What If My Income Increases During Chapter 13? Important Facts & Details

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What If My Income Increases During Chapter 13?

In this article, we’ll discuss the important topic of: “What If My Income Increases During Chapter 13?”

Often users raise this question that if there is a change in my income source, can I close my bankruptcy early? In Chapter 13 bankruptcy, the debtor has to get a repayment plan approved from the court, under which he has to keep making payments for the next 3- 5 years. In such cases, debtors often try to close off the bankruptcy by raising their income. However, there is a procedure that needs to be followed once you get a raise in pay. 

As it is the debtor’s responsibility to complete the Chapter 13 bankruptcy, he is likely to inform the lawyers and the court about any change in the income. We are about to brief you about the procedures that one might follow once they get a raise in pay. 

What If My Income Increases During Chapter 13?

Before we talk about what happens to the chapter 13 bankruptcy repayment plan once there is a hike in salary, let us discuss what happens if we fail to inform our attorney, trustees, and court. It can be a very tempting circumstance to receive an extra income and not give away a significant portion of it as repayment. However, we must understand that you can be charged with severe consequences if the trustees find out about this raise. The court has every right to dismiss your bankruptcy midway, and you can land up exactly from where you began. 

Another significant consequence that the debtor may have to suffer is to pay a considerable fine, at times around $250,000, along with five years of imprisonment.

This happens if the trustees find out that the debtor has deliberately hidden the extra income source. Hence, we would suggest you be honest and report the changes to your attorney and trustees immediately. 

Effects of Income Raise On a Repayment Plan

The significant effect that the trustees and court can decide upon if you have a raise in income is to increase your repayment plan. Chapter 13 allows you to make a monthly installment of debts based on your income. The amount you pay as debt repayment is your income minus reasonable and qualified monthly expenses such as food, medicine, rent, etc. Thus a higher salary means that you will have an extra amount to add to the repayment plan. 

However, the repayment plan is revised by the trustees only when there is a massive jump of income and no increment on expenses. But if there is only a minor change and there is no considerable change in the disposable income, the trustees cannot make any changes. 

Tips and Tricks for Chapter 13

Chapter 13 bankruptcy can be challenging as it continues for 3-5 years. And there are a few tips we would like to suggest you overcome this phase quickly. 

Determine the period According to the Bankruptcy Abuse Prevention and Consumer Protection Act enacted in 2005; the debtor has to agree to a 60- month plan if their income is higher than the state’s median income level. And if the income is lower payment the state’s median level, then the debtor must choose a 36-month plan. However, they can also choose for 60 months. Now you will have to decide on the plan that is best suited for you. 

Classify Debts According to Priority

In chapter 13 bankruptcy, the debtor must understand each debt’s priority and make repayment plans accordingly. For instance, secured debts like the trustees’ fees are to be paid first. Secured debts do not allow partial payments unless you have filed a motion to lower the value of the amount that you owe. Many unsecured debts like child support, alimony, taxes, etc. are also on priority and need to be paid fully. The remaining types of debts are considered unsecured and can be paid over the agreed payment period. 

Identify Exemptions

An exception is an amount that is free from the creditors and bankruptcy court. When the exemption levels are lower than the equity, then you must include the equity value to the amount that needs to be paid to unsecured debts. You must decide whether you wish to claim the exemptions under the bankruptcy code or choose to claim exemptions under the state law. You must consult with your lawyer to determine the amount to be added to the disposable income.

Final Thoughts

So, What If My Income Increases During Chapter 13?

Since there is a provision to increase your income and stick to your earlier expenses, there can be a chance of early discharge. It can be quite disheartening for the debtor to have raised their income but will have to give away most of it as per the Federal law or Bankruptcy court. The debtor must accurately determine and identify the exemptions and set up a favorable period to complete the repayment plan without any inconvenience. 

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What If I Buy a Car While Under Chapter 13 Without Trustee Permission?

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What If I Buy a Car While Under Chapter 13 Without Trustee Permission?

In this article, we’ll discuss the important topic of: “What If I Buy a Car While Under Chapter 13 Without Trustee Permission?”

Chapter 13 bankruptcy is an extremely debt relieving tool, which is in a lot of sense better than Chapter 7 bankruptcy. Unlike in chapter 7 bankruptcy, it lasts longer, up to 3-5 years. It lasts longs to give the debtor a reasonable period to overcome the bad debts and come out of bankruptcy. 

Understand that the time duration is long, and there can be financial changes in your life during this period. Chapter 13 bankruptcy has the exact details of what needs to be done when such changes occur. Suppose your income grows significantly and changes your financial condition. In that case, you can either opt-out of bankruptcy voluntarily, close this case and file a new lawsuit, or you can convert the case to Chapter 7. 

But no matter what, you will have to keep your trustees, attorney, and the court involved in tiny decisions you take. In this article, we will further discuss what happens if you do not abide by the rules. 

What If I Buy a Car While Under Chapter 13 Without Trustee Permission?

