Recent Posts in Bankruptcy Category

Starting today, June 1, 2010, HAMP Home Loan Modifications cannot be denied because you are in an active chapter 7 or 13 bankruptcy.

This is significant for many consumers. Many consumers facing foreclosure need both bankruptcy and a modification.

A bankruptcy filing will automatically stay a foreclosure on your home and a modification of the terms of the mortgage will make the home more affordable.

For more information about this important change please visit https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1002.pdf

Bankruptcy can save your home from foreclosure!

The moment a bankruptcy case is filed with the bankruptcy court the automatic stay comes into effect. The automatic stay prevents creditors from taking certain actions against you including foreclosing on your property.

 Bankruptcy will even stop a foreclosure if filed minutes before the foreclosure sale.

Once the case is filed and the foreclosure stopped you may be able to catch-up missed mortgage payments during the course of a chapter 13 plan, eliminate second or third mortgages, or have time to work out a modification with the bank.

All initial bankruptcy consultations with Attorney Kovacs are free. And there is no time limit!

During the consultation we will first talk about you, your assets, income, expenses, and debts. I will explain to you the several different bankruptcy chapters and how your situation will fit in. I will make a recommendation on which chapter is best for your situation. Also, I will take you through the process itself, what happens before the case is filed, during the case and then life after bankruptcy (including how to improve your credit score post bankruptcy).

We will talk about what your goals are and how we can reach them.

If you would like to setup a free consultation give the office a call or send an e-mail.

When you stop paying your credit card bill the bank will want to find a way to get you to start paying again. The first step will likely be making phone calls and sending letters. If that does not work the bank may hire a debt collector to turn up the heat on you.

The collection agency will call, a lot. And send many letters. If still you are not paying your bank will likely hire a local debt collection law firm to attempt to collect.

The law firm will likely again send more letters and make more phone calls. If still not payment is made then they are likely to bring a lawsuit against you.

In order to start a law suit the bank will have to file a complaint and serve a summons on you.  

In my experience it typically takes 10 - 12 months from the time of the first missed payment and the time of the law suite.

Filing for bankruptcy will likely stop all collection calls, letters, and law suits the moment the case is filed.

Judge Melvin Hoffman is set to take the bench April 15, 2010. Judge Hoffman will be taking the seat left by retiring Judge Rosenthal in the Massachusetts Bankruptcy Court, Central Division.

Judge Rosenthal will remain on the bench through April 14, 2010.

At the conclusion of most individual bankruptcy cases a Debtor receives a “discharge” of his debts. The discharge is a release of your personal legal obligation to repay your debts. In part that discharge serves as an injunction against the discharged creditors ever attempting to collect a discharged debt.

In some cases a creditor may ignore the discharge injunction and continue to harass the debtor in an attempt to collect the debt. This harassment is illegally and hampers the Debtor’s ability to get a fresh start and move on in life.

A creditor may be liable to a debtor for violations of the discharge and have to pay to the debtor money damages.

If you have been the victim of harassing phone calls, collections letters, or other debt collection activates on discharged debt you may be entitled to money damages.  

The Law Office of Robert W. Kovacs, Jr. will pursue all such violations. We will handle your discharge violation case even if you used another attorney for the underlying bankruptcy case.

After filing bankruptcy the “automatic stay” comes into effect.  Much like the name implies it happens automatically upon the filing of your case and stays actions against you.

This means that a creditor cannot call you to collect a on a debt as soon as your case is filed. However, it may actually take 2 – 3 weeks for all your creditors to receive notice of the bankruptcy and really stop calling.

During this 2 – 3 weeks period you may answer the phone and tell your creditors about your bankruptcy filing. The creditor will likely ask for your case number and attorney information. Providing this information will cause the creditor to have actual knowledge of your filing and thus they will have to stop calling.

If they still continue to call, call your lawyer, the creditor may be ignoring the stay or they may not have received notice of your case. In either event a strongly worded letter from your attorney is appropriate.

If after a warning letter from your attorney the creditor continues to call, you may be able to bring an action against your creditor for money damages.

Yes settling a debt for less than you owe will save you money but it is not going to save you as much as you think.

When you settle a debt with your credit card or other creditors for less than you owe the amount forgiven is taxable income.

