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

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

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?

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?

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

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

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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How Does Bankruptcy Affect A Cosigner?

how does bankruptcy affect a cosigner

In this article, we’ll be tacking the question: “How Does Bankruptcy Affect A Cosigner?”

Most certainly, the cosigner of your debt is also going to be affected when you file a bankruptcy case. When there is any default in loan repayment, the creditors have every right to charge the cosigner. However, there are multiple ways to protect your cosigners from the creditors.

This article will discuss how a consigner is involved in bankruptcy and how you can protect them from getting chased by creditors. 

How does bankruptcy affect a cosigner?

A cosigner, in simple words, is a guarantor for your loan. When you sign a loan form along with the consigner, they are equally responsible for the debt repayment. It is a much severe responsibility than it sounds. Once the consigner agrees to the terms and conditions of the loan and signs the documents, they are also legally bound to the contract. 

If you are someone trying to set up a business or do not have a perfect credit score, it is often difficult to collect funds. In such cases, the creditor will advise you to get someone who has a better credit history and can be considered a guarantor on your behalf.

A cosigner who has a better income source, valuable assets are often preferred by the creditor, as there are fewer chances of loan repayment default. In a few cases, the bank may ask you to find a consigner if you have already filed a lawsuit of bankruptcy previously, or you wish to take a more massive amount of loan than your income, or you do not have a good credit history. 

So, when you are unable to repay the loan or debt, it automatically jumps to your cosigner as now it is their responsibility to repay the loan. Let’s find out the types of Bankruptcy cases, and how is the cosigner impacted?  

How is a cosigner affected in different cases of bankruptcy?

There are two types of bankruptcy that we have discussed below.

1. Chapter 7 

If you have decided to file a bankruptcy case under Chapter 7 of the Federal law, there is an immediate stay order on all kinds of debt collection activities from the creditors. However, that is not covered for the cosigners or guarantors. They are subjected to debt collection and persuasion. However, there are ways in which you can stop that from happening. 

Firstly, you can straightaway pay off the debt yourself. After you have been discharged from the debts, you don’t need to pay your creditors. But if you wish, you can pay off the loan voluntarily.

The cosigner, on the other hand, can pay off monthly instalments on your behalf. However, the guarantor will have to pay a lump sum amount to pay off the entire debt. You can always negotiate with the creditor on a preferable repayment plan. It is unlikely that the creditor will agree if you have a consigner or guarantor with acceptable assets. 

Secondly, you can reaffirm the secured loans, including car loans, jewelry, a computer in which the debtor will have to give up if he is unable to repay the loan. But by doing so, you will be subjected to the obligation by yourself, and protect your cosigner or guarantor

2. Chapter 13

Unlike in Chapter 7, the consigners and guarantors are well protected if you file a bankruptcy case under Chapter 13. There is an automatic stay on debt collection on both the debtor and cosigner/guarantor. There is also a provision to pay off the debt through a repayment plan over 3-5 years. However, the creditor can request the court to remove the automatic stay under a few circumstances- 

  • If the creditor will undergo huge losses if the stay is not removed
  • If the debtor is promising to pay only a certain amount and not the entire amount through the repayment plan
  • If the cosigner has taken benefits of the loan

The consigner’s stay will end if the court decides to convert the case into Chapter 7 from Chapter 13 or even decides to dismiss. 

Filing bankruptcy on student loans with a cosigner

When you are a student, it is often hard to pay off your loan under challenging circumstances. In such cases, you can file a discharge of the student loan petition. In case you have explored all instances to repay, you can explore filing a lawsuit of bankruptcy under Chapter 7 or Chapter 13. 

After the student has finished college and cannot find a decent job to repay the debt, the consigner will be facing trouble. When the student files for bankruptcy, even though the debtor is relieved of the loan, the creditor is still under the lens to pay off the debt.

Final Thoughts

When a debtor takes a loan, and carefully chooses the cosigner, make sure the cosigner is ready to face any legal action in case of any defaults. There are risks involved, and the consigner should face it and then decide on signing the documents. 

