Should You File for Bankruptcy if Evicted?

In my previous article, I wrote about what to do if your landlord files for bankruptcy protection.  Today, I will write about the shoe being on the other foot.  What if you as the tenant files for bankruptcy?  The most common situation for bankruptcy in relation to a lease or tenancy agreement with a landlord is where the landlord serves you an eviction notice most probably due to non-payment or late payment of rental.  So in such a case can you file for bankruptcy protection and continue to stay in the premise?  Can filing for bankruptcy save you some time so that you can continue to negotiate with your landlord?

Before 2005, the answer to both questions is ‘yes’.  But the government passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005 that changed things dramatically.  It is not that you cannot file for bankruptcy when being evicted (you still have the right to do so), but the process has now become more expensive.
Most likely the landlord has won a judgment for possession against you.  In view of that, you must file a “certification” which states that the judgment allows you to stay in the premise if the judgment amount is paid in full and that you have deposited with the bankruptcy clerk “any rent which would become due during the thirty (30) day period after the filing of the bankruptcy petition”.  This means that when you file for bankruptcy under such circumstances, you will have to deposit one month’s rental to the bankruptcy court immediately.  This “certification” must be made on oath under penalty of perjury.

Obtaining a judgment for possession does not mean the landlord has to allow you to stay in the premises.  The landlord still has the right to terminate the lease or tenancy agreement after giving you notice according to the agreement even if you have paid the judgment amount.  Furthermore, most tenants land up in such a situation because they have been delinquent in paying their rent, therefore they would most likely not have the means to pay the judgment amount or deposit anything with the bankruptcy court.  If you are in such a situation, you will probably have to vacate your premise once the landlord obtains a judgment for possession.

If you are struggling financially under a load of crippling debt, you may want to think about filing a bankruptcy petition.  Call us at (813) 200 4133 for a free consultation.  We can help you navigate through the bankruptcy process to clear your debts.

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    What to do if Your Landlord files Bankruptcy

    What to do if Your Landlord files Bankruptcy

    In today’s tough economic climate, it is not uncommon for people to file for bankruptcy protection.  In fact, with more than 10 million Americans jobless the situation is not showing signs of abating anytime soon.  Since the economy is in recession, it also means many Americans cannot afford to buy a house and live in rented properties.  Combine the two scenarios together and you could find yourself living in a rented property where your landlord files for bankruptcy protection.  How is that going to affect you?  And most importantly, what can you do in such a case?

    Firstly, it depends on whether you have a formal lease or tenancy agreement with your landlord.  Most tenants do but if you are one of the exceptions that do not, you MUST have one even if your landlord is your loving grandma.  Do not be sentimental about this because when a bankruptcy petition is filed, the court goes by official records, not word of mouth or gentlemen’s agreements.  So the first thing to do if you do not have a formal lease or tenancy agreement is to draw one up.

    Secondly, look closely at your lease or tenancy agreement especially at where it specifies the rights of the tenant when it comes to terminating the lease.  It may be that the bankruptcy your landlord files is a Chapter 7 bankruptcy and the premise you are renting is to be liquidated to pay for your landlord’s debts.  If this happens, you most likely will be required to leave the premises.  In view of this, you should examine much notice you are entitled to be given when the landlord terminates the lease.  This clause cannot be overridden by the bankruptcy.  In other words, if your lease states you are to be given 90 days’ notice by the landlord to vacate the premise, then you are still entitled to the 90 days even if your landlord has filed a bankruptcy petition.

    If you do not have a lease or tenancy agreement at the time your landlord files for bankruptcy, your landlord will only have to give you 30 days’ notice.

    Thirdly, you have to continue fulfilling your end of the deal according to the lease agreement as though there was not bankruptcy filing.  This is because the bankruptcy does not affect the use or quiet enjoyment of the premise by you under the agreement.  This means you still pay your rental as usual and when it comes time to either terminate or renew the agreement, you can choose to renew (or extend) your lease if your agreement has an extension clause (provided your landlord also agrees to the extension, of course).

    So if you are a tenant facing such a situation, you now know what to do.  If you are someone who is facing financial difficulties in the form of crippling debt, you may want to consider bankruptcy as an option to solve these problems.  Call us at (813) 200 4133 for a free consultation.

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      What Creditors will do when you file Bankruptcy

      What Creditors do when you file Bankruptcy

      Bankruptcy and creditors are not bosom buddies.  Once you file for bankruptcy, the chances of a creditor receiving back all his or her dues plus interest is pretty slim.  This is why many creditors would move heaven and earth to either stop you from filing for bankruptcy or do something to disrupt your bankruptcy proceedings.  Once you file for bankruptcy protection, your creditor will take action.  Here are some of the things your creditor may (or will) do when you file for bankruptcy.

