Happy Holidays

The holiday season is a great time to relax, sit back, and spend time with your family. However, it is unfortunately also a time of great stress for many people. Financial stress around the holidays and at the beginning of the new year is not uncommon.

As a bankruptcy attorney, my busiest time of year is in the Spring. There are probably several reasons for this. First, no one wants to file bankruptcy around the holidays, which is completely understandable. It is often something that is pushed back until after the holiday season has passed.

The second reason is that many creditors and financial institutions tend to file more lawsuits against my clients during the Spring. Personally, I believe they do this because they know that individuals have tax refunds available at this time. Whatever the reason, there is often a big spike in people needing to file bankruptcy in the Spring.

At this time of year, I would certainly recommend everyone to take a breath and enjoying some time with friends or family. Or even just alone. But, if stress boils over about your finances into the new year, feel free to give me a call at 412-414-9366. The new year is a time for fresh starts. I have literally filed hundreds upon hundreds of cases, and a general sense of relief amongst my clients is nearly universal. Enjoy your holidays. Most financial problems can be fixed with a little bit of guidance and should not ruin your holiday with stress..

Personal Collections and Bankruptcy

Personal collections of collectibles can be protected under the bankruptcy code. However, the value of those items will be important in determining how protected they will be. In most cases, you will be able to keep your stuff.

All assets must be listed when filing a bankruptcy. This includes obvious things such as homes, cars, investment accounts, cash, and electronics and furniture. These items are then exempted from your creditors, using either the federal or state exemption (in most cases filed in Pennsylvania the federal exemptions will be used).

There are specific exemptions for things such as jewelry, real estate, cars, and tools of the trade. But what about personal collectibles? This may include things such as art, antiques, comic books, baseball cards, sneakers, coins, or any other number of collectible items. In most cases, the wild card exemption of the federal exemptions will be used to protect these items from your creditors. For something like sneakers, the exemption for household goods may be allowed, as this includes wearing apparel and shoes.

What values will be listed when trying to exempt these items? The value will be what the items would sell for if they were sold through normal markets, such as eBay or other consignment options. Not what you paid for them originally. In most cases, the United States trustees office is not interested in selling these items unless a significant and easy profit can be made to be used to pay your creditors. The United States trustees office will not want to set up a stand at a comic book convention to sell your old comics. If you have a massive collection of anything that could easily be sold in bulk, they may become interested. But once again, we only need to use the exemption amount for what they would get if the items were sold, given all of the circumstances that make it difficult to sell such items.

In the vast majority of cases, the United States trustees office will not be interested. However, this does not mean that you do not have to list these items or disclose them. As your bankruptcy attorney, I will help you determine whether or not losing personal collections or collectibles would be a realistic possibility. We will try to fit them under the various exemption schemes. If you have questions about bankruptcy or protecting your assets, call us at 412-414-9366 set up a free consultation to discuss your situation. It would be happy to answer your questions and explain the process.

Secured vs. Unsecured Debt

Secured debt has a special status in bankruptcy. The first question most people have is “what is secured debt?” Put simply, it is any debt that is secured by property. The most common examples are homes and cars. The debt that underlies these assets is secured by the property. That is, if you don’t pay your mortgage or car payment, the mortgage company or finance company can take back the security to offset their loss.

Unsecured debt is generally represented in credit cards and personal loans. If you do not pay your credit card or personal loan, the finance companies can sue you and potentially go after things such as bank accounts, but they cannot go after whatever you purchased with the credit card or the loan.  Those items were not secured by the loan.

With this background, what are issues with secured debt as opposed to unsecured debt? The biggest thing is that if you want to keep any of your property that is secured by a loan, you have to pay it or continue to pay it through bankruptcy.  I often tell potential clients, “there is no such thing as a free car in bankruptcy.” This means if you don’t pay the car loan, you can’t keep the car. In bankruptcy or outside of bankruptcy if you don’t pay a secure debt, you lose the asset.