Bankruptcy is very critical in terms of following the rules and laws. If you want to buy a car without informing the trustees, God forbid the trustees to find out about your recent purchase. The trustees have every right to ask you to surrender the vehicle, and they can also dismiss your bankruptcy, which will stay as incomplete.

Most lenders who usually do not run a credit check before lending you some amount but get a document signed, which says that you are not part of any bankruptcy right now. 

However, you can request your trustees to file a motion to get a car loan approved by the court, and then you can buy your car, even during bankruptcy. 

Consequences of Not Following the Rules of Bankruptcy

If you are found an offender of the law, there can be a series of consequences– 

Dismissal of The Bankruptcy Case

The bankruptcy court can decide to dismiss a case on its grounds or complaints from the trustees and creditors. The judge can choose to impose a ban on future filing of the bankruptcy case for the debtor for some time or even permanently in extreme cases. This is a common punishment for debtors who repeatedly fail to pay the creditors and file for dismissal. 

Denial of Discharge

When the bankruptcy court decides to dismiss your bankruptcy discharge, the creditors get the power to collect the debts again from you directly. The discharge of bankruptcy could have wiped out some of the debts that were over-burdening the debtors, but the denial of the discharge will make it difficult for the debtor to meet the needs. 

Other Consequences

The judge has the power to charge any concerned party contempt of court and can exercise power to impose restrictions. For example, if the creditors are found contempt of court, the judge can deny any further claims from the creditor and ensure to prohibit him from filing any claims in the future. Other significant consequences include unable to vote or travel outside of the country or apply for some job. 

How Can I Buy a Car While in Chapter 13?

Do you want to buy a new car during chapter 13 bankruptcy? Let us tell you that it is challenging yet possible. But for that, you will have to find out a lender who will agree to work with your despite you being inactive chapter 13 bankruptcy. By now, we already know that no one can get new debts while in Chapter 13, bankruptcy without the bankruptcy court’s permission. 

And to get permission, there will be a meeting with all creditors, trustees, and the debtor. The trustees can agree or not to your request for buying a new car, while your lawyer will try and convince the judge how important it is for you to get this new vehicle. To make the judge decide in your favor, you must present an acceptable reason to buy the new car in an active chapter 13 bankruptcy case. It usually takes 30-45 days to complete the process. 

Suppose you have figured out the proper proposed payment. In that case, the interest rates are reasonable, and the total amount is not too high; most bankruptcy courts approve the request if you do not have alternative transportation. 

Final Thoughts

It will be considered fraud if you do not inform your bankruptcy case’s trustees before buying a car. And that can also lead you to severe consequences as it also implies breaking the law. You can be tempted to take such a step, but this can lead you to a series of negative impacts, including being charged a hefty fine or even imprisonment. 

Here’s a video for more information on the subject “What If I Buy a Car While Under Chapter 13 Without Trustee Permission?”

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Chapter 13 Budget Allowances – Important Facts & Details

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Chapter 13 Budget Allowances

In this article, we’ll discuss the important topic of: “Chapter 13 Budget Allowances”

A debtor files for bankruptcy when he cannot repay the debts and has tested all the limits to do so but has failed. However, each bankruptcy is designed considering the debtor and creditor circumstances and provides relief to both. There are primarily three types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13. 

In Chapter 13 bankruptcy, the debtor is allowed to make a monthly repayment of the loan over an agreeable period of 3-5 years. Over the next 3-5 years, the debtor has to repay some debts to the creditors each month and meet his needs. 

In this article, we will briefly discuss the expenses that the bankruptcy court allows for any debtor to consider before submitting the repayment plan. 

Chapter 13 Budget Allowances

In the US constituency, if you have filed a case of bankruptcy, you need to undergo the means test. This test identifies the debtor’s income and expenses and estimates whether the debtor has a sufficient amount left to meet the needs every month, besides paying back the unsecured debts. These expenses are considered essential and are allowed by the bankruptcy court. 

These expenses consist of credit card bill payments, medical bills, different taxes, maintenance and utility costs, health and education of the child, etc. However, the calculation is a little complex. It consists of both disposable and non-disposable income, the value of the assets and property you own, the kinds of debts, and the unpaid amounts associated. Let us discuss these allowable expenses in detail. 

Allowable and Reasonable Expenses During Bankruptcy

The US bankruptcy court has mentioned a list of essential and allowable expenses for a healthy living of a debtor under Chapter 7 and 13 bankruptcy. Almost every expense listed here is ordinary and reasonable, which you might spend on each year. We have divided them into broad categories. 

House Expenses

This includes rent/mortgage payment, repair of damaged houses, and minimum maintenance costs. This is a considerable amount that the debtor has to pay every month. 

Food and Necessities

This category is well understood as it includes expenses like food, medicines, water, sewer, trash services. This also includes other essentials like the internet, cell phone bill, cable service, laundry, dry cleaning services, and clothing. The US government also provides provision for “reasonable” recreation, transportation, automobile charges. 

Insurances

When it comes to insurance, a few considered necessary, such as term life insurance for yourself only, medical insurance, which includes dental and health, automobile insurance. Another insurance which is again optional is homeowners or renters insurance. 

