal liability from most pre-bankruptcy debt and enjoins the creditors from attempting to pursue collection actions against the debtor. Certain types of debt are not dischargeable in bankruptcy, including debts for alimony, child support, certain students loan, and certain taxes. In addition, the discharge of a particular debt or the overall discharge may be denied under certain grounds.

 

By |September 27th, 2015|Uncategorized|0 Comments

What is a Mortgage Foreclosure “Deficiency” Judgment?

A mortgage deficiency judgment may be pursued by a mortgage lender after the sale of the real estate at a foreclosure sale. A deficiency judgment is a “money” judgment generally for the balance due on the mortgage note as reduced by the sales proceeds of the foreclosure sale.  A claim for a mortgage deficiency is usually brought as part of the original foreclosure action.

Limitation on Amount of Deficiency for Residential Hmortgage foreclosure deficiency judgmentomes

A new Florida Statute passed in the year 2013, limits the deficiency amount to the difference between the balance due on the mortgage note and the fair market value of the foreclosed home. This new Florida Statute, which went in effect on June 7, 2013, is called the “Florida Fair Foreclosure Act.”

Statute of Limitations to Pursue Mortgage Deficiency Judgment

In general, the statute of limitations on bringing an action for a deficiency judgment is 5 years. As to 1 – 4 unit family residential property, an action for a mortgage deficiency judgment must be brought within 1 year after the foreclosure sale or short sale.

By |September 8th, 2014|Uncategorized|0 Comments