For example if you owe Bank of America $20,000 and they forgive $10,000 the forgiven $10,000 is treated as income to you which you will pay taxes on at year’s end.  The creditor will issue you a 1099.

Also debt settlement for less is reported on your credit report and can negatively impact your credit score.

In bankruptcy debts are discharged through a court order. Discharged debt in bankruptcy will not be taxed or reported as income.

As soon as your bankruptcy case is filed with the Court the “automatic stay” comes into effect. The “automatic stay” is much what it sounds like, it happens automatically upon filing of your case and it stays certain actions against you.

This means as soon as you file bankruptcy your creditors are legally prohibited from, foreclosing on your home, repossessing your car, sending bills, or making collection phone calls.

Of course, your creditors do not know you filed bankruptcy the very instant you file. The Court will send a letter to all the creditors listed in your Creditor Matrix informing them of your filing. This will likely take about two weeks.

If there is an urgent matter, such as a home foreclosure tomorrow, I will call and fax the law office handling the foreclosure to ensure they are aware of your bankruptcy filing and it does not take place.

Individual debtors filing bankruptcy are required to complete both pre and post discharge counseling courses. Pre-filing counseling or “Credit Counseling” must be completed before the filing of bankruptcy.

After the filing of bankruptcy debtors must again complete a counseling course. The post filing course has several common names; including, “Debtor’s Education,” “Financial Management Course,” and “Pre-Discharge Education.”

The course must be completed in order to get a discharge of debts. If a debtor fails to complete the course then the debtor’s bankruptcy case will be dismissed and no discharge granted debtor. The course must be completed and the certificate filed with the Court no later than 45 days after the first scheduled date of the §341 meeting of creditors. However, it is my recommendation to complete the course before the meeting.

The course can be completed, on-line, over the phone or in person.  There are many agencies that provide pre-discharge education to bankruptcy debtors. These organizations must be non-for-profit corporations AND must be approved by the US Department of Justice; commonly debtors use the same company for both the pre-filing and post-filing course.

I provide all my clients with a referral to an approved counseling course, however, clients are free to use any agency they wish to complete the course.

In order for an individual to qualify for bankruptcy protection you must first complete Credit Counseling. Counseling can be completed on-line, over the phone, and in person.  The counseling will take about 2 hours.

In order to for an agency to provide bankruptcy credit counseling, the agency must be a not for profit corporation and approved by the US Department of Justice. A list of approved agencies is available at http://www.justice.gov/ust/ .

I, and most other attorneys, will provide clients with a referral to the agency that has provided a Quality service to my clients in the past.

With the internet the counseling is available nearly 24 hours a day so there should be a convenient time for you to complete the course.

Chapter 13 bankruptcy is a payment plan. In chapter 13 the debtor makes a reasonable monthly payment based on his or her income and expenses. Whatever does not get paid back to creditors through the plan is discharged and you never have to repay again.

In order to determine the amount of the monthly payment we first look to the debtor’s income and then take off deductions for living expenses. Such as utilities, rent, mortgage, car loan payments, food, gas, retirement contributions, and life insurance to name a few.

With some careful planning we can reduce the amount of the chapter 13 plan payment. The simplest way to reduce the payment is to increase the amount of you contribute to your employee retirement plan. For every dollar you contribute you have to pay one less dollar to your creditors. However, your contribution cannot exceed 15% of your annual salary.

If you owe the IRS or the Massachusetts Department of Revenue (“DOR”) back taxes then filing bankruptcy may help.

Filing bankruptcy under chapter 13 or 11 will put you into an interest free repayment plan. Yes, you will have to pay the IRS or DOR back, but it will be INTEREST FREE, penalty free, and you will be able to do it over 5 years in chapter 13 and possibly even longer in chapter 11.

It should also be noted that some taxes will get discharged in bankruptcy meaning you never have to pay them back.

For most debtors filing under chapter 7, 11, 12, or 13 you are able to keep your tax return without surrendering it over to the case trustee or the estate.

In bankruptcy you are able to exempt certain asset from your creditors and the bankruptcy estate. Although there is no specific exemption for tax returns, the federal exemptions allow for a “wild card” exemption for up to $11,200 per person or $22,400 for married debtors filing jointly.

