You have probably never heard of a “preference payment” in a Chapter 7 consumer bankruptcy proceeding, but these are never fun conversations to have with a client. Let me write about this now and hope that, if you decide to hire me as your attorney, we will never have to have this conversation. This situation comes up when an otherwise broke person has a sum of money on hand, and then has to decide what to do this money.
Bankruptcy allows consumers who are faced with overwhelming debt to move forward with their lives knowing that they have legally resolved problems with their creditors. While there are some debts, such as student loans, which are not automatically discharged by a bankruptcy filing, almost every type of consumer debt can be discharged in a bankruptcy filing. Here are some life situations which have I seen in more than two thousand consumer bankruptcy filings:
One of the critical goals in any bankruptcy proceeding is to keep as much of your property out of the hands of the Trustee as you can. In fact, you want to keep all of it out of the Trustee’s hands (the so-called “no asset” case). After all, if the Trustee takes everything from you, the idea of a “fresh start” doesn’t really mean too much. Property which you as the consumer filing bankruptcy get to keep is known as “exempt” property.
For most consumers, filing a bankruptcy is a once-in-a-lifetime occurrence. But for others, even after being granted a discharge of debt in bankruptcy, they find themselves in that unbelievable situation of having to ask the question – if I filed for bankruptcy protection previously, can I file another bankruptcy and get my debts discharged? The answer to that question depends not only on the length of time since your previous filing, but also the type of bankruptcy you filed. For more information about the difference between Chapter 7 and Chapter 13 bankruptcy filings, click here.
People trying to file bankruptcy starting December 1, 2015, may be in for a surprise. On that day, new mandatory bankruptcy forms went into effect and must be used in all consumer bankruptcy filings under Chapter 7 and Chapter 13. Consumers sometimes try to file their own bankruptcy, without a lawyer to represent them. If they do so now, they will be confronted with at least 98 new pages of legal mumbo jumbo.
Cleveland Metropolitan Bar Association, Cleveland, Ohio
Sponsor: National Business Institute
After you have filed your bankruptcy petition with the Court, the ultimate goal is to get a discharge order from the Court. This is a court order which specifies that all debts which are subject to a discharge have been eliminated – your obligation to pay them has been legally terminated. A bankruptcy discharge order is a powerful thing indeed.
Almost exactly ten (10) years ago, the 109th Congress enacted and then-President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
Lien Strips – Removing “Underwater” Second Mortgages in Bankruptcy and How it Could Help You Make Your Home More Affordable
Chapter 13 bankruptcy is a powerful debt relief remedy. It allows consumers to enter into a court protected debt reorganization of your debts over a period of time (normally, 36-60 months total).
Chapter 13 debt reorganization plans can, for example, force the mortgage company to accept past-due mortgage payments. This is extremely helpful for consumers who have fallen behind on their home mortgage, but now have the means to get caught up, if given more favorable terms than the mortgage company can offer. This is true even if the mortgage company has already filed a foreclosure action against the homeowner.
One of the important steps in filing a Chapter 7 bankruptcy is to provide your attorney with all the information you can find about the debts that you owe. Normally this is done by giving your attorney all of the bills in your mailbox. Whether an original creditor, a debt collector or a collections attorney, your attorney needs all the names, addresses, account numbers and balances that you can find.