Child Care

Under this category, the allowances approved are the nursing, daycare, babysitting, preschool expenses, and sports fees. Another scenario involves alimony amount and contribution towards child support. 

Education and Taxes

This is an exciting category as this includes not just education and taxes but also fits your charitable contributions (which cannot be higher than 15% of monthly income). In education, it includes student loan payments, educational expenses, which may lead to a profession. 

The taxes include employment and payroll taxes, which have income, Medicare and social security, union dues, retirement contributions, and state taxes are essential in a citizen of the United States. Surcharges are not dischargeable in bankruptcy. Hence you will have to make the payments without fail. 

Bankruptcy Related Expenses

When you file a case in bankruptcy, you will have to hire an attorney. You will have to bear certain expenditures in terms of case filing in court, documentation, etc. and other small amounts. 

Guidelines for Surviving Chapter 13 Bankruptcy

Overcoming a bankruptcy is not easy. You will have to follow specific guidelines and maintain a constant standard of living to survive this period. Here are a few tips that might help you get back on track. 

Firstly, you will need adequate support who can help you come out of this period. Hiring a good and experienced lawyer and a financial adviser can be the first step. You will have to be honest with them and take their timely advice and consultations. It is an excellent practice to keep your lawyer and financial adviser up to date with your finances. It may cost you a little, but they will also help you overcome Chapter 13 bankruptcy. 

The second most important tip is to manage your expenses well. Although Chapter 13 allows you to repay the debts, you will have to cautions of your budget and cut down a few unnecessary expenses. 

At the beginning of the session, you can request the lawyer to work out a reasonable repayment plan. Lastly, you will have to pay attention to all notifications over the period. There can be multiple changes and communication from the court, creditors, and trustees. You will have to be present at all meetings arranged by the court. Alongside this, you will need to keep all your paperwork, financial records, documents accurately filled, and are kept ready. 

Final Thoughts

The list is comprehensive and elaborative with all the essential expenses that the Bankruptcy court allows for any distressed debtor. You can consult your attorney and decide on which allowable budget is best suited for you. 

https://youtu.be/4_rXB4s10MU

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Filing Bankruptcy a Second Time – Helpful Tips & Advice

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In this article, we’ll discuss the important topic of: “Filing Bankruptcy a Second Time”

Every individual today has some financial burden to maintain a proper lifestyle. But it becomes intolerable when you get drowned in debts. When you are overburdened with debts and do not have an option to pay them off, filing bankruptcy becomes the ultimate option. 

Though most people learn to manage their finances after first bankruptcy, others still may get stuck in another similar situation. Such people might question whether they can go for filing bankruptcy a second time or not. 

Usually, you can file bankruptcy as many times as required. But there are specific parameters that you need to follow in doing so. 

Filing Bankruptcy a Second Time – Helpful Tips & Advice

You can file bankruptcy even more than two times. But whether your case will be supported or will be dismissed depends upon many factors. 

  • What chapter did you file previously?
  • After how much time are you filing bankruptcy again?
  • Under what chapter are you filing bankruptcy this time?
  • Are you filing for debt discharge or for gaining time to repay?

Your case can be dismissed on supported in the bankruptcy court on your second filing based on these factors. There are several strict laws that you need to follow, such as:

  • You can file Chapter 7 for the second time, too, but you have to wait for at least eight years. 
  • In the case of Chapter 13 for the second time, it is just two years waiting time. 
  • Similarly, if you have filed Chapter 13 earlier and then you are filing Chapter 7, you have to wait for six years. 
  • Again, on the vice versa, that is, if you have filed Chapter 7 before and then are filing Chapter 13, you have to wait for four years. 

It is always a better idea to talk to your advocate about all these complications. Also, here is the right procedure that you can follow. 

  • Bankruptcy Evaluation:

If you have already filed bankruptcy previously, filing bankruptcy a second time should not be that much confusion. It would support if you did a few of the analyses for the filing purpose. Some of the facts that you need to analyze are mentioned here.

  • Do you have dischargeable debt or not.
  • The property that you have to compromise for the solution.
  • Which bankruptcy filing is best suited for you, i.e., Chapter 13 or Chapter 7? 

It is only after doing such an analysis that you can move ahead for the next procedure. 

  • Back to Back Filings:

Do you intend to pay the debt amount at all, or are you filing bankruptcy to get protection from the creditors? If planning to get protection from the creditors, you are filing back to back cases, and you can be in trouble soon. The court will realize that you are filing several issues, and soon, it will dismiss your case. Thus, you should talk to your attorney carefully, analyzing the time that you need to pay back the debts. It would help if you also asked questions such as how many times can you file chapter 13 and how often you can file. You should file bankruptcy accordingly. 

  • Debt Discharge:

If you are filing bankruptcy a second time for debt discharge, there are specific guidelines that you should know. You can file the case after a certain period after your first case depending upon several factors such as:

  • The Bankruptcy type that you filed earlier and that you wish to file now
  • The date of the last bankruptcy file
  • Whether the last time the debt was discharged or your case was dismissed

Based on these factors, you can file for debt discharge twice or more.

