Can I Include The Loan On My Wrecked Car In Bankruptcy?

Posted on December 21, 2010 by Kevin Gipson, Attorney at Law

A collateral mortgage loan on a car can be discharged in a bankruptcy even if the car is wrecked.  This is true of a car with mechanical problems as well.

The reality is that for most people the days of a 3 or 4 year car loan are gone.   In my practice I often see potential bankruptcy clients with car loans of up to 7 years!

With such lengthy car loans, the likelihood of a car being damaged or failing mechanically before the completion of the loan are significant.

In a Chapter 7 bankruptcy you have the right to discharge a secured loan such as a car loan.

Generally speaking the creditor will then make arrangements to pick up and sell the vehicle.  The amount that the creditor gets at the auction of the car is all it can get from a debtor that has “surrendered” a vehicle in a Chapter 7 bankruptcy.

A similar result occurs in a Chapter 13, with the only difference being that if there is still money owed after the auction of the vehicle, that money owed, often referred to as a “deficiency”, is treated as an unsecured debt, and the creditor may receive some or all of the deficiency if payments are made to the unsecured creditors in a Chapter 13 Plan.

The option of whether or not to surrender a vehicle and the type of bankruptcy to file should only be made after consulting with an experienced bankruptcy attorney.

by , New Orleans, Louisiana bankruptcy lawyer.

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Chapter 7 Bankruptcy: Can I Turn In My Car If Signed A Reaffirmation Agreement?

Posted on December 7, 2010 by Kevin Gipson, Attorney at Law

When you purchase a car and take out a loan to pay for the car, you are giving the lender a collateral mortgage on the car.   A car loan is a secured debt in a Chapter 7 bankruptcy.

In order to keep your car in a Chapter 7 bankruptcy, you will have to sign a reaffirmation agreement.  If you do not sign the reaffirmation agreement, or if the judge will not approve the reaffirmation agreement the lender has the right to seize the car.

Chapter 7 also lets you turn the car over to the lender in full satisfaction of what is owed to the lender.   This means that if the car is sold and the sale price is not adequate to pay off the loan, the lender has to eat the loss.

The reaffirmation agreement must be signed and filed with the bankruptcy court before your case is discharged.

So what happens if you sign a reaffirmation agreement and then realize that you can’t afford the car after all?

The answer is:  It depends!

When you sign the reaffirmation agreement, you are agreeing to pay the car loan after your bankruptcy is discharge.   In other words, you don’t discharge the car loan. 

If you don’t pay the you will in all likelihood have the car seized and you are still  liable on the debt.

Fortunately, even if you signed a reaffirmation agreement and then decide you can’t pay the loan, the bankruptcy code gives you some time to change your mind.

If you sign and then change your mind, you have 60 days from the date the reaffirmation is entered with the court, or the date of discharge of your bankruptcy, whichever is later.

A Chapter 7 bankruptcy is an opportunity to get a fresh start.   You need to give serious thought as to whether you can afford to keep your car.

Discuss your options with an experienced bankruptcy attorney.

by , New Orleans, Louisiana bankruptcy lawyer.

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They Went Broke Too! Toni Braxton.

Posted on October 11, 2010 by Kevin Gipson, Attorney at Law

Grammy Award winning singer, Toni Braxton, has filed for bankruptcy.

The filing occurred on September 30, 2010 and bears Docket Number 10-51909.  The bankruptcy was filed in the Central District of California Bankruptcy Court located in Los Angeles.

Ms. Braxton’s has filed a Chapter 7 bankruptcy, which is also frequently referred to as a “Fresh Start” bankruptcy, since the debtor discharges her debts and starts over.

Ms. Braxton previously filed for bankruptcy in 1998.  (Docket Number 98-12646, Central District of California Bankruptcy Court).

Reports are that the bankruptcy is the result of health problems that caused Ms. Braxton to  be unable to honor a contract to perform in a Las Vegas show, coupled with her insurers refusal to cover the loss, alleging that she had failed to disclose a pre-existing heart condition to the insurers.

Health problems can be a direct or indirect reason that is often listed as a major reason why people file for bankruptcy.

by , New Orleans, Louisiana bankruptcy lawyer.

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How Often Can A Bankruptcy Be Filed?

Posted on October 6, 2010 by Kevin Gipson, Attorney at Law

There are limits on how often a bankruptcy can be filed.  

