It is not uncommon for close family members to transfer ownership of assets to one another. It is also common for one family member to own assets by proxy in the name of another family member. But before you do such things, you should be aware of the sticky issue of ownership should bankruptcy take place.
Let’s consider a hypothetical situation. John Doe has bad credit but his sister, Jane Doe has excellent credit standing. John desires to buy a car but because of his bad credit record, he is not able to secure financing, so he asks his sister Jane to purchase the vehicle in her name. John even pays the down payment and promises to pay the monthly installments so that Jane does not have to fork out a single dime.
All goes well for a few months until Jane runs into problems of her own. Let’s say she runs into massive financial difficulties, loses her job and incurs high medical costs for a chronic and serious illness. She is no longer able to clear her debts and files for bankruptcy. Another hypothetical scenario can be Jane is an innocent spouse whose husband has absconded leaving her straddled with huge back taxes she is liable for because she and her husband are joint filers of their income taxes. The IRS might even file a levy on her properties (including the car she bought in her name). Again, the situation is critical and Jane is forced to file for bankruptcy protection.
In these hypothetical situations, the car immediately becomes part of the bankruptcy estate. This means the car might be sold to help pay off Jane’s debts. She cannot transfer the ownership back to her brother because it is not allowed and the bankruptcy trustee would simply reverse the transfer if she tried to do so.
The only way for John to obtain ownership of the car is to buy it back from Jane. Even if the car is fully paid up, as long as it is still under her name, John cannot lay any claim to it. The bankruptcy trustee does not take into consideration who has been paying the monthly installments or maintaining and using the car. As far as the trustee is concerned, the car belongs to Jane because it officially says so on paper.
So if this type of incident happens to you, you should be aware of the legal implications of ownership of assets.
Are you facing huge debt problems? Consider filing for bankruptcy protection to avoid losing your assets and get your creditors off your back. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 31st, 2012. Comment. 
When you file for bankruptcy, it is wise to do your due diligence and hired a bankruptcy lawyer. You should also have your records all straightened out as there is a lot of paperwork that needs to be done and everything you declare has to be substantiated. Then your bankruptcy lawyer will advise you on which type of bankruptcy you should file for, either Chapter 7 or Chapter 13 bankruptcy. But whichever bankruptcy you eventually file for, here are some things you can do to make the most out of your bankruptcy.
When under bankruptcy protection, you do not have the stress of dealing with harassing creditors. Sometimes, this reprieve can be a temptation for you to spend more. When you need to spend on credit, you should consult your bankruptcy lawyer first. This is so that the bankruptcy trustee will not have reason to think you are intentionally raking up your debts just to get it discharged eventually. Your spending habits need to change anyway, so when you are under bankruptcy protection is the best time to start. So to make sure you do not unduly arouse the suspicion of your bankruptcy trustee, always consult your bankruptcy lawyer before making special expenses if they are on credit.
This brings me to the next thing to do which is to change your spending habits. What drove you to declare bankruptcy in the first place? It could have been addictive money-wasting habits like gambling or careless spending ways like living beyond your means or lax monetary habits like living without a budget. Whatever the case(s) may be, you have to identify your faults and eliminate them. Have an accountability partner or a financial advisor to help you live within your means and save some money every month. This will help you not only get out of bankruptcy successfully but also stay solvent for life after bankruptcy.
When you exit bankruptcy, there is almost certainly going to be a stigma attached to you either by yourself or by people around you. Sadly, most people in society still frown upon a bankrupt for one reason or another. So if you find it difficult to cope with the stigma of being a bankrupt, you should hire a bankruptcy counselor. A trained counselor will work with you to overcome these issues and help you gain the necessary mindset to become a financially independent person again.
If you need bankruptcy advice, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 17th, 2012. Comment.
Once you file for bankruptcy, you get automatic stay which means your creditors are to leave you alone. However, at times you will still be harassed by a persistent creditor who either ignores the bankruptcy notice or was not informed of your bankruptcy and keeps phoning you or sending demand letters in the mail. Of course, this is illegal. In such a case, you have to take action and stand up for your rights.
What you should do is keep a record of all their attempts to contact you. Keep on file the letters of demand they send to you and the time and dates of their phone calls. These become evidence of law-breaking that you will use against them. The next thing to do is present all these evidence to your bankruptcy attorney. Your attorney will know what to do and how to bring this matter up to the attention of the bankruptcy court. You can initiate legal proceedings against your creditor(s) and sue them for breaking automatic stay and causing emotional harassment. In most cases, you will be successful as long as you can provide evidence.
Although automatic stay applies the moment you file for bankruptcy, there are certain exceptions. These exceptions come in the case of co-debtors. Some of your debts may be in two names such as a housing loan that is in joint names between you and your spouse. You and your spouse are co-debtors in such a case. All consumer debts (like housing loans) can have co-debtors. When you file for bankruptcy protection, your co-debtor may or may not be protected under automatic stay as well.