  • Without Debt Discharge:

Not many people file for debt discharge. Many people file bankruptcy to get some extra time to make the payment. In such a case, you can file the second case much before the period mentioned in the rule. 

How Many Whiles Can You File Chapter 13?

You can file Chapter 13 bankruptcy endless times. But there is a criterion that you need to follow. Here are some of the essential facts that you should follow to file bankruptcy under Chapter 13. 

  • You are not eligible to file liquidation under Chapter 13 if you have a secured debt that is more than $1,184,200 and an unsecured debt that is more than $394 725. 
  • For filing bankruptcy under Chapter 13 for the second time, you have to wait for at least two years.
  • If your previous bankruptcy was under Chapter 7, you need to wait for the next four years to file Chapter 13. 

If you have filed for insolvency under Chapter 7 and now your question is Can I file chapter 7 before eight years? You will get a negative answer. In such a case, you can wait for four years and can file Chapter 13 if it suits you. 

Related Article:

Summary

Filing bankruptcy can be a complicated task. Further, you are filing bankruptcy a second time; it can get even more complicated. You need to follow several rules and guidelines if you do not want your case to get dismissed by the court. 

In such a situation, many people have several questions such as can I file chapter 7 before 8 years. Getting in touch with the right bankruptcy attorney can help you get answers to these tricky questions while solving your problem. 

How Long Does It Take To Convert Chapter 13 To Chapter 7?

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How long does it take to convert chapter 13 to chapter 7

In this article, we’ll discuss the important topic of: “How long does it take to convert chapter 13 to chapter 7?”

Let us start by describing the types of Bankruptcy that are available to file. Chapter 7 in Bankruptcy means that your non-exempt assets and properties are to be taken over by trustees to evaluate the worth, sell it, and try to pay back the debts to your creditors as per the Bankruptcy rules. 

Chapter 13 in Bankruptcy, on the other hand, means that you can save your assets and properties by paying an amount every month to the trustees, who then distribute the amount amongst creditors. 

Often debtors wish to convert Chapter 13 to Chapter 7 under certain circumstances. In this article, we discuss under what circumstances can a bankruptcy case be converted from Chapter 13 to Chapter 7 and how long does it take. 

How Long Does It Take To Convert Chapter 13 To Chapter 7?

Chapter 13 to chapter 7 conversion may seem simple to you. But that is not the case. Firstly, if you have received a chapter 7 discharge in the past eight years, you cannot apply. Next, to be eligible for this conversion, you will have to persuade the court that you are incompetent to pay the monthly charges. You will have to show the updated Schedules I and J to showcase your current expenses. 

When the conversion is approved, the court can now appoint trustees as per the Chapter 7 rules and schedule a 341 meeting of creditors. This meeting can happen after 30 days of conversion. 

There is a small convenience fee involved for the conversion. However, your file number remains the same, which means that it is the same case. All you have to do now is fill up a new set of forms and declare the new assets, debts incurred after the initial Bankruptcy was filed, etc. 

Reasons for Conversion

There can be two significant reasons why there can be a conversion. 

  • Convert when you feel Chapter 7 will benefit you

When your financial status changes and you feel that converting your Bankruptcy from chapter 13 to chapter 7, you can check the eligibility and apply for the conversion. 

If you start getting to feel that you will not make those monthly payments due to loss of income, the creditors can ask the bank for foreclosure. But since you will lose the property or asset, you might as well get it to consider bringing it converted to chapter 7. It will therefore settle all the discrepancies or shortages, which may have arisen later. 

In a chapter 13 conversion, it goes on for 36-60 months. In such long durations, there can often be a change in fortune. At times, people wish to get the conversion done to get rid of the long handling case of Bankruptcy. But it may not always stand true as you have to be eligible for this conversion under specific rules. 

  • Forced conversion by Bankruptcy Court

Court usually does not force a conversion. But such scenarios do occur when you are unable to repay the decided monthly amounts or are unable to follow the repayment plan. However, there are exceptions; for instance, if you fail to make one or two payments due to a valid reason, or despite the efforts, you cannot put together a confirmed payment plan, the court is likely to consider and dismiss your Chapter 13. 

But when the court and trustees feel that the debtor is misleading the court, suspects of abusing and manipulating the legal system, trying to hide the properties/assets to get a Chapter 7 discharge, or is trying to pay the creditors a lesser amount than that was decided. 

Pros and Cons of converting chapter 13 to chapter 7

Listing down a few advantages and disadvantages of the conversion- 

Pros:

  • In Chapter 7 bankruptcy, almost all the unsecured debts tend to get discharged.
  • You can get out of a recurring payment per month to creditors.
  • When you move to Chapter 7 bankruptcy, the case closes sooner (just in a few months).

Cons:

  • You will lose the non-exempt property forever as it will be sold by the trustee to pay the creditors.
  • Not all debts are discharged, e.g., Childcare, mortgage, medical expenses, etc. 
  • It may heavily affect your credit scores. 

