For most of us, a car is a necessity. Very few people can survive in an urban setting without a car in the 21st century. At the same time, most people own a car through obtaining a car loan. If you fall behind in your car loan repayments, the lender has a right to repossess the car. When you file for bankruptcy, that is what is likely to happen. The lender would demand the car back and sell it at an auction. If the proceeds of the auction is insufficient to cover the outstanding loan, the lender will initiate a lawsuit against you to recover the balance.
So is there a way to keep your car when you file for bankruptcy? Here are some things you can do.
When you file for Chapter 7 bankruptcy, you can “redeem” the car by paying the lender the value of the car and discharging the rest of the car loan in bankruptcy. On the other hand, if you file for a Chapter 13 bankruptcy, your car can also be “redeemed” if the car loan is more than 910 days old or if the loan was not used only for purchasing the loan (i.e. a rollover loan from a trade-in).
Furthermore, if you do not have enough money to pay the value of the car to the lender, you may take up a loan to do so even while in bankruptcy. This is good news if you have an upside down car loan (a situation in which the market value of the car is less than the outstanding car loan). You can file for bankruptcy and keep your car.
Another thing you can do to keep your car in bankruptcy is reaffirm your car loan with the lender. This means you confirm with the lender that despite filing for Chapter 7 bankruptcy, you will continue paying the car loan installments. And the lender agrees not to repossess your car as long as you maintain the car loan repayments during bankruptcy.
The only problem with reaffirming your car loan is that if you fall behind on your payments after your bankruptcy is discharged, the lender can still repossess the car and sue you for the balance of loan. in view of this, you should always discuss your reaffirmation agreement with a bankruptcy attorney before entering into one with your lender.
If you wish to file for bankruptcy or discuss matters about bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on May 16th, 2012. Comment. 
Is it possible to wipe out all your debts and live debt-free? Yes, it is. But this is somewhat of a pipe dream for 99.9% of people in the world. Yet if you are smart, you can have all your debts wiped out in a short length of time. How? Through filing for a bankruptcy petition.
If you are already sold on the idea of finally wiping your financial slate clean through bankruptcy, do not rush headlong into it so quickly even though I’m sure you cannot wait to end your ordeal of debt. You should consider the following matters first.
Where your debts come from
There are certain types of debt that cannot be discharged by bankruptcy so filing a bankruptcy petition would be of no use. If most of your debts are in the form of student loans, child support or alimony, tax debts then bankruptcy may not be the ideal solution as these debts are typically non-dischargeable by bankruptcy.
However, if your debts are mostly credit card debts, medical bills, mortgage debts and car loans, then it would make sense to file for bankruptcy because these debts can be discharged by a bankruptcy filing.
Which type of bankruptcy to file
For most individuals, the two types of bankruptcy that apply are Chapter 7 and Chapter 13 bankruptcy. There is another type of bankruptcy open to individuals called Chapter 11 bankruptcy but it is generally too expensive for most individuals and as such is only used for businesses.
The choice between Chapter 7 and Chapter 13 is crucial so that you can go through the bankruptcy process as smoothly and quickly as possible. Generally, you should weigh your income against your debts. If you are generally able to repay your debts in installments over a period of time with your present income, then Chapter 13 bankruptcy is suitable for you. Chapter 13 bankruptcy also allows you to keep your assets (they do not have to be liquidated to pay your debts) and generally has a shorter period where the bankruptcy stays on your credit record.
But if your debts are insurmountable compared to your income, then you should consider Chapter 7 bankruptcy. But in order to qualify for Chapter 7, you need to pass a means test. A means test is to determine if your household income is below the average income set by your state. If you pass the means test, then you are eligible for Chapter 7. In Chapter 7 bankruptcy, you do not have to repay all your debts. Those which you cannot repay will be forgiven. But the downside to Chapter 7 is that your non-exempt assets will have to be liquidated to pay off your debts. And your bankruptcy generally stays longer on your credit record than Chapter 13.
If you are considering filing for bankruptcy protection, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Mar 14th, 2012. Comment.
In the state of today’s ailing economy, it is very common to find lenders tightening credit which in turn makes paying for your home more difficult. Once you fall behind on your payments by more than a couple of months, the banks will start collection efforts. One unpleasant thing banks do to recoup their money is initiate foreclosure to take possession of your house and sell it off. If you bank is about to launch foreclosure proceedings against your home, you should take action to keep your home.
The first thing you should do is to approach your bankers to inform them of your financial difficulties. The bank may be willing to adjust your payment plan. Alternatively, you can try asking for forbearance. Forbearance is where your banker agrees to stall foreclosure proceedings and negotiate an agreement with you. A forbearance agreement can take several forms. It may be in the form of a postponement of monthly installments or a reduced payment amount or even an extension of the repayment period.
If you default on your forbearance agreement, your banker will have the right to foreclose your property immediately. Forbearance is a good way to deal with temporary financial difficulties such as a major illness or loss of job. It is generally not a solution for longer term financial problems.
If you have already gone through the process above and you still cannot keep up with your monthly payments, the best option would be to file for bankruptcy. There are two options in filing for bankruptcy – Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is where your non-exempt assets are sold off to pay for your debts and any debts that are not settled after all your non-exempt assets have been sold will be cancelled. In Chapter 13 bankruptcy, the court will enforce a payment plan for you to clear your debts over a period of up to 5 years.
To file for Chapter 7 bankruptcy, you must pass the means test i.e. your household income must be below the average income set by your state. In addition, you also have to be current with your mortgage payments to be eligible for Chapter 7 bankruptcy.
If you are already defaulting in your mortgage payments or if your banker has already initiated foreclosure, it is advisable to file for Chapter 13 bankruptcy which is essentially a restructuring of your debts. The bankruptcy court will put you under a payment plan that is more affordable for you.
So if you want to keep your home but cannot afford to make your mortgage payments due to some long term problem, then you might as well file for bankruptcy instead of negotiate forbearance. You should not wait till the last moment to file a bankruptcy petition.
Call us at (813) 200 4133 for a free consultation on how bankruptcy can save your home from foreclosure.
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Filed under Chapter 7 (Tampa) by on Feb 22nd, 2012. Comment.
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 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.