Because of the large value of the wild card exemption it is rare that a debtor will lose their tax return in bankruptcy.

Also, individuals filing under chapter 11, 12, or 13 will simply factor their anticipated tax return into their monthly budget as to not lose their tax return over the course of the bankruptcy plan.

When contemplating filing bankruptcy, sometime individuals will max out their credit cards right before filing. This is a mistake, and could jeopardize your entire case.

Some debts in bankruptcy are non-dischargeable, meaning you will still be responsible to repay your debts even after your bankruptcy case is over. This includes luxury items charged to your credit cards within 90 days of filing. Someone may think, max out the cards and wait 90 days and then file. This too will not work.

Any debt that you ever incurred without the intent to repay is also non-dischargeable.  

By maxing out your cards you may risk the discharge not only on the maxed out cards but all your debt.

If you are thinking about filing bankruptcy stop using credits and talk to a lawyer.

Chapter 13 bankruptcy is often called a payment plan. In chapter 13 bankruptcy the debtor will make a monthly payment for either 3 or 5 years. The amount of the payment is reasonable based on the debtor’s income and expenses and not on how much debt the debtor has.

The debtor is required to have income. Unemployment income is enough to file. Of course unemployment does not last forever so the debtor filing with unemployment alone will need another source of income by the time unemployment runs out.

If you live in or around Framingham your §341 meeting will be at:

J.W. McCormack Post Office & Court House
5 Post Office Square, Room 325
Boston, MA 02109

If you file for bankruptcy and are behind on a public utility bill then you can discharge the arrearage and not lose service.

What happens is the amount you are behind will be discharged in your bankruptcy. Anything you incur for a charge after the date of filing bankruptcy you will be required to pay.

Public utilities include the electrical (National Grid) and gas (NStar) company.

Cable or satellite television and land or cell phones are not public utilities. Your obligation to repay these bills will be discharged in bankruptcy.  You may or may not lose service depending on the policy of your provider.

Water and sewer bills attach to your home so those will need to be repaid.

If you file bankruptcy you will keep your home; unless you want to surrender it to the bank.

In order to keep your home you will need to at a minimum be able to make the current monthly payment on the first mortgage.

If you are filing chapter 7 bankruptcy, you will need to be current with all mortgages on the home when you file and continue to be current after the case is over. This is just like it would be without the bankruptcy filing. As long as you are current with the mortgage payments the bank will not foreclose.

If you are behind on your mortgage, or have a second mortgage, worry not, you will still be able to keep your home. In chapter 13 you are given up to 5 years to catch-up the missed mortgage payments under a court approved plan. Your bank will legally be barred from foreclosing during your bankrutpcy.

Additionally, in chapter 13 you may be able to eliminate your second mortgage and keep your home. In order to eliminate the second mortgage you will have to prove to the Court that the value of your home is less than the value of your first mortgage.

Bankruptcy can help. As soon as your bankruptcy case is filed the “automatic stay comes into effect. (See 11 U.S.C. §362)

The automatic stay is much like the name implies, it happens automatically by the filing of your case, and it stays actions against you.

Simply put, as soon as you file bankruptcy your creditors are legally prohibited from calling any more.

Leave it there.

An individual filing a chapter 7 bankruptcy case you may be able to exempt up to $11,200 ($22,400 for a married couple) of cash and bank deposits.

If the money is exempt it will not be touched by the bankruptcy court, trustee, or your creditors. Simply put you can keep.

If you are filing a chapter 13 case there is no liquidation of your assets, unless you want there to be, so here again you can keep the money in your bank.

If you have cash and bank deposits that exceed the exemptions, fear not, you may be able to protect some of the non-exempt money by placing it into an IRA or putting a new roof on your home. I strongly encourage you to meet with a lawyer prior to planning any exemption.

No, your bankruptcy filing will not be in the newspaper.

However, the local newspapers here in Massachusetts does not list who filed for bankruptcy. Look for yourself, pick up the newspaper and look for the bankruptcy filings section, you will not find one.

You should know that foreclosure listings are in the newspaper. Also, if you were famous, perhaps a  town official or celebrity, then the paper may run a story regarding your bankruptcy.

