Bankruptcy

As a debt relief agency, we help people file for bankruptcy relief under the Bankruptcy Code.

Common Reasons for Filing

• unemployment & layoffs
• disability & medical leaves
• uninsured medical expenses
• loss of household income due to divorce or separation
• loss of household income due to care for children or disabled relatives
• preventing mortgage foreclosures in order to have an opportunity to cure the arrears or to sell the house
• preventing vehicle repossessions in order to have an opportunity to cure the arrears or to renegotiate the car loan
• discharging deficiency balances after mortgage foreclosures and vehicle repossessions
• selling a house free and clear of mortgages which exceed the value of the house
• avoiding ordinary judgment liens on property
• stopping Sheriff Sales pursuant to ordinary judgments
• walking away from a business
• keeping the business while catching up on the taxes
• keeping the business while curing arrears on the secured business loans

Key Concepts About Bankruptcy

• Automatic Stay
  The filing of a bankruptcy petition generally acts as a stay which temporarily prohibits creditor collection activities while the case is pending. While the stay is in effect, creditors are prohibited from calling, billing, sending collection letters, commencing or continuing lawsuits, enforcing judgments, and proceeding with Sheriff Sales.
• Mortgages and Car Loans
  Generally, liens are not dischargeable in bankruptcy. However, with secured loans, borrowers have the choice of the following:
  • retaining the collateral by making regular payments; or by paying the secured creditor the value of the collateral during the course of the bankruptcy.
  • walking away from the debt by surrendering the collateral.
• Discharge
  Most debts are dischargeable in all chapters of bankruptcy. Major exceptions include the following:
  1. most taxes
  2. student loans
  3. child support and alimony
  4. debts that were incurred through fraud or willful & malicious injury
  5. nonsupport marital debts (still dischargeable in Chapter 13)
• Exemptions
  Most bankruptcy cases involve no loss of property because borrowers can exempt a limited amount of value from their assets. Major exemptions are as follows:
  • Homestead exemption - $18,450
  • Vehicle exemption - $2,950 (limit - one vehicle per individual)
  • Household goods exemption - $9,850 (limit - $475 per item)
  • most pensions
  • Wild Card exemption - $975 plus up to $9,850 in unused homestead exemption
  These exemptions double if husband and wife file jointly. These amounts will be increased on April 1, 2004.
• Example
  Problem:
  A husband and wife own a $150,000 home with mortgages totaling $120,000. They also own a $17,000 car on which they still owe $16,000 and a $2,000 car which they own free and clear. They also have $2,000 in the bank, a $5,000 gun collection, and furniture, appliances, clothing and other household goods with a garage-sale value of $11,000.
  
  If husband and wife declare bankruptcy, what would they lose, if anything.
  
  Solution:
  If husband and wife declare bankruptcy in the sample problem, they would lose nothing if they keep up with their mortgages and car loan. Although the home is worth $150,000, their equity in it is only worth $30,000, which is covered by their combined homestead exemption of $36,900. As long as they keep up with their mortgages, they can keep their home. The $17,000 car has an equity value of $1,000, and the second car is only worth $2,000. Husband can use his $2,950 vehicle exemption on one car, and wife can exempt the other car. Together, they can keep both vehicles as long as they keep up with their car loan. Their combined household goods exemption of $19,700 will protect the furniture, appliances, clothing and other household goods, which have a garage sale value of $11,000. Because they used only $30,000 worth of homestead exemptions, they can transfer the remaining $6,900 to their combined Wild Card exemption of $1,950. This can be used to protect the $2,000 in the bank and the $5,000 gun collection.
  
  If you have further questions, click here to contact us.