Credit cards, on the other hand, no matter what you purchased with the credit card you do not have to lose it if it was unsecured. So, if you are behind on a car loan and you are considering chapter 7 bankruptcy, you have to get the car loan current or you will lose the car. In a chapter 13 bankruptcy, you would have the opportunity to catch up the arrears over the course of the bankruptcy plan and keep the car. But, once again, only paying the secure debt allows you to keep the asset.

Contact us at 412-414-9366 if you have secured debt issues that you want to discuss, or if you were not sure whether your debt is secured or not. This may require you to get the original contract paperwork for me to review. I would be happy to discuss your situation and answer your questions.

Chapter 7 Bankruptcy 8 Year Filing Limit

You must wait eight years between filing Chapter 7 bankruptcies. This prohibition limiting filing can cause many complications for individuals facing debt multiple times in their lives.

No one wants to file Chapter 7 bankruptcy multiple times. However, circumstances of life will sometimes dictate the need to do so. Unfortunately, the prohibition against filing in less than eight years is ironclad. If you are unable to file because you have already filed within the last eight years, there are several strategies that you can pursue.

First, you will normally be able to file a Chapter 13 bankruptcy in less than eight years. This would require you to repay at least a nominal amount of debt to your creditors. In some cases, Chapter 13 bankruptcy may be the only bankruptcy that you qualify for even when the eight years expires. If your income has gone up, or you have acquired equity in a home or other property, Chapter 13 bankruptcy may be the only option. There may be no reason to wait.

A second option may be to reach out to your individual creditors and negotiate individual payments in lieu of bankruptcy. After the fact, if you cannot maintain these payments, you may be able to file a Chapter 7 bankruptcy at a later date. The payments to creditors may be able to buy you time until you can file at the later date.

A third option you may need to discuss with your bankruptcy attorney is whether or not to just simply ignore your creditors until you qualify again. Creditors have a wide range of actions they can take against you, including suing you and putting liens on your property. In some circumstances this may be a manageable problem. Creditors have a wide range of actions they can take against you, including suing you and putting liens on your property. In some circumstances this may be a manageable problem with the guidance of an experienced attorney. Reaching out to an experienced bankruptcy attorney may help you navigate this waiting period.

Call us at 412-414-9366 to discuss your situation and see if bankruptcy is an option, or will be an option down the line. I will be happy to discuss your situation and answer your questions.

Chapter 13 Bankruptcy Plan Duration

Chapter 13 bankruptcy allows you to repay your creditors spread out over a 3 to 5 year repayment plan. In a Chapter 13, you can stop a foreclosure, pay back the IRS and stop a tax lien, pay unsecured creditors at 0% interest, and sometimes at less than the full amount, and get a car out of repossession. It has many uses and benefits.

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy will last for a duration of time. As mentioned above, a Chapter 13 will last for 3 to 5 years. But what determines exactly how long it is? First, if you are above the means test , which is discussed elsewhere on my website, you are required to be a five-year (60 month) repayment plan. If you can pay all of your creditors in full before that time, the court may allow you to schedule a shorter plan.

If you are below the means test, and you are able to repay all creditors as required, you can schedule a plan to be a short as three years or 36 months.  Under no circumstances can you initially at filing schedule plan to be longer than 60 months or shorter than 36 months. The Chapter 13 trustee will sometimes proceed for another month or two beyond the 60 month limit if you were finishing up your payment. But you cannot extend it beyond that length.

In some cases, if all creditors are paid as required, a plan may end before the 36 months. However, you cannot schedule the plan to be shorter than 36 months at the filing. It only happens when the payments have actually been made. You are not required to continue a plan once everything is paid in full.

For the most part, the Court and the Chapter 13 trustee are pretty flexible in accommodating plans within the 36 to 60 month window. Your bankruptcy attorney should discuss what will work best for you. In some cases, a longer plan is better because it will make your payment lower. For some filers, a shorter plan is preferable because it allows them to wrap it up quicker and get on with their lives. Calculating your payment and determining the duration is an important part of the process.

Speaking with an experienced bankruptcy attorney can make sure that it is done right. If you would like to discuss Chapter 13 bankruptcy, or you have any questions about the process, feel free to call 412-414-9366 and set up a free consultation. I would be happy to look at your situation, see if you qualify, and answer your questions.