Chapter 13 Plan Payments

February 18, 2016

Chapter 13 bankruptcy can be a useful tool to prevent foreclosure, prevent repossession, terminate garnishments, eliminate tax debts, catch up late payments in a mortgage, or to simply regain control of your personal financial situation.  It may make it possible to reduce the interest you are paying on your vehicle, reduce your monthly car payment, or even to reduce the total amount of your loan.  In certain circumstances, the ability to stop penalties, fees, and high interest charges may be enough reason to consider a Chapter 13 bankruptcy.

Chapter 13 Plan Payments

In a Chapter 13 case, we assist you in developing a household budget, and after subtracting the monthly budgeted expenses from the total household income, the remainder is considered disposable monthly income.  All disposable monthly income must be paid to the Trustee.  The Trustee will use this money to pay debts in order of the priority by the bankruptcy code and the Chapter 13 Plan.  These payments will last somewhere between 36 and 60 months, and once the Plan is successfully completed most remaining debts are discharged.

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Protecting Your Life Insurance Through Bankruptcy

February 15, 2016

When filing a bankruptcy proceeding you are allowed to protect a certain amount of personal property. Bankruptcy attorneys refer to protected personal property as “allowed exemptions.”  One of the categories of personal property is life insurance.  Life insurance comes in many forms.  However, for purposes of bankruptcy we typically categorize life insurance into term life insurance or whole life insurance.

Key to protecting life insurance

 

Term life insurance has no cash value.  It simply provides cash payment upon death. What this means is the policy or the insurance contract has no cash value while you are living. The term life insurance policy should be disclosed on your bankruptcy schedules, however, to the extent that it has no cash value a trustee has no ability to liquidate the asset.  In other words, you may continue to pay the term life insurance policy and the beneficiaries are allowed to keep any of the proceeds despite your bankruptcy.

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Rebuilding Credit

January 25, 2016

When it comes to credit repair, there is no secret formula to make all your previous debts disappear, and suddenly show a nice, clean credit report.  That being said, there are some important considerations in how to improve your credit score, and some significant pitfalls to avoid.          

First, pay your bills on time.  Whether you have gone through a bankruptcy, or are just trying to improve your credit score, one of the biggest things you can do to increase your credit score is to keep the accounts that are reporting to the credit bureaus current.  Deficiencies will quickly damage your credit score, and need to be avoided.  If you have a mortgage, car payment, or other open credit accounts, paying those on time will help rebuild your credit after an economic struggle.

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Debtor Education Requirement

January 22, 2016

Once the Meeting of Creditors is completed, there is normally not much else you will need to do.  You do have to complete the second part of the credit counseling, referred to as debtor education, click here.  This requirement can be done online for $10.00 or over the phone $15.00.  You may have already paid Greenpath when you did your pre-filing credit counseling. 

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The 341 Meeting of Creditors

January 21, 2016

About a month after your bankruptcy case is filed, you will have to attend the Meeting of Creditors.  This may sound intimidating, but, creditors rarely attend.  Generally, it will be you, your attorney, the Trustee, and other people who are also filing for bankruptcy.  It is held in a conference room, and is a relatively casual environment. While you do not have to dress up for this meeting, we recommend that you dress appropriately for a work day.

You must to arrive about 15 minutes early for your Meeting of Creditors.  Most of the Trustees have a supplemental form they want filled out prior to the meeting, so you will want to have time to go over  and prepare it for the Trustee.  Your attorney will generally arrive early in case you have questions. 

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Garnishments

Wage garnishments and bank account garnishments are a common reason people look to bankruptcy for relief.  Once a bankruptcy is filed, a garnishment must immediately stop.  If you had a wage garnishment, bank account garnishment, or levy during the 90 days prior to the filing of a bankruptcy that allowed any one creditor to receive more than $600, it may be possible to have that money returned to you depending on your available bankruptcy exemptions.  

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Preference Payments

January 19, 2016

One part of the bankruptcy process is to determine whether you have made any payments to creditors that qualify as a “preference.” It is human nature to prefer to pay a family member whom you owe money to or a favorite creditor prior to paying an unrelated or unknown creditor. In bankruptcy, the word preference is used to describe what is often an innocent payment of one creditor over others.

Preference liability analyzes payments which occur before the bankruptcy petition is filed. Two rules apply in determining the “reach back” period of time for the preference. If the creditor is an “insider,” as defined in the bankruptcy code, then the preference period is one year before the petition filing. If the creditor is not an “insider,” then the preference period is limited to the 90 days before the bankruptcy petition is filed.

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Automatic Stay

January 19, 2016

The day you file your bankruptcy, the Court imposes what is referred to as the Automatic Stay. The Automatic stay is like a shield of protection from creditor collection action.

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Bankruptcy Signing Appointment

January 18, 2016

Once your attorney and paralegal have prepared your bankruptcy case with the information you have provided, you will need to attend the signing appointment to review and sign the pleadings. This appointment can be lengthy. It is important that you carefully review the pleadings, you will be attesting that all of the information is accurate and complete. If you think of any information that you may have overlooked, like additional income coming into your household or a missed creditor, now is a good time to share that information with your paralegal and attorney, before the case is filed. If you have questions during the signing appointment, make sure to ask so that you understand what you are signing.

Image result for signing pleadings

 

Once the pleadings are accurate and signed by you and your attorney, your bankruptcy case is filed with the Court. Your case is assigned a case number and a trustee. This is when your creditors are sent notice of your bankruptcy filing and must discontinue collection action and all contact.

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