The difference comes in the type of bankruptcy you file. If you file for Chapter 7 (i.e. liquidation) bankruptcy, you will be granted automatic stay, but your co-debtor is not. However, if you file for Chapter 13 (reorganization) bankruptcy, then your co-debtor is also afforded protection under automatic stay until you are discharged from bankruptcy.
However, there is one exception to this rule in Chapter 13 bankruptcy and that is in the case of tax debt. Tax debt is not classified as consumer debt. So if you and your spouse are liable for the same tax debt listed in your Chapter 13 bankruptcy, then only you are granted automatic stay and the IRS still has the right to seek payment from your spouse, the co-debtor.
So it is not possible to seek legal redress against the IRS (as you could with harassing creditors) if you have tax debts listed in your Chapter 7 or Chapter 13 bankruptcy.
If you need help with tax debts or bankruptcy, call us at (813) 200 4133 (bankruptcy) or (813) 229 7100 (tax) for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 13th, 2012. Comment.
One of the most dreaded things anyone can face is the foreclosure of their home. This is because foreclosure threatens our basic need for security. But if debts are mounting and you fall behind in your mortgage payments, it is only a matter of time before your bank takes foreclosure action. Is there anything you can do about it? Yes. You can file for bankruptcy protection.
Depending on your situation, a bankruptcy filing may halt foreclosure proceedings. There are two types of bankruptcies for individuals. The first is Chapter 7 bankruptcy which is where your non-exempt properties are sold to repay your debts. Chapter 7 bankruptcy is useful if you are not behind in your mortgage payments but have run into unexpected financial problems like a huge medical bill that you need time to repay. Should you file for bankruptcy under such circumstances, there is a high chance that your Chapter 7 bankruptcy will stall your mortgage payments until you exit bankruptcy. After the discharge, your mortgage will continue as scheduled. This is how Chapter 7 bankruptcy can affect your mortgage and help you avoid foreclosure to your home.
The second type of bankruptcy for individuals is Chapter 13 bankruptcy or reorganization bankruptcy. Under this type of bankruptcy, your bankruptcy debts are put into a repayment plan that can stretch up to five years. Thus, your mortgage will be included in this plan. When you start repaying your bankruptcy debts according to the plan, you can avoid foreclosure. Chapter 13 bankruptcy will be more useful to you if you have fallen too far behind your mortgage payments and your bank has initiated foreclosure proceedings. But there is a proviso.
The bankruptcy court will only grant your mortgage to be included into your bankruptcy assets provided you are not too far into the foreclosure process. If the bankruptcy judge feels that you owe too much to the bank already and that the foreclosure process has gone on for too long, then he or she may strike out your mortgage from the rest of your bankruptcy assets. In such a case, there may be nothing you can do to save your home.
To decide whether you should file for bankruptcy and discuss how your home can be saved from foreclosure in bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 11th, 2012. Comment.
When your bankruptcy is discharged it means you have successfully exited bankruptcy protection and you can start afresh financially. Discharges in bankruptcy take place under different circumstances. For each discharge, certain criteria must be met. Usually, this has to do with meeting financial obligations by the debtor in paying off his or her debts.
For example, a discharge in Chapter 7 bankruptcy happens when all non-exempt assets are liquidated to pay off your debts. Any other debts that are still outstanding after liquidating all non-exempt assets are generally forgiven. It is for this very reason that it is not easy to qualify for Chapter 7 bankruptcy. Only if your household income is below the median household income set by your state can you be eligible to apply for Chapter 7 bankruptcy. Otherwise, an applicant for Chapter 7 bankruptcy must take and pass a means test.
If you do not pass the means test, chances are you would be eligible for Chapter 13 bankruptcy. Chapter 13 bankruptcy is where you pay off your debts according to a payment plan approved by the bankruptcy court. This payment plan is meant to be affordable to the debtor to enable him or her to pay debts according to the bankruptcy trustee’s prioritization schedule. Discharge from Chapter 13 bankruptcy comes about when the debtor keeps to the payment plan and pays off all the debts according to plan.
But what if despite the payment plan, you still cannot afford to keep up with the installments? The bankruptcy trustee will revise your payment plan to make it more affordable but sometimes due to unavoidable circumstances like a drastic drop in financial income, no payment plan is going to work.
This is where hardship discharge comes in. The debtor can seek to file for a hardship discharge. In order to be granted a hardship discharge, the debtor must have at least paid some amount towards the payment plan, typically at least the amount they would have paid if they had filed a Chapter 7 bankruptcy. If the bankruptcy judge is satisfied with the payments made thus far, a hardship discharge may be granted under the circumstances.
The rationale behind it is that if the person were to transfer to a Chapter 7 from their Chapter 13 they would be unfairly subject to seizure of their assets, which is more than they would have been required to pay under either chapter.
The only other option besides a hardship discharge is to cancel the Chapter 13 bankruptcy and file for Chapter 7 instead.
In any case, the best thing to do would be to discuss these options with an experienced bankruptcy attorney. If you wish to speak to a bankruptcy attorney on your situation, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 5th, 2012. Comment.