Final Thoughts

In a nutshell, there is no fixed timeline for the conversion procedure to complete. There are multiple steps involved after you find you eligible for the conversion and would like to file for the same. After you have filed a case, and if the court finds you and your financial status are eligible for conversion, the process happens very soon. In this article, we hope you have your queries answered. 

Video

Here is a quick video to explain “How Long Does It Take To Convert Chapter 13 To Chapter 7” in further detail. 

Related Article: How Long Does It Take to Improve Credit Score After Debt Settlement?

How Does Bankruptcy Affect the Rental Property? 2 Common Causes

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How Does Bankruptcy Affect the Rental Property

In this article, we’ll discuss the important topic of: “How Does Bankruptcy Affect the Rental Property?”

There can be two scenarios here when you think of a rental property undergoing bankruptcy. One is if the tenant files bankruptcy, and the other is if the owner of the rented premise file bankruptcy. In this article, we will discuss both the scenarios in detail. 

You must understand that the idea of bankruptcy can affect the value of the property. The bankruptcy rules for real estate are very confusing and tricky to navigate, leaving many scopes for the mistake.

Under whichever chapter you file a bankruptcy case, a simple mistake may even make you lose the property. 

How Does Bankruptcy Affect the Rental Property?

There can be two ways a rental property be affected. If you are a tenant who has filed for bankruptcy under Chapter 7 and you do not miss any rent payments, you cannot be evicted. As you are under bankruptcy protection, your landlords cannot end your lease agreement. 

However, under Chapter 13, the trustees can decide whether to terminate your lease agreement, if it benefits your creditors. The trustees may evaluate your rent with the others in the area and decide on removing the lease. The idea is to lessen your expenses, to pay back the creditors. 

Under the federal law protects you from being evicted by landlords during your bankruptcy. We will discuss what happens if a landlord files a case of bankruptcy in the next heading. 

How is rented property treated under Chapters 7 and 13?

If you are a landlord and curious to know what happens to your property after you file for bankruptcy, keep reading. Different rules apply to different chapters.

Chapter 7

Once you file a case of bankruptcy under chapter 7, you will be allowed to keep any free property under the state or federal law. The choice is often given to the filer to choose the law. Under chapter 7, many states allow you to keep some of the home’s assets/equity. In some cases, the states may allow you to keep only some dollars; most other states let you keep your property’s interest. 

However, the state law protects only your residential property, i.e., the home you currently live in. It will not cover any other asset or property you are not using now, for instance, your rental property. And since it is considered to be one of your assets, the bankruptcy trustees can take over the property, sell it to pay back to your creditors. 

The trustees decide to take over a property only if the proceeds of selling it is more than the cost of getting it and selling. So do not worry if the valuation of the property is too less. But in such a case, the mortgage company can take over the property, and your creditors will not get anything. 

There is, however, a “wildcard exemption” to protect even the small assets of your property. It is by paying an exemption amount applicable to any asset. So if your state agrees and your property has low equity value, you can use a “wildcard exemptions,” which may work in your favor and stop the trustees from taking over your rental property. 

Chapter 13

This is relatively simpler. You do not have the distress of losing your property under chapter 13 of bankruptcy. In place of that, you can use your rental property to pay back your creditors for over 3-5 years. So the trustees will not take over the property and sell. 

However, there will be some effect of Chapter 13 bankruptcy on your in some ways.

Firstly, you may be asked to pay back a massive sum of your debt. Under this chapter, you may have to pay a sum equivalent to your nonexempt property. This is to protect your creditors from any loss; else, they would have preferred Chapter 7. 

Secondly, you will include any payments that you missed earlier for your rental property into your repayment plan. You will have to make sure you are making the payments slowly and steadily to avoid foreclosure. 

Lastly, you can try to “cram down” the mortgage worth of the property. Since paying such a huge amount in such a short span is beyond imaginable, especially when you have filed a case in bankruptcy. Hence, you will be able to reduce your debt amount to the property’s value when you filed for bankruptcy.  

Can you rent an apartment after bankruptcy?

Once you are discharged from bankruptcy, within three months, people will be eligible for rental. It all depends on how much you can bear with; you can rent or lease a property. However, there can be landlords who can check your credit score before lending you the house. In some parts, there can be rent discrimination too. But it is illegal, and most people do not face such situations. 

Summary

In our opinion, a rented property will have some effect due to bankruptcy, whether it’s from the owners’ end or tenants. In this article, we have tried to summarize all the situations you may have to face if filed for bankruptcy. We hope this helps.

Video

Here is a video link to talk about rentals and bankruptcy, and more information to answer the question, How Does Bankruptcy Affect the Rental Property?

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How Long Should You Keep Bankruptcy Discharge Papers?

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How Long Should You Keep Bankruptcy Discharge Papers

In this article, we’ll go over the important topic of “How Long Should You Keep Bankruptcy Discharge Papers?“

Although it’s considered a digital era, safekeeping all the records are vital in any form, either on paper or computerized. Since birth, we have undergone a lot of documentation, starting with the record of our birth. And that perhaps is the most important record to be kept. With age, other documents become essential, and a lot of paper is considered junk. 

