Bankruptcy Page

Have you been thinking about Bankruptcy?  Are you undecided because you want to do the right thing?  Do the Credit Card Companies do the right thing?  What can you do?

What is a Bankruptcy?  In short, a bankruptcy is every person's Constitutional Right.  The times of a debtor's prison are long past.  In days of old, a person could be placed in prison for owing money.  This injustice was eliminated by our bankruptcy laws.  Each and every person has the legal right to file Bankruptcy and start over with a fresh slate.

There are several types of Bankruptcies.   Each type of Bankruptcy is named for its Chapter.   The different Chapters are specifically tailored  to help debtors with different types of debt.  For most individuals, the preferred chapters are Chapter 7 (total liquidation) and Chapter 13 (debt adjustment).   In a Chapter 7 the debtor wipes out all debt and starts over fresh.  In a Chapter 13, the debtor submits a plan to pay back the debt over a 3 to 5 year term.  The Courts have published a Debtor's Guide to bankruptcy which is available here.    

Is your house in foreclosure?   Filing a Bankruptcy will immediately stop a foreclosure.  However, if the wrong bankruptcy is filed, or it is filed incorrectly, the mortgage company can "lift the automatic stay."  This means that they can continue to foreclose upon your property.  The correct bankruptcy chapter may allow you to keep your home, or even a rental property which is being foreclosed upon.  

What assets can I keep after filing for bankruptcy?   No matter which chapter a person files under, a debtor can generally keep assets if their "net value" is below the allowed exemptions.   An example of a "net asset" is the value of your home less all mortgages.  (Home - Mortgage = Net Asset)   In a Chapter 13, the debtor may be able to keep substantially more assets, if the debtor's income stream allow for the payment of the creditors through the bankruptcy plan.  The are many special consideration in devising a plan.

The allowed exemptions for each debtor are as follows:
Code Sec.
522(d)(1) Principal Residence
$ 17,425.00
Each debtor's exclusion.  There are some specific considerations if there is a jointly owned home with only one party filing bankruptcy.  
522(d)(3) Furnishings
The exemption is $450.00 for any one item and the aggregate is not to exceed the $9,300.00 total exemption.
522(d)(2) Motor Vehicle
Leased vehicles may be totally excluded if the lease is reaffirmed and payments continue.
522(d)(4) Jewelry
522(d)(5) Discretionary Exemption
Can be used to exempt any other asset or can be combined with any other exemption to increase valuse of asset exempted.
522(d)(5) Unused Residence Exemption
In addition to the discetionary exemption, if the debtor does not own a principal residence, this amount can be applied to any owned asset.
522(d)(6) Books, tools & impliments used in trade
522(d)(7) Life insurance contracts payable to another
522(d)(8) Life insurance contracts payable to the debtor
522(d)(11)(D) Payment from law suit for personal injury.
This is the amount able to be exempted from an award of pain and suffering in the recovery of a law suit.
* These amounts are the amounts allowed as of April 1, 2001, and will stay in effect until April 1, 2004.
** Exclusions may be doubled in a joint bankruptcy.

Non-Dischargable debt is debt which the Court will not discharge and the debtor is still obligated to pay.  Examples of non-dischargable debt are DWI insurance surcharges, Student Loans, debts arising from intentional torts and others.  Taxes are usually non-dischargable, with some exceptions.  Find out the details.

Recent legislation has affected a debtor's ability to discharge debt.  Pending legislation could wipe away many of the benefits of bankruptcy.  If you have questions, ask a professional.  You have a right to file bankruptcy and you have a right to know about the laws.

Make an appointment at the:  
Hopkins Law Firm
for more information on Bankruptcy.

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