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Video      

Here is a video demonstrating the scenarios of cosigners in bankruptcy. If you need more information on “How Does Bankruptcy Affect A Cosigner” watch this short video below:

Why is any Form of Bankruptcy Most Often Considered the Last Resort?

Why is any Form of Bankruptcy Most Often Considered the Last Resort

In this article, we’ll answer the complicated question: Why is any Form of Bankruptcy Most Often Considered the Last Resort?

When you undergo a financial crisis, you should look for options to overcome it. One such option is filing a case of bankruptcy. Besides bankruptcy, there are other options which must consider as soon as possible. 

Often bankruptcy is the ultimate step that one takes to overcome dues. And you must go through careful consideration before taking this step. There are often counseling sessions available before you go to file for bankruptcy to understand if that’s the best option for you, or are there any other legal actions available. In this article, we will further discuss the negative impact of bankruptcy. 

Why is any Form of Bankruptcy Most Often Considered the Last Resort?

At times of crisis, bankruptcy can help you regain financial stability. You must look through Chapter 7, Chapter 11, and Chapter 13 bankruptcy and understand the terms and conditions that suit your best interest. But when should you file for bankruptcy?

When your loan amount is above and beyond your total income and assets, that’s when you know you need financial advice. But before taking the step, we would want to advise other workarounds like negotiating payment plans with creditors. 

After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, filing a bankruptcy case has become tedious with many paperwork, counseling to manage finance, and many limitations. There are many, not just financial but also societal impacts of Bankruptcy, which we will list down. 

Effects of Bankruptcy as the last resort

When you have chosen to file a case of bankruptcy, let us list some of the negative impacts it has. 

1. Credit Score

Once you have filed a case of bankruptcy, it remains visible on your credit report for almost ten years. However, it may not have much impact if you continuously have a poor credit score. 

2. Information made Public

All the details of your property, including your assets, will be filed in the documents of your bankruptcy case. You will not be given an exception, and these are public records. It is mandatory to do so under oath. The major credit bureaus and creditors and informed about your bankruptcy the moment you file a case. 

3. Certain Limitations

Even though bankruptcy is a model that gives you another chance to bring back financial stability, it gives you the option to hold back some of your assets, but you will have to let go of a few. But debts like criminal fines, student loans, child support, and some taxes cannot be discharged.

Furthermore, if you take a loan during your bankruptcy case is still pending, it cannot be included. If you are not covered under the insurance of an event that may cause significant financial loss, you will not be able to file another bankruptcy case.

4. Years to recover 

Most bankruptcy cases take almost seven to ten years to recover. Besides being discharged, there are a few loans that need payment to creditor irrespective. And there are extra expenses like hiring a good lawyer, funding the trustee fees, and running the case in court.

And you will also not be able to file another lawsuit of bankruptcy anytime soon. For that, you will have to wait around 4-8 years, depending on the severity of the case. Together it is a lot in such challenging conditions.

5. Loan Approvals

Once you come under the radar of bankruptcy, you automatically become a high-risk customer. These are very few chances of loan approvals, and even if you get a loan, it will have a very high interest incurred. But over time, you will have to pay that extra interest amount to regain trust and rebuild your credit score. 

What does filing for bankruptcy do?

When a person is unable to pay back that loan that he had taken, and there is no other way possible, he could shortly file for a case of bankruptcy. Although there are multiple disadvantages listed above, there are a few temporary relaxations also for filing bankruptcy.

For instance, you will get an immediate stay order on all the debts to be collected. There are a few dischargeable debts, too, which can be relaxed, for instance, medical bills, credit card loans, utility bills, and other personal loans.

Under a few sections in both Chapter 7 and Chapter 13, some exemptions allow you to keep a few of your assets and properties. There are a few cases where the credit scores take a dip, but there is no room to be alarmed. Once the case is discharged, one can work towards building a better credit score. So, filing a lawsuit of bankruptcy has more advantages than one. 