A Chapter 7 bankruptcy can be filed once every eight years.  The date of filing of the original bankruptcy is used to determine the filing date for the new Chapter 7, not the date of discharge of the debt.

A Chapter 13 can be filed anytime after the discharge of debt in a Chapter 7, however, if the debtor wants to obtain a discharge in the Chapter 13 bankruptcy they cannot file a Chapter 13 until four years from the filing date of the Chapter 7.

Some other factors that need to be considered in filing bankruptcy:

  • If a Chapter 7  or Chapter 13 bankruptcy is dismissed rather than discharged, the bankruptcy can be refiled, but if it is refiled less than a year from the original filing, the stay of collection proceedings is no longer an “Automatic Stay“, and is only in effect for the 30 days following the filing.  If a stay needed, a motion needs to be filed with the court to extend the Stay.  The decision on whether to extend the Stay beyond 30 days is within the judges discretion.
  • If a debtor attempts to file repeated bankruptcies only to dismiss them or have them dismissed for failing to comply with the requirements of the bankruptcy code, the court can enter an order prohibiting and/or delaying a particular debtor from filing bankruptcy. 

This is a very general discussion of the time limits involved in filing a bankruptcy.  There are several factors that come into pay regarding the timing of the filing, or the re-filing of a bankruptcy.

It is recommended that you speak with an attorney experienced in bankruptcy to find out what options are available.

by , New Orleans, Louisiana bankruptcy lawyer.

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Terms You Hear At A Bankruptcy Creditor’s Meeting And What They Mean?

Posted on August 26, 2010 by Kevin Gipson, Attorney at Law

There are several steps in the process of filing for bankruptcy.

One of the first steps after the filing is the “Meeting of Creditors”.

The meeting, also called a Section 341(a) meeting is held by the “Trustee“.

The meeting is usually scheduled to occur about one month after the bankruptcy is filed.

At the end of the meeting, the Trustee will announce what he plans to do with the debtor’s property.

This is usually referred to as a “Statement of Intentions”.

 Unfortunately, the Statement of Intentions tends to be in Legalese, and debtors frequently leave the meeting uncertain of what the Trustee intends to do with their property.

The following are three phrases you may hear and what they mean.

1) THE PROPERTY IS EXEMPT.

Property that is exempt cannot be sold (liquidated) by the trustee and is retained by the debtor.

2) THE PROPERTY IS UNWORTHY OF ADMINISTRATION.

Property that is unworthy of administration is property that, while not exempt, has little or no equity value. Simply put, it is not worth the time, effort and cost for the trustee to seize the item of property and sell it. This property is usually abandoned by the trustee and is also retained by the debtor.

3) THE PROPERTY IS ENCUMBERED.  (OR THE PROPERTY IS ENCUMBERED BEYOND ITS WORTH)

An encumbrance is a secured debt such as a mortgage or a car loan. For most debtors the encumbrance also makes the property unworthy of administration.

Finally, don’t be afraid to ask questions if you hear something said at the trustee’s meeting that you don’t understand. Bankruptcy lawyers and trustees use these terms on a regular basis: you don’t.

However, understanding the terms used in bankruptcy as well as the process are important parts of having a successful case.

 An experienced bankruptcy attorney can guide you through the entire process and will be able to bring the legalese down to earth.

by , New Orleans, Louisiana bankruptcy lawyer.

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What Is A Bankruptcy Estate?

Posted on August 16, 2010 by Kevin Gipson, Attorney at Law

A bankruptcy estate consists of all of the property that a debtor has at the time of the filing of his bankruptcy. 

 The bankruptcy estate comes into existence when a Chapter 7 or Chapter 13 bankruptcy is filed. 

Some of the items included in the estate are:

  •  Real Estate;
  •  Furnishings;
  •  Vehicles;
  •  Retirement plans;
  •  Clothing;
  •  Lawsuits or other causes of action;
  •  Property left to an individual in a will or inherited within 180 days of filing for bankruptcy.

Even though you must disclose all of your assets, many of the items in your estate are exempt from administration.

If items are exempt you are able to keep it them.

Even when the property cannot be exempted it may be of little monetary value to the trustee and will be abandoned back to the debtor.

A debtor who fails to list all of his property runs the following risks:

  •  Having his discharge either denied or revoked;
  • Having otherwise exempt items lose their exempt status; 
  • In extreme circumstances, fines and jail time.