One such document which, if in your life you ever come across bankruptcy, then are the documents and the discharge documents. But in this era of computers, how long should you be holding onto the papers. If asked us, either you like it or not, we would advise you to treat this document with great importance than any other. 

How Long Should You Keep Bankruptcy Discharge Papers?

In case of bankruptcy, it is always debatable how long should one be keeping the documents safe? Some say it to keep it for ages, and some say there is absolutely no need. We want to state some examples of vital records and the right way to keep them. 

When you buy or own something, and it comes with a warranty document. We often tend to keep the documents until the warranty period. Post which, there is no importance of the document. Similarly, for receipts, as you may want to keep it safe if you need to return the product within the return period. 

If you are a taxpayer, you must have the tax receipt and other supporting documents for seven years, at least. You may need them even later, so it’s a good practice to keep it safe. Since it’s all paperless, you can also save a soft copy in the electronic form, but it’s essential to keep the document. 

Let us now come to bankruptcy documents. Agree with it or not, these are perhaps the most important documents that one should be keeping. There are many procedures where the state may need a solid trust before handing over any agreement, for example, any license.

Your bankruptcy discharge documents will be required the most at that moment.

1. Why keep the documents safe?

When you go through bankruptcy, you get involved with a lot of creditors and third-party vendors. In the future, even after you receive your discharge documents, many creditors may return and demand the debt which was involved in the bankruptcy. 

When you produce these documents and prove that it was a part of chapter 7 and chapter 13 and that the property, they are trying to collect does not belong to you anymore. 

In certain states and countries, you must produce your bankruptcy discharge documents to receive a professional license. Having kept the records safe will save you a lot of harassment and time. 

2. Which documents to keep?

We would say all the documents are essential. There might come uncertain times when you never know which document will you need. And at the moment, if you lack any documents, according to a few experiences, it takes ages to correct the document from the lawyer, and the federal court is both time-consuming and costly. Why not keep a copy of all the documents in your archive during the hearing of the case. 

Below is the list of documents that you may want to keep- 

  • There are counseling sessions both before filing a bankruptcy case and discharge of the case. Both the documents/certificates are essential.
  • The details of creditors involved in the case and their mailing list.
  • Social Security document and income document that was disclosed while filing the petition.
  • The petition was filed in bankruptcy, the schedules, and exhibits.
  • The statements, declarations, and disclosures that were made during the file petition.
  • The legal notice which you will receive from the bankruptcy court, from the lawyer and other trustees. 
  • The final and perhaps the most crucial document is the final bankruptcy discharge document.

Difference between bankruptcy file date vs. discharge date

If you ever go through the entire bankruptcy process, you will know the different dates you need to remember. The most important date for many debtors is the date the case was filed. Once the lawsuit is filed, the bankruptcy stay order comes into play, when no creditor can ask or collect for his debt. 

The discharge date is when all the qualified debts are paid off to the creditors or wiped away officially in the federal court. 

Summary

In our honest opinion, it is essential to safe keep all the documents involving the bankruptcy case. And if you are part of Chapter 13, it is difficult to get a discharge if all your payments are cleared. It can take as long as three to five years. And during this period, you should prepare your archive of documents. These documents are perhaps as important as the house deed, your life insurance documents, etc. 

Video

Here is a quick video that explains in more detail How Long Should You Keep Bankruptcy Discharge Papers for.

How to Find Out If Someone Filed for Bankruptcy?

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How to Find Out If Someone Filed for Bankruptcy

In this article, we’ll cover the topic: “How to Find Out If Someone Filed for Bankruptcy?”

To tell you briefly, bankruptcy under the Federal Law is a debt solution available to an individual who is overwhelmed with debts and is no longer capable of paying it back. Usually, an individual files a case of bankruptcy when he has surpassed all ways, and repayment methods entrust the court’s responsibility.

Together with an attorney and trustees of bankruptcy, try to overcome the debts through various methods and following specific rules.

How to Find Out If Someone Filed for Bankruptcy?

All bankruptcy courts fall under the Federal Courts, and that is where all the hearings take place. “Pacer” is the website with all the federal courts’ locations and is open to the public. All the hearing and bankruptcy records are updated on the website regularly.

However, complete information may not be available on the portal. For instance, the bankruptcy files can be used against the person in a criminal trial as well. If not available, you can try to get the credit report. Not everyone gets the credit report, except for employers and potential lenders.

If you are a creditor, you may find out that your debtor has filed a bankruptcy case, either through their attorney or through a legal notice from the court.

It is essential to remember 2 points before looking for bankruptcy records:

  1. Firstly, the reason, you will need to understand the main factor of filing this bankruptcy. For instance, it can be a student loan over a credit card overspending.
  2. Secondly, the period- you will have to consider the time when a person/business filed for bankruptcy. For instance, a person who has filed for bankruptcy almost 20 years ago will be in a better position than a person filing it last year.

So, it gives away a lot of valuable information about the finances.

Why should I know if someone has filed for bankruptcy?