      Firstly, due to the automatic stay that comes in force when you file for bankruptcy, your creditor will cease all collection efforts against you.  This includes all forms of actions such as phone calls, notices of payments, letters of demand, emails, faxes, personal visits, hiring services of debt collectors etc.  If your creditor violates the automatic stay, you should tell him or her to liaise directly with your bankruptcy attorney.  If your creditor does not comply, then report it to your bankruptcy trustee.  Your bankruptcy attorney can also take legal action against the creditor.

      If you wish to file for bankruptcy and require legal representation, call us at (813) 200 4133 for a free consultation.

      Secondly, your creditor may file a claim against your asset in the bankruptcy court.  This is a right given to creditors.  If such a thing happens, the bankruptcy court judge will make a ruling on your creditor’s claim.
      Thirdly, if the bankruptcy court decides against your creditor’s claim on your asset, he may make another filing to challenge your right to discharge your debt to him.  Once again, it is up to the bankruptcy court judge to make a ruling on this.

      Fourthly, your creditor may attempt to have your bankruptcy case dismissed by alleging that you have committed bankruptcy fraud by doing something like hiding assets or transferring assets to another person’s name to avoid liquidation in bankruptcy.  If such fraudulent actions are proven to be true, your bankruptcy case will be dismissed, the automatic stay will cease and your creditors will be able to resume collection efforts.

      Fifthly, a secured creditor can apply for a relief from stay to annul the automatic stay.  If this is granted by the bankruptcy court, the secured creditor can continue taking action to recoup his or her dues from you.  Most likely this takes the form of repossession or foreclosure of the property that is still encumbered.

      Finally, your creditors will take a keen interest in the ongoing progress of your bankruptcy case and if it is discharged then they will resume all collection efforts on their dues which have not been repaid.

      To know what to do and what not to do in bankruptcy is critical to a successful bankruptcy discharge.  You need professional legal advice so if you wish to discuss how bankruptcy can help you overcome your financial problems, call us at (813) 200 4133 for a free consultation.

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        Bankruptcy for the Self-employed

        Filing for bankruptcy is everyone’s right under the law.  The bankruptcy code allows you to seek bankruptcy protection to overcome your debt problems.  If you are struggling under the load of crippling debt, you may want to consider filing a bankruptcy protection.  When your bankruptcy is discharged, you may walk away with a huge burden lifted off your shoulders because your financial slate has been wiped clean.  This may be especially so for the self-employed as the economic recession continues to bite.  Sadly, many self-employed entrepreneurs continue to struggle with burdensome debt thinking bankruptcy is an option only for those who are employed.  This is hardly the truth.

        You can (and should) file a bankruptcy petition even if you are self-employed and finding it difficult to make ends meet.  The main problem with the self-employed is the requirement to declare and substantiate your current monthly income when filing for bankruptcy.  For the W-2 employees, this is easily done by producing pay slips, copies of checks, bank statements and so on.  But for the self-employed, it may not be so straightforward.  According to the law, current monthly income is defined as the average monthly income for the previous 6 months before the date bankruptcy was filed.

        Without a W-2, the way a self-employed entrepreneur declares and substantiates monthly income is by producing a Profit and Loss statement.  However, the reality is that many self-employed business people do not maintain an accurate Profit and Loss statement.  But as far as the bankruptcy court is concerned, only the Profit and Loss statement will suffice to prove monthly income.

        So if you are a self-employed entrepreneur, it is very important that you have an accurate and up-to-date Profit and Loss statement.  This is not only to track your income and expenditure but to substantiate your monthly income to the IRS when you make your bankruptcy petition.  Without a proper Profit and Loss statement, your bankruptcy case will likely be dismissed by the court.

        If you wish to file for bankruptcy (whether you are self-employed or not), call us at (813) 200 4133 for a free consultation.

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          Borrowing to Pay Alimony or Child Support in Bankruptcy

          One of the non-dischargeable debts according to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) 2005 is any form of alimony and child support. These expenses take priority over other debts including taxes. So filing a bankruptcy petition will not absolve you from your obligation to pay alimony to your ex-spouse or child support for your children even after divorce.

          When you file your bankruptcy petition, the bankruptcy trustee will send a bankruptcy notice in writing to your ex-spouse and to the Child Support Enforcement Agency in your state. In order to continue receiving alimony or child support, your spouse would need to file a “proof of claim” with the bankruptcy court once you file for bankruptcy. When your bankruptcy is discharged, a second notice at that time is also required by law.

          Suppose you file a Chapter 13 bankruptcy petition and after paying for a period of time, you find you are struggling to keep up paying for the alimony or child support. What should you do?