Student loans are typically non-dischargeable in bankruptcy. Therefore after your bankruptcy case is over you will still be personally liable on your student loans and have to pay them.

In very rare cases student loans are discharged in bankruptcy. In order to discharge student loans in bankruptcy you must prove that the loans cause an “undue hardship.” This would involve a trial within the bankruptcy court, often referred to as an Adversarial Proceeding or “AP.”

Successful litigants are typically are currently not working and will be unable to ever again have gainful employment.

If you filed bankruptcy under chapter 7 you will be able to obtain a new credit card very shortly after filing. Most banks will want your business, because (1) you have reduced your debt, (2) cannot get another bankruptcy discharge for 8 years, and (3) the bank will be able to charge you a high interest rate.

Most individuals are able to get unsecured credit cards, however, in some cases the bank my require you to get a secured credit card. A secured credit card is much like the traditional unsecured card, however you will be required to secure the card with a deposit. This is different than a prepaid card. With the secured card you will still need to pay the monthly bill.

If you are in chapter 11 or 13 you are not permitted to get a credit card or other loans until after the case is over.

In either chapter getting a new card and using it responsibly will increase your credit score and rehabilitate your credit score. Using your card responsibly should include paying your bill on time and never charging more than 30% of your credit limit.

Yes, you can but you will need permission of the Court.

While you are in chapter 13 bankruptcy you are prohibited from incurring new debt without permission of the Court. This means no new credit cards, home loans, car loans, or other sorts of debt until your case is over.

However, the Court will grant you permission to incur certain types of debt. The Court will understand that a car is a necessity for you to get to work and run your daily life. Therefore the Court will grant permission for you to incur a new car loan that is reasonable. Luxury cars are not likely necessary nor are trucks or SUVs, unless you need the truck for work, or have an exceptionally large family.

Worcester:

Worcester U.S. Trustee Office
446 Main Street, 1st Floor
Worcester, MA 01608

Boston:

J.W. McCormack Post Office & Court House
5 Post Office Square, Room 325
Boston, MA 02109

Filing bankruptcy does not prevent you from buying any property, including a new home or cars. However, the better question is; when will a bank give me a mortgage for a new home?

Chapter 7 bankruptcy will be listed on your credit report for ten years after you file bankruptcy. The listing of the bankruptcy on your credit report is not a legal bar to obtaining credit; however, it is a factor that a bank will use in determining whether or not to extend you credit.

Smaller loans, such as credit cards, will be available to most debtors shortly after filing. Most debtors start getting solicitations for post-petition credit cards within a month or two of filing.

Car loans may also be available right after the case is filed but you should expect a very high interest rate.

As for home mortgage, it will likely take 2 – 3 years until you can expect to be approved. However, some individuals get a new home mortgage in as little as 1 – 2 years or sooner.

The bank’s decision to extend credit is unique based on your situation, the bank will look at factors such as, credit reports and score and income to debt ratio to determine to extend credit to you.

 Filing bankruptcy will automatically stay any foreclosure proceeding. So long as your bankruptcy case is filed prior to the actual foreclosure sale.  

If your intention is to permanently save your home from foreclosure then you will need to catch-up your missed mortgage payments in chapter 11, 12, or 13.

In chapter 13 you will have to make a monthly payment for either 3 or 5 years. This payment must be enough to pay back the entire arrears on at least the first mortgage.

In some cases you are able to eliminate the second mortgage and keep your home.  

If you are unable to afford your car loan you may chose to voluntarily surrender the car to the bank.  After the bank has the car they will sell the car at an auction. They will apply the proceeds of the sale to the outstanding balance you have on the loan. If the bank collects more than you owe on the loan they will send you a check. However, if they do not collect enough at the auction to pay off the entire loan the bank will send you a bill for the deficiency.

If you owe a deficiency, you have a few opinions. Of course you could pay the bill, work out a payment plan with the bank.

Bankruptcy may also be an option. Bankruptcy will discharge your legal obligation to pay the deficiency.

Also, you may be able to save the car and reduce your car payments in bankruptcy by redeeming in chapter 7 or cramming down in chapter 13.

The goal for most individuals in bankruptcy is to receive a discharge of their debts. A discharge is a release of your legal obligation to repay your debt. With limited exception the discharge will discharge all your debt including your car loan.