Although it is not mandatory that you need to find out about someone’s bankruptcy details, but in a few cases, when you are to make a financial decision with someone, it is essential to know the financial condition.

Here is a list of few common reasons:

1. Potential business partner

When you are planning to set up a new business, and you have a partner to share your ideas and thoughts. When you plan on investing in the concept, it’s best practice to determine your partner’s financial details. For instance, if your business hits a loss, and your partner has already undergone bankruptcy recently, you will have to take the responsibility of paying all bills and credits alone.

2. Lending money

If you are a moneylender, it should be your precautionary measure to find out about each of your lenders, their income, past credit history, current debts, if any, expenses, and most importantly, history of bankruptcy. Once you know the lender has undergone a bankruptcy, you can decide whether to lend the amount or not and if yes, shall it be on a higher interest percentage? Often lenders do this to gain trust and protect themselves from any loss.

3. The financial history of a business

If you are to invest in a business, it is evident that you will have a quick background check on the owners, profit and loss statements, and, most importantly, the current market value. When the business is bankrupt, the valuation falls, and there are fewer investments.

4. Others

At times people try to find out if you are bankrupt, just out of curiosity. And if yes, what was the cause for the financial crisis. It can be a friend, a colleague, or someone in the family who has recently filed a bankruptcy case but are hesitant to speak. You can find out the details as it is available to the public. However, you will need a few details of the person/business to extract that data.

What details do I need to find out if a person is bankrupt?

To look for a person/business’ bankruptcy details, you need to have these mentioned details:

  • The person’s legal name along with SSN (Social Security Number)
  • If it’s a business, then the Tax Id number
  • The case number of bankruptcy.

When you have extracted these details, you can check if a person is bankrupt. In case of physical inquiry in the courthouse, this process may take a few hours.

Summary

Agree or not, it is essential to know the financial status of a person/business before you choose to get involved. You can look for the details also on the website of Individual Insolvency Register (IIR).

Video

Check out this short video for more information on How to Find Out If Someone Filed for Bankruptcy

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What to Tell Creditors When Filing Bankruptcy? 3 Important Steps

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What to Tell Creditors When Filing Bankruptcy

In this article, we’ll answer the important subject matter of, “What to Tell Creditors When Filing Bankruptcy?”

Usually, many questions arise when you are trying to file a lawsuit of bankruptcy as you are trying to figure out the best possible way to overcome this situation and inform the creditors. 

Should I inform my creditor that I’m going to file bankruptcy?

Will I stop receiving calls post that?

If I inform him about the situation, will it affect the creditor?

Is he going to negotiate the terms before filing a case?

 

Creditors are those stakeholders who do try their best to get back the loan that they have given you, by any means possible. At times, it isn’t easy to listen to everything that the creditor has to say. So, let us find out what is the technically correct way of informing the creditors. 

What to Tell Creditors When Filing Bankruptcy?

When does anyone file for bankruptcy? When the debt is more than assets and income. And when you are in such a difficult situation, it is often very common for the creditor to call repeatedly.

As per the mentioned rules of bankruptcy, there is no need to inform the creditors you are about to take this step. But a few people do it out of courtesy. Most people often do it to stop the constant calls that they receive from creditors. There is a proper format to give notice to the creditors, and you will be pleased to know it is not you who informs but your attorney or the court. 

A few scenarios explain the reason to inform the creditor that you no longer have money to repay the debt. People use this tool to negotiate terms and bargain their way out of the debt. 

Firstly, people take this step to make the calls from disturbing them. Creditors are well aware that there will be an automatic stay on debt collection or any communication directly with the person once there is a case filed. From then on, all kinds of communication will happen through the attorney.

When creditors hear about the threat to bankruptcy, they try to pursue more to get the amount back. It depends on the creditor on how they will react. In a few situations, they can agree to revise and settle at a lower debt rate. This article lets us find out what can be communicated to the creditors during the entire bankruptcy procedure. 

Communication with creditors in phases

The situation arises when you have decided to file a bankruptcy case as you are annoyed with the creditor’s constant reminders. There can be 3 phases when the creditor calls, and you need to know what exactly to tell them.

●     Before filing the case

Way before you file a case, you can speak to the creditor to determine if they can negotiate terms of debt and repayment. If it comes to an understanding, you will be spared to filing a case of bankruptcy. And if not, you can inform them to communicate further details with your attorney.

●     During the case

Once the case is submitted in court, there is a stay order on all kinds of debt collections. The bankruptcy notice will be communicated to the creditors through the bank, and you don’t have to communicate with them at this stage. If you still receive calls and reminders, you can tell them to contact your attorney and settle. Your lawyer can sue them for contempt of court, which can charge them a fine too. 

●     After the case is discharged

Once the debts are discharged, the creditors have no right to call and collect the same debts. The federal court of bankruptcy stops creditors from doing so. You can again ask them to communicate with your lawyer if you receive repeated calls. However, in case of a few non-dischargeable debts, you may receive phone calls, and you will have to keep paying the bills. 

Can a creditor collect on a discharged debt?