          If you are thinking of taking a loan to help you pay the alimony or child support, you need to inform your bankruptcy trustee to obtain his or her approval first. Generally, when you are undergoing the 3 to 5 year payment plan under Chapter 13 bankruptcy, you are not allowed any form of credit or loan. Obviously, this is to prevent the situation that led you into bankruptcy from recurring. You are required to live within your income and pay off your debts out of your income and savings.

          The entire process of Chapter 13 bankruptcy may be in jeopardy if you take on new debt while paying off your existing creditors, including paying alimony or child support to your ex-spouse. So it will be highly unlikely that your bankruptcy trustee will approve of a loan to pay alimony or child support. The rationale is if you can afford to pay for a new loan, you should be able to pay more towards alimony or child support. This may result in the bankruptcy trustee increasing your Chapter 13 payments.

          If you wish to file a bankruptcy petition or just want to discuss how bankruptcy can help solve your debt problems and give you a new start, call us at (813) 200 4133 for a free consultation.

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            “Octomom” files for Bankruptcy

            A mother in California known as “octomom” for giving birth to octuplets filed for Chapter 7 bankruptcy recently. Nadya Suleman who gained nationwide notoriety for giving birth to 8 babies in 2009, owes about $1 million in debts, according to court documents. The documents indicate that she owes several creditors, namely her medical doctors, her attorney, Verizon Wireless, DirecTV, Farmers Insurance Group, Kaiser Permanente, So Cal Gas Company, So Cal Edison Company for electricity supply, the La Habra Water Department and the Superior Court of California, among others.

            Besides the octuplets, Suleman has 6 other children. Although she is given about $5,000 a month in public aid, Suleman acknowledged in an ABC news report that she was ashamed to receive it. She also admitted receiving lots of negative reactions, including death threats when she announced that she was receiving public aid.
            Suleman’s octuplets, who were born in January 2009, are believed to be the second such birth in the United States. But public criticism increased sharply when it was learned that she used in-vitro fertilization methods and engaged the services of a fertility expert in her pregnancy after already having 6 children.

            According to her bankruptcy petition, Suleman declared she has less than $50,000 in assets. Under the circumstances, as long as all goes well with her Chapter 7 bankruptcy, Suleman should have most of her dischargeable debts cancelled by the bankruptcy. It is learned that Suleman has already taken compulsory credit counseling classes as required by the bankruptcy petition.

            If you are burdened by huge debts, you may want to consider bankruptcy as a way to wipe your financial slate clean and start afresh. Bankruptcy is your right under the law and is provided to help you solve difficult debt problems. If you wish to discuss your circumstances further or wish to make a bankruptcy petition, call us at (813) 200 4133 for a free consultation.

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              Bankruptcy Protection for Subprime Owners Inadequate

              Bankruptcy Protection for Subprime Owners Inadequate

              Ever since the subprime mortgage crisis hit the nation in the late part of the last decade, there has been an acute need for changes in the bankruptcy law. As it stands, the bankruptcy code does do enough to protect the consumers with subprime mortgages. Most of the laws under the code were enacted back in the late 70’s when mortgage rates and the property market were very different. Here’s an excerpt from an article from Consumer Affairs in which consumer groups say:

              “The only chance many of these (subprime) borrowers have is through declaring bankruptcy…the problem is that as currently enacted, the Bankruptcy Code favors home mortgage lenders over virtually all other secured and unsecured creditors. The amendment disfavoring protection of the debtor’s principal residence was added at a time — 1978 — when home mortgages were nearly all fixed-interest rate instruments with low loan-to-value ratios and were rarely themselves the source of a family’s financial distress. As a result, bankruptcy law singled out the home mortgage loan as the major debt for which the bankruptcy court is powerless to provide relief…Since that time, the mortgage market has shifted considerably. Subprime lending practices of the last six years, which have relied on property appreciation, and in many cases appraisal fraud, have left many borrowers with mortgages larger than the value of their homes. If the borrowers cannot restructure these debts, then they cannot get back on their feet financially.”

              This article alludes to the problem faced by many subprime mortgage holders. They buy subprime properties thinking the value of these properties will appreciate. The lenders grant them loans on appreciating (not fixed) interest rates also believing the values of the properties will appreciate. But we know what happened. The property market bubble burst in 2008 and that sent property prices (especially subprime properties) crashing down. But subprime mortgage interest rates continue to climb.

              As you can see, bankruptcy is the provision in the law to protect consumers from spiraling market prices for subprime properties and the increasing mortgage interest rates that go with them. But the bankruptcy laws were enacted at a time when there were no appreciating interest rate mortgages. As a result, consumers who borrowed such loans end up drowning in mortgage debt and facing foreclosure as their home values drop and their mortgage rates increase drastically. And as it stands, the bankruptcy laws that are meant to protect the borrowers favor the lenders, so the lenders see no need to change their lending practices. In view of this, I feel that bankruptcy courts should be given greater power to review subprime property loans and modify them to offer greater protection for the consumer.