The assets in your bankruptcy estate usually vary from State to State. 

Contact an experienced bankruptcy attorney.

by , New Orleans, Louisiana bankruptcy lawyer.

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What Happens To My Lease When I File A Chapter 7 Bankruptcy?

Posted on August 14, 2010 by Kevin Gipson, Attorney at Law

When you file a Chapter 7 bankruptcy you have two basic options:  You can assume the lease or you can reject the lease.

 If you decide to assume the lease, then you  will still be responsible for honoring the terms of the lease.

When you reject a lease you are stating that you no longer want to honor the lease terms, and you will have to surrender use of the leased property.

In addition, by rejecting a lease agreement in a bankruptcy, you receive a discharge from any further obligations under the lease agreement.

You can only assume or reject an unexpired lease, and when you assume a lease you are responsible for curing any defaults in your obligations under the lease.  This means that any money you owed on the lease will need to be paid.

Remember:  A bankruptcy is an opportunity to get a fresh start.  You should carefully consider whether to assume a lease where you are behind on your monthly payments.

If you assume the lease and can’t catch up on the monthly payments after your debts are discharged in a bankruptcy, you will once again run the risk of being sued by the lessor to force you to honor the lease.

by , New Orleans, Louisiana bankruptcy lawyer.

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Can My Employer Fire Me Because I Filed For Bankruptcy?

Posted on August 13, 2010 by Kevin Gipson, Attorney at Law

Can you be fired because you filed for bankruptcy?

The simple answer is no, you cannot be fired, or for that matter refused employment because you filed for bankruptcy.

11 U.S.C.A § 525(b) of the Bankruptcy Code provides that, “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt”.

However, I should point out that, like all simple answers, there is a “but” to this answer.

An employer cannot fire or refuse to hire “solely” because you filed for bankruptcy.

What this means is that if an employer can fire or refuse to hire if the decision was not made only on the basis that you filed for bankruptcy.

Also, the statute only applies to private employers.  The issue of whether a public employer can use bankruptcy as the sole basis for hiring or firing has not been resolved.

Now, for what it is worth, I have never personally had a client come to me and tell me that he or she was fired because of a bankruptcy.

If you have filed for bankruptcy and feel that you were fired or not hired because of the filing, you need to speak with your attorney to make sure your rights are protected.

by , New Orleans, Louisiana bankruptcy lawyer.

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What Is A Chapter 20 Bankruptcy?

Posted on August 10, 2010 by Kevin Gipson, Attorney at Law

What is a Chapter 20 bankruptcy?

The fact is there is no Chapter 20 of the Bankruptcy Code.

Chapter 20 is an expression used by attorneys to describe a situation where a Chapter 7 bankruptcy is filed for a debtor followed by a Chapter 13 bankruptcy.

When would this process be used?

From time to time a debtor will come in with too much debt to file a Chapter 13 bankruptcy.   Since the debt limits for the 13 are too high, it is sometimes necessary to file a Chapter 7 bankruptcy to get rid of the debt that is either unsecured, or that is secured debt where the debtor no longer wants to keep the secured property.

After the Chapter 7 has been discharged, a Chapter 13 will be filed in order to propose a monthly payment plan to pay the remaining debt.

A “Chapter 20” is a complex process and may not be the best approach for your situation.

You should contact an experienced bankruptcy attorney to discuss your options.

by , New Orleans, Louisiana bankruptcy lawyer.

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They Went Broke Too! “Real Housewives of New Jersey” star Teresa Giudice. UPDATE!

Posted on August 9, 2010 by Kevin Gipson, Attorney at Law

The Trustee for the bankruptcy filed by “Real Housewives of New Jersey” star Teresa Giudice has scheduled an auction of the couples non-exempt belongs to occur on August 22, 2010.

To encourage only legitimate buyers, a $300.00 deposit is required to attend.

A list of the items scheduled for auction along with pictures of the items can be viewed at the A. J. Willner Auctions website.

When an individual files for bankruptcy certain items of property are exempt from seizure and sale by the bankruptcy court.  The debtor in a bankruptcy gets to keep the exempt items.

The non-exempt items can be seized and sold by the Trustee appointed to administer the bankruptcy and the proceeds from the sale goes to pay the claims of the unsecured creditors.

by , New Orleans, Louisiana bankruptcy lawyer.

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