In simple words, the answer is no. When a bankruptcy is discharged, it stops a permanent collection of that debt. Despite the court’s orders, a few creditors try to pursue you to collect the debts back. There can be phone calls and letters, and it is not legal. If it feels like harassment, you can always let your attorney know and let him legally take care of it. 

But before that, make sure you have the list of debts laid out and discuss with your attorney to understand which debts are to be considered and which not. As there can be a few debts that are not dischargeable, and there can be calls for those. For instance, if you have a child support loan, alimony, domestic support, or government-backed student loan, you are under challenging situations.

Summary

Before we jump to any conclusion, let’s know for sure that creditors, in a few cases, do exercise power. And it is not confirmed that after you file a claim, you will be spared of their constant reminders. You can always consult with your attorney to better communicate the situation and take any legal step if required. But make sure you have the bankruptcy notice well communicated to your creditors. 

Video

If you still need to know more information on “What to Tell Creditors When Filing Bankruptcy?”, check out this short explanation video below:

https://youtu.be/Zl8BhP-P5WQ

How Do Bankruptcy Trustees Get Paid? 2 Critical Variations

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How Do Bankruptcy Trustees Get Paid

In this article, we’ll explore all of the possible scenarios to the question: “How Do Bankruptcy Trustees Get Paid?”

In a case of bankruptcy, property or assets the court confiscates from the debtor are often administered and governed by a body called “trustees” until the matter gets resolved and the debts are settled.

Now you must be wondering that do the trustees get paid for this job. For example:

What is their payment like?

Do they get to use the properties and assets?

What are the requirements for the trustees to be paid a certain amount?

In this article, we will discuss the kinds of payments made to the trustees for this job, the slab they are paid under, etc. You must read on to find out. 

How Do Bankruptcy Trustees Get Paid?

Before we discuss the trustees’ pay-checks, we should find out the roles that have to play. Here we are going to discuss two types of bankruptcy- Chapter 7 and Chapter 13. The role that the trustees’ play is each of these cases is different from the other.

For instance, in case of a Chapter 7 bankruptcy, the trustees must sell off the properties to gather cash to repay the creditors. In Chapter 13, the trustees are required to collect monthly instalments from the debtor to pay the creditors over some time. Other general duties also need to be followed by the trustees. 

The trustees are required to find out from the debtor if he is hiding any money or assets. If yes, then that too needs to be confiscated. They are in full responsibility of the properties that are a part of the bankruptcy until the case is solved. They need to document a final report once the case is resolved. 

The fees of the trustees vary from case to case. For instance, if he manages a large estate worth millions, a chapter 13 trustee will receive will be different from a trustee working with an improvised debtor under chapter 7. However, there is still a minimum payment that has been decided by the court at is a minimum of 5%. 

Types of Bankruptcy and Their Method of Payment to Trustees

Above, we have discussed the types of bankruptcy trustees their fees. Let’s discuss this in detail. 

Chapter 7 Trustees

The basic administrative fee for a Chapter 7 trustee is flat $60. This administrative fee comes from the fee which you have paid while filing a case. If the court decided to waive the case filing fee, the trustees are not paid anything.

Secondly, the trustees also earn a commission from the properties that they sell to pay the creditors. They have a share of the profit. If the debtor does not have any assets, and there are no returns from the lawsuit, tax refunds, etc., the trustee does not receive any other amount. 

When the trustees sell off the properties and assets and collect the amount to make a payment to creditors, they also receive a commission on the collected amount. There is something called the sliding scale commission, which has the following percentage.

Ranging from the first $5000 disbursed- 25% and ranging up to 1,000,000- 3%. There are other sources of income for Chapter & trustees, like fees for professional accounting.

Chapter 13 Trustees 

The payment for Chapter 13 trustees is a little complicated. In this case, the trustees do not sell your properties and keep them safe and, in return, collect a certain amount every month. This amount is part of the payment that you make for the creditors.

The trustees, in this case, need the court’s approval to get the payment. As per the bankruptcy law, a maximum percentage of 10% of plan payment is allowed for the trustees. The trustees under Chapter 13 will have to meet the expenses and cost within this limit.

The trustees are paid a salary under the federal law as they are appointed as standing trustee by the district. These trustees’ annual salary is as per the executive V level employee under the federal government, inclusive of the benefits.

However, the trustees must file an operating budget with the United States Trustee’s office, which is part of the Department of Justice. If approved, after looking through the proposal, it sets a limit to cost and compensation for the trustees to recover. 

What information does a bankruptcy trustee have access to?

The trustees try to get their hands on your bank details, your income statement, your assets, and properties declared and compare with the details that you have submitted in the court while filing a case.

They look into the assets and determine if there is more amount that you could pay to the creditors but are not accepting otherwise. They look into your budget and expenses. They also have the right to inspect any hidden assets or amounts transferred recently. And if they find a discrepancy, they have every right to ask or wait for the 341 meetings of creditors.

Summary

When it comes to payment, the trustees are paid well either through salary or through compensation. Their commission involves a portion of the amount you will pay as a part of bankruptcy case expense. 

Video 

Here is a video that vividly explains the payment of trustees. 

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