However, in order to keep the car post bankruptcy you MUST continue to make the payments to avoid repossession.

Reaffirmation is a process in which an agreement is filed with the Court which says that the debtor is again personally liable on the debt.

In Massachusetts this agreement is unnecessary. Under Massachusetts State Law a bank cannot repossess a car unless there is a default which must includes one or more missed payments (see MGL Chapter 255 §20A).

Therefore, as long as you remain current on your car loan, in Massachusetts, you are able to keep the car without threat of repossession.

Banks will often point to federal law to scare people in to reaffirming. The federal law states that if there is no reaffirmation agreement then the bank can repossess even if you are current on the payments. However, your bank is bound to repossess under state law. So do not fall for this scare tactic.

If you have any questions about reaffirmation please feel free to give me call.

The goal for most individuals in bankruptcy is to receive a discharge of their debts. A discharge is a release of your legal obligation to repay your debt. With limited exception the discharge will discharge all your debt including credit card bills, medical bills, auto loans, home mortgages, and some tax obligations.

Some debts do not typically get discharged in bankruptcy including student loans, some tax obligations, child support, alimony and government or court fines (such as a speeding tickets).

The discharge does not typically affect a lien held on property. Therefore in order to for the debtor to keep property that has been used as collateral to secure a loan, the debtor must continue to make payments.

Some liens can be removed in bankruptcy. Liens held by the second mortgage can be removed, in this case the debtor will be able to keep their home and never again have to pay the second mortgage.

Judicial liens can also be removed. These are liens that have come out of a court action. Typically these occur after a credit card company has sued you over a debt and then they put a lien on your home.  

If you are struggling with your home payments you may be able to get a bank approved home loan modification.

The government program is run through the Department of Housing and Urban Development. HUD has setup a website for dealing with the issue of home loan modification called Making Homes Affordable, http://makinghomeaffordable.gov/ .

Watch out for companies or lawyers that require a fee for home loan modification help. The government program is FREE and you should not be asked to pay. Remember “if asked to pay walk away.”

Very often the value of your car is much lower than the amount of your outstanding loan. (Check the value of your car at Kelly Blue Book, www.KBB.com  ). If this is your case bankruptcy may be able to help you reduce the amount of your loan and/or reduce your payments.

Debtors filing chapter 7 have the ability to redeem their car. Redemption is a process during your bankruptcy case where you pay to the bank the current value of the car. The amount of the loan that exceeds the value of the car is discharged.

Most debtors do not have enough cash to pay the current value of their car. However, there are banks that have loan programs for redeeming (checkout www.722redemption.com ). Your new loan payment will be less than your current payments because the principle of the new loan will be much less.

Debtors filing chapter 13 are unable to redeem their car, however they are able to cram down. Cram down is much like redemption without having to get a new loan. Chapter 13 is a court ordered payment plan, which is reasonable based upon the debtor’s income.

Through the plan you can repay your bank the current value of the car and then be discharged from the remainder of the loan. In order to cram down in chapter 13 the car loan must have been incurred more than 910 days prior to filing bankruptcy. At the conclusion of the chapter 13 plan you will own the car free of the lien.

Despite a recent stabilization in home prices, CNN Money is reporting that home values will continue to decline in 2010 (http://money.cnn.com/2009/12/31/real_estate/home_price_drop/index.htm) .

If the housing market continues to decline more people, and perhaps you, will be able to eliminate your second mortgage and retain your home in chapter 13 bankruptcy.

If the value of your home is equal to or less than the value of your home then you will be able to eliminate your second mortgage in chapter 13. Since the housing market is continuing to decline you may be able to eliminate your second mortgage in 2010 even if you were unable to in years past.

In chapter 13 you make a reasonable monthly payment on your debts, based on your income and expenses and not on how much money you owe creditors, for either 3 or 5 years. After making all the payments whatever has not been paid through the bankruptcy is discharged.

A common question that comes up is: “Can I file bankruptcy without my spouse?”

The Answer, Yes. If you are a married couple you may file as an individual or as a couple.

If an individual files, the non-filing spouse’s credit will not be impacted by the bankruptcy filing of his or her spouse.  If you are filing as an individual and you are married you should watch out, because if there is joint debt (with both husband and wife’s name on the debt) the bankruptcy filing of one spouse will leave the non-filing spouse on the hook for the entire balance on the loan.