              If you are facing foreclosure of your property and wish to file for bankruptcy protection, call us at (813) 200 4133 for a free consultation.

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                Bankruptcy and your Child’s Bank Account

                If you file for bankruptcy protection, will the bankruptcy trustee take your child’s bank account to repay your creditors? The answer to this question depends on how the bank account was set up. If the bank account was set up properly, the bankruptcy trustee does not have any right to seize the account.

                If you have a designated bank account you have started for the benefit of your child the onus is for you to prove this to the bankruptcy court. If you can show that this bank account is for your child exclusively, then according to the Uniform Gift to Minors Act this account is your gift to your child and does not form part of your bankruptcy estate. Proving exclusiveness would generally mean showing that the bank account is in your child’s name or in joint names with yourself.

                However, if you have a bank account in your name but use the money therein for expenses related to your child then you may have a problem proving to the court that the account is for the exclusive benefit of your child.
                So if you have not set up your child’s bank account properly, you may want to do so just in case you have to file for bankruptcy in future.

                If you want to consider filing for bankruptcy, call us at (813) 200 4133 for a free consultation. Bankruptcy presents an opportunity to you to wipe your slate clean of all debts and start anew.

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                  Bankruptcy Law and Inheritance

                  If you receive an inheritance, what does the bankruptcy law say about it? More specifically, if you are given an inheritance after you file for bankruptcy what happens to it? The bankruptcy code has different ways of treating your inheritance depending on which chapter of bankruptcy you file under.

                  If you file for Chapter 7 bankruptcy, what happens to the inheritance depends on when the person who gave it to you passed away. If the death of the testator occurred within 180 days prior to your bankruptcy filing, the inheritance you received will form part of your bankruptcy estate and will have to be handed over to the bankruptcy trustee who will use it to pay your creditors. If the testator passed away more than 180 days before you filed for Chapter 7 bankruptcy, then the inheritance is yours to keep.

                  Note that the 180 days is counted from the date of death of the person who gave you the inheritance, not the date you received the inheritance. For example, if your distant relative gave you $1 million in his will, and you received it only 1 year after he died, the money will become part of the assets in your bankruptcy if the death occurred within 180 days prior to your bankruptcy filing.

                  On the other hand, if you file for Chapter 13 bankruptcy, the 180 day limit does not apply. As long as your bankruptcy is still ongoing, the inheritance will form part of your bankruptcy estate and will be used to calculate how much you should repay your creditors. So in the example above, regardless of when you received the inheritance, as long as your debts in bankruptcy have not been discharged, your inheritance is taken into account to calculate your repayment amount.

                  If you wish to file for bankruptcy to overcome your debt problems, call us at (813) 200 4133 for a free consultation.

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                    How Long does Automatic Stay Last?

                    When you file for a bankruptcy petition, the bankruptcy court grants you an automatic stay, meaning all creditors are prohibited from making efforts to collect their dues from you. This reprieve allows you to proceed with the bankruptcy filing so that your creditors can be paid under the supervision of the bankruptcy trustee. But how long does this reprieve last?

                    Under the best of circumstances, the automatic stay lasts until your bankruptcy is discharged i.e. until all your debts have been repaid or forgiven. But things do not always go that way. Here are some other circumstances that can end the automatic stay.

                    Your bankruptcy case is dismissed
                    This means your bankruptcy petition is thrown out by the bankruptcy court because you are not eligible to file for bankruptcy. There may be several reasons why you can be ineligible for bankruptcy such as a previous bankruptcy filing within a certain number of years depending on which type of bankruptcy you file for. Another circumstance that may disqualify you from filing for bankruptcy is bankruptcy fraud like raking up high credit card debts just before making your bankruptcy filing. Once your case is dismissed by the court, all your creditors will come swooping in on you like hawks.

                    Your bankruptcy case is closed
                    Your bankruptcy case will be closed when you withdraw your bankruptcy petition. If you do so, obviously you will not have bankruptcy protection any longer.

                    Your bankruptcy discharge is denied
                    A bankruptcy discharge can be denied as a form of punishment for certain acts done to surreptitiously thwart creditors. For example, if you transfer your assets to a family member’s name so that they (the assets) will not be liquidated to pay your debts, making false oaths or hiding or destroying financial records. If you commit these types of acts, your automatic stay is removed.

                    As mentioned above, the best scenario is when you have the automatic stay end only when all your dischargeable debts are paid off or forgiven. But there are some debts that are not dischargeable such as alimony and child support and student loans. The creditors for these debts will be able to initiate collection efforts if any part of the debts is still outstanding when you exit bankruptcy.

                    If you wish further information or wish to file for bankruptcy, please contact us at (813) 200 4133 for a free consultation.

                     

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