Summary

Now that we have come across all the advantages and disadvantages of having filed a case in bankruptcy, we are sure you will make the right choice for yourself. All we can say is to go through each Chapter’s terms and conditions while filing the case.

 

There can be many loopholes involved in such debt cases, so make sure you have all the correct details and rules. 

Video

For your reference, here is a video link that explains this topic in more detail – “Why is any Form of Bankruptcy Most Often Considered the Last Resort?

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What Is A Core Proceeding in Bankruptcy? – 5 Instructions You Must Know

What Is A Core Proceeding in Bankruptcy

In this article we’ll tackle the complicated question: What Is A Core Proceeding in Bankruptcy?

When you file a bankruptcy case in court, three shareholders get involved in the matter- debtor, creditor, and the court. Some courts are authorized to handle disagreements during a bankruptcy case, and their power is limited, unlike other courts. 

In some cases, there can be matters that are not directly a part of the bankruptcy case but must be resolved even before the court can finalize the bankruptcy case. 

When such cases occur, it is essential to understand the legal differences between non-core and core proceedings and resolve them urgently. So, what is a core proceeding in bankruptcy? Let us find out. 

What is a core proceeding in bankruptcy?

At times the situation may not be in your favor when you are bankrupt. So, in such cases, you file a case in the Bankruptcy case in the court. After carefully analyzing the case, the bankruptcy judge decides on the main reasons that are directly related to the bankruptcy case.

These primary factors are directly related to or are involved in the bankruptcy. Such factors are considered “core proceedings” as per the 28 U.S. Code § 1334 Bankruptcy code

The core proceeding is, however, different from the non-core proceedings. Just for information, matters involving custody of a child, injury or death, fraud, etc. are involved in the non-core proceedings. The judges can opt not to listen to these non-related matters, which may also be involved in the case. 

We shall discuss the kinds of core proceedings involved in the article. 

Types of Core proceedings

The core proceedings can be of 16 types but are not limited to just these factors. We have listed a few below. 

1. Distribution of properties 

This means that when the creditors are to be distributed back the amount in the bankruptcy, the people involved do not agree to the clause. This also consists of the governance of bankrupt estate that has been confiscated and the administration of those properties as well. 

The court also governs the trustees who are to be appointed to take care of and oversee the bankrupt properties. When the judge who handles the case notices any discretion in the matter concerning this factor, that is considered a core proceeding. 

2. Illegal possession of debtor properties

Property or possessions owned by another person which also a part of the debtor’s property, then the court will interfere and has every right to ask the person to give in the property. The court also has the function to decide when should be given an exception to keep the properties. This involves the court’s power to govern or look after the validity and extension of the properties that are a part of the bankrupt case. 

3. Confirmation hearing by the Court

Confirmation of Bankruptcy is to be made through a hearing by the court. The court must also confirm/approve the plan of bankruptcy. There are multiple Chapters of the repayment plan involved in a case, and the court must approve the ideal plans for the particular case.

For Example, Chapter 13 consists of the amount that the creditors will receive and which debt will be paid off. Hence chapter 13 is an essential part of the Bankruptcy repayment plan. Other chapters may be involved, and the decision has to be taken by the court.

4. Force collection of debts 

The court looks after the properties or funds that the debtor must have transferred to their relative just before the bankruptcy case was filed. The trustees involved in the case have every right to file a lawsuit against the relative and the debtor’s illegal transferring of funds.

The other part consists of the court’s power to stop creditors from collecting the amount back from the debtor. And in some instances, there might be a turn of events where the trustees may turn over a property, which means that the trustees should ask the court to order a bank that can issue funds into the debtor’s account. 

5. Request for another loan

The last and final is permission for credit during bankruptcy. The court must look into any credit request and permit the debtors or trustees’ debt during this period. There is also a provision for the court to take care of the sale, lease, or use of the bankrupt properties.

In such cases, both the debtor and creditor have the opportunity to ask the court to modify the bankruptcy stay soon after the lawsuit is filed in court. 