In an article from the Worcester Telegram and Gazette (http://www.telegram.com/article/20091230/NEWS/912309982/1002) it is reported that foreclosure petitions in Massachusetts remain high.

The good news is that the actual number of foreclosures that have been completed for 2009 has been less than 2008. However, the number of foreclosures started with the filing of a Petition to Foreclose has increased in 2009 from 2008.

Bankruptcy has several options that may help if you have facing foreclosure, in chapter 13 you may be able to eliminate your second mortgage forever, and catch up the missed payments with the first mortgage.

Additionally, you may be able to eliminate all your unsecured debt in either chapter 7 or 13 thus freeing up money to pay towards the mortgage.

If you are facing foreclosure, please give me a call and we can find a solution to the problem. Bankruptcy can stop the foreclosure and save your home BUT ONLY if you file before the foreclosure sale.

It is often difficult to keep track of all your creditors. Making matters worse, often times debt collections agents and/or debt buyers make it confusing to understand who you owe.

If, for some reason, a creditor is not included in the initial bankruptcy filing and your bankruptcy case is still open, then worry not the creditor can still be added to your bankruptcy filing. The debt owed to the added creditor must have been incurred prior to filing of your initial documents.

A Motion to Amend your Bankruptcy filing will need to be filed with the Court. Currently the Court will charge a $26 Court filing fee to Amend Schedule D, E, or F.  Here at the Law Office of Robert W. Kovacs, Jr., we will, in most cases, file one Amendment to Schedule D, E, or F without charging additional legal fees.

If you can no longer meet your financial obligations bankruptcy may be able to relieve the stress related with too much debt.

There are two concerns if you have recently charged a lot on your credit cards prior to filing bankruptcy.

First, luxury goods charged on your credit cards that exceed about $450 within 90 days of filing bankruptcy are not dischargeable in bankruptcy. Luxury items are not defined in the bankruptcy code, however, the law tells us that luxury items do not includes charges for things that are reasonably necessary for the support of you and your dependents. Therefore, food, gas, and clothing for you and your family are not likely viewed as luxury items.

If you have recently charged luxury items on your cards then you may need to wait up to 90 days until you should file bankruptcy.

Second, anything charged to your credit cards without a present intent to repay is non-dischargeable in bankruptcy. This is a more difficult issue. This means that at the time you made the charge to your card you thought to yourself that you would never repay the debt. This is very difficult to prove for creditors.

If you are considering bankruptcy I would be happy to sit down with you to discuss all your opinions.

In all bankruptcy cases there will be a required meeting this is often called the “meeting of the creditors” or the “§341 meeting.” The Case Trustee will conduct the meeting. She represents the interests of all the creditors in the case and is also in charge of administering the debtor’s bankruptcy estate.

All of the Debtor’s creditors are invited to attend the meeting. However, it is very unlikely that a creditor will appear at the meeting in consumer cases. Almost all creditors are satisfied that the Case Trustee will properly examine the Debtor.

In consumer cases the meeting last only 5 – 15 minutes. Typically attendees of the meeting include the Debtor, Debtor’s attorney, and the Case Trustee. During the meeting the Case Trustee will ask the Debtor several questions regarding her financial affairs. The purpose of the examination is to ensure that the Debtor has fairly and honestly represented her assets, income, and debts in the bankruptcy filing.

Typical questions the Case Trustee may ask the Debtor include:

• “Did you review your bankruptcy filing with your lawyer prior to authorizing him to file it?”

• “Have you listed all your assets in your bankruptcy filing?”

• “Could you sue someone for any reason, including a personal injury claim?”

• “Have you given anything worth more than $1,000 to anyone in the last year?”

• “Have you bought or sold any property in the last year worth more than $1,000?”

• “Have you made any one single payment to a creditor of more than $600 in the last 90 days?”

·         “Do you expect to receive any inheritance?”

Currently in Massachusetts the meetings are not held in the Court House. A judge is never present, no one is called to a witness stand, and it is not adversarial in nature. The meetings are an informal and open process.

With the snow that fell this weekend I cannot help but think now may be a good time to mention what happens if a debtor cannot make their assigned time and date for their §341 meeting.