Summary

This article has tried to cover the essential disagreements that often occur in a bankruptcy case. The conflicts often happen when the stakeholders involved in it do not agree to a few terms and conditions imposed by the court. The judge has to listen to all pleas and suggestions from these stakeholders and then impose a decision. 

Video

Here is a video that covers the basics of bankruptcy:

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Consequences of Not Saving Money

Consequences of Not Saving Money

In this article, we’ll discuss the important topic of: “Consequences of Not Saving Money”

There are more risks involved in not saving money than we imagine. It’s better to be slightly careful today than cry later, so why not save some money for good. With the fast-paced 21st century lifestyle, one may find it hard to save, but it’s not altogether impossible. Everyone is working and earning, but all of them have their reasons to work. 

Some people are working to make their ends meet; others are purely doing it to learn and lead a lavish lifestyle. Even those who may be working for pleasure must learn to save. Everyone must have some amount to count on, so they can enjoy their calm whenever there’s an emergency.

What Are the Consequences of Not Saving Money?

Ever thought what’s the point of working so much, when there’s no saving you can be proud to call your own. The message to save money is one of the learnings from adulthood we should bookmark and remember for life. It’s not just one person anymore, but it’s the youngsters, adults, and governments alike. 

If these people change their attitude even slightly and become more sensible with their finances, there won’t be room for uncertainty or doubt anymore. It is not a pleasant feeling to be indebted to someone, especially those you don’t have a close connection with. To avoid such a circumstance, why don’t we start saving and we start now. 

Nothing gives you more confidence than the ability to save some money, money that you can count on, during your tough days. It feels like our older generation and ancestors have done the right thing by saving something both for themselves and us. 

They probably knew that no one from our generation could look after them like they can care for themselves. To assure a promising future for ourselves, we have to change our attitude towards saving and taking it more seriously. 

We Can Be in Debt

Our family doesn’t want it to be the case. No loved one of ours wants that we should be in debt of any kind. To avoid a situation like this:

  • Start saving a part of your regular salary every month. 
  • It doesn’t have to be a huge amount you are saving; even if it’s a small amount, it’s fine.
  • Save and forget the amount you kept aside. 

Emergency Fund

It’s sad not to have even a small fund, you may need it during an emergency, and you must understand how important it is to save. 

  • Unexpected emergencies may keep coming; such funds are for these times. 
  • We can’t avoid the emergency, but we can at least stay prepared; we can have a small fund created. 
  • You won’t have to function on a low budget. 

Lack of Security

It is hard to say how long you can last in a specific job during uncertain times like these. If we are not even saving, how are we going to get by difficult circumstances? 

  • Uncertainty will be there; no one knows for how long. 
  • It shouldn’t distract us from our goal of saving in any case.
  • Change your saving cycle a little bit to assure yourself some job security. 

Can’t Decide Confidently

Lack of decision comes with not being able to save enough or anything at all. We slowly begin to lose ourselves and confidence in ourselves.

  • If you have some saving to back you up, you can confidently exercise your choices and go forward 
  • From small to big, all decisions will be up to you to take
  • The feeling of restlessness goes away on its own 

Health Problems

One may even be faced with unanticipated health problems and stress.

  • When you choose not to save, you put your mental health at stake. 
  • Stress can be a problematic health condition; don’t ever bring yourself to a point where you have to experience anxiety
  • Start afresh, make new saving goals, achieve new visions, and keep going forward in high spirit. 

FAQs

What are the disadvantages of not saving money

There are, in fact, multiple disadvantages of not saving money. From health issues to emotional dissatisfaction, the mental state of not being able to save can be harrowing. 

How much money should you save?

There isn’t a set bar for an amount you should or shouldn’t save. Whatever you can, to the best of your financial capacity, you must save—however, small or large amounts.

Verdict

The consequences of not saving money are many. You will realize this only as you read this detailed write up about ways to start saving and being productive with your finances to the point that how much money should you save shouldn’t remain a question anymore.

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