The §341 meeting is often the only meeting a debtor has to attend; they are not a formal Court process and are not held before a judge or even at the Court House. The §341 meeting gives the Case Trustee and others a chance to ask questions about the debtor’s financial affairs.

It is uncommon for anyone other than case trustee and the debtor’s lawyer to be present during the §341 meeting in consumer cases. The meetings are typically short lasting only 5 – 10 minutes for chapter 7 cases and about 15 minutes for chapter 13 cases.

When your bankruptcy case is filed, the Court will automatically assign your case a Case Trustee (who represents the creditors) and a time for the meeting.

If for some reason you are unable to make the scheduled meeting time then you can request that your case trustee reschedule the meeting. The case trustee will give you a new time and date. The debtor, typically through her lawyer, will have to send notice (a letter) to all the creditors stating the new time and date of the meeting. Of course the more notice you can give the case trustee about your need to reschedule the better, however, in the case of an emergency or inclement weather you may not be able to give the case trustee much notice at all.

Warm wishes.

Robert

Around this time of the year many struggling families look to their income tax return to provide some relief. These same struggling families often consider filing for bankruptcy.

A common question becomes: Can I file bankruptcy and keep my tax returns?

Typically, yes an individual can keep his or her tax return.

Although everyone’s bankruptcy case is different and an individual assessment of your case will be required, most debtors are able to completely exempt their tax return, thus protecting from the case trustee and your creditors.

If, you are in the small minority of debtors that are unable to fully exempt your tax return, you may be able to plan your exemptions and spend down some of the tax return prior to filing for bankruptcy. Thus, you will keep the entire tax return.

Please feel free to give me a call to discuss your particular case and determine the best way to protect your tax return and all your assets from your creditors and the bankruptcy trustee.

Many times when facing insolvency issues a debtor, either a business or individual, will look to pay one creditor over another, this is called a preference. If the payment was not in the ordinary course of business and the transaction occurred within the 90 days prior to the date of filing the bankruptcy case, then the preference is likely avoidable.

For businesses this may be paying a large sum to creditor, such as a supplier whom you want to repay in full before filing. For individuals this may be a large payment to a family member.

If this has occurred the case trustee or another party in interest may be able to force the creditor to return the payment to your bankruptcy estate. Then the case trustee will distribute the non-exempt funds to your creditors’ pro-rata.

If you have made a large payment to a creditor prior to filing bankruptcy you should discuss this situation with your attorney.

Debt collectors are well known for using harassing, unethical, and immoral techniques to collect debt. There are both federal and state laws to protect an individual from these abuses.

In Massachusetts creditors, the original creditor, a debt collector agent or attorney for the creditor, are not permitted to call a debtor more than 2 times in a rolling 7 day period at home and no more than 2 times in a rolling 30 day period at a place other than at home.

If creditors are calling keep a detailed log of calls from the creditors. Record such information as: time and date of call, phone number the call came from, name of the creditor and debt collector agent. If you answered the call, who did you speak to, what did they say, how do you call them back?

If the creditor leaves a message on your voice mail, save it, and keep all telephone logs from the phone company.

If you have been sued you may have a counter claim against the creditor because of the harassing phone calls and you may also have a cause of action against them.

Robert

Attorney Hoffman was recently selected to replace retiring Judge Rosenthal. Attorney Hoffman will have to undergo an FBI background check before taking the bench. Judge Rosenthal will be missed by many but I am excited about the appointment of Judge Hoffman.

Debtors filing chapter 13 bankruptcies may be able to eliminate their obligation to repay their second mortgage and still retain their home.

In order for to eliminate the mortgage and keep your home the value of your home must be equal to or less than the value of the first mortgage.

In chapter 13 bankruptcy the debtor makes a reasonable monthly payment, based on the debtors’ income and expenses, for either 3 or 5 years. After making all the required payments the debtor will receive a discharge of her personal obligation to repay all most all of her debts and the judge will also order the lien, the mortgage, removed at the registry of deeds.  

With home prices continuing to decline many home owners are now able to get rid of their second mortgage forever. Couple this with the discharge of unsecured debt, such as credit card debt, many people are able to get a needed fresh start and save their homes.