While chapter 7 bankruptcy is the most common bankruptcy filing for individuals, few people know what the differences between Chapter 7 and Chapter 13 filings. In reality, there are actually four (4) possible bankruptcy filings for individuals:
Chapter 7: “Liquidation”
As the most common bankruptcy filing, Chapter 7 allows companies, married couples, and individuals liquidate their assets and essentially erase their debts. Once the entity, couple, or individual files for Chapter 7, a “trustee” is appointed to oversee and orchestrate the sale of assets. The resulting value from the sale of assets is then distributed to creditors. While not all creditors may receive any payment, and most will not receive full payment, the subject’s debts are then “forgiven”. While the idea of selling off all of one’s assets is an extreme step, there are certain asset exemptions for individuals including an individual’s primary residence, some automobiles, clothing, and other personal … Read More
Foreclosure – on either a residence home or a vacation home – is always difficult. However, it is important during this emotional time to remember that the law limits a foreclosed homeowner’s ability to make changes or modifications to the property. This is because the effect of foreclosure is to transfer ownership to a bank or other institution. This passage of rights means that the former owner no longer has exclusive control over the property.
One such restriction on the former owner is their ability to make changes to the home. Specifically the homeowner is not able to remove certain fixtures that are permanently attached to the home. Examples of such fixtures include lights, ceiling fans, and garage door sensors, among others. The question for a court will be whether, when the fixture was installed, if the then-owner intended the fixture to be permanently attached to the house.
If fixtures … Read More
According to statistics recently released by the United States Federal Courts, 30 percent of individuals who filed for Chapter 13 bankruptcy had filed for bankruptcy within the past eight years. Some of the legal implications of a second filing for bankruptcy can be found here.
According to the same report, it took between 115 and 205 days from the date of filing for bankruptcy for the debtor’s proceeding to be completed. This time frame is important to keep in mind when filing for bankruptcy; while many of the forms are available online, it is generally advisable to seek professional legal counsel in navigating this complicated process.
The report also noted that creditors’ efforts to collect debts, even during the bankruptcy process, have been increasing. This is in spite of the fact that such actions – known as creditor misconduct – could expose credit agencies or other groups attempting … Read More
In an ever-tightening job market with interest rates set to begin a long-awaited upward climb, the cost of higher education becomes more and more prohibitive for young adults considering their potential career paths. Student loan programs enable thousands of people every year to attend college when they otherwise would not have been able to do so. Heralded as vehicles by which students are able to realize their full potential, student loans are not without their drawbacks. As the college graduate field becomes more saturated, many students consider taking out additional loans for graduate school. The increased accessibility to higher education weakens the value of a college diploma and crowds the limited number of the job positions which fresh graduates are qualified for.
Aside from the institutional effects of increased availability of education financing (from both public and private sources), the resulting debt for graduates is enormous. Student loan debt is … Read More
When a party files for bankruptcy for the first time, either under Chapter 7 or Chapter 13 of the Bankruptcy Code, they are generally entitled to a legal phenomenon called the “automatic stay.” The stay operates to protect the debtor against debt collection attempts, other creditor activities, and generally any proceedings that relate to debts held by the debtor at the time of the bankruptcy filing. In an initial bankruptcy filing, the stay continues to operate during the whole time of the bankruptcy proceedings, which in some cases can take years. In this way the automatic stay operates as a shield for the debtor.
However, if a debtor is filing bankruptcy for the second time, circumstances are different. Specifically, if it has been less than a year since the debtor has last filed bankruptcy or been in bankruptcy court, the stay does not last as long. In a subsequent proceeding, … Read More
The recent bankruptcy in Detroit also brings to mind Jefferson County’s own problems with solvency. While cities going bankrupt are very rare, statistics from the U.S. Court system indicate that more than 50 percent of people or small businesses will declare bankruptcies over the course of their live(s). These bankruptcies are generally covered under Chapter 7 of the U.S. Bankruptcy Code.
Among other things, filing for bankruptcy generally requires individuals and businesses to list all of their assets, as well as their debts. An overlooked part of the process, however, is a continuing requirement to disclose certain types of assets that most people may not think of.
For instance, if you file an insurance claim with a company based on homeowner’s insurance, driver’s insurance, or some other type of claim, you may be required to disclose that claim to the court, even though you may have submitted your initial list … Read More
At Parkman White, LLP, our Birmingham bankruptcy attorneys always counsel our clients on the importance of being completely truthful in their bankruptcy petitions. Few firms in Alabama have the experience we have in not only guiding clients through the bankruptcy process, but also in representing them when they are accused of falsifying their bankruptcy petition. When you lie in your bankruptcy petition, you are risking being charged with Bankruptcy fraud, a serious white collar federal crime that can lead to years of imprisonment.
While bankruptcy fraud cases are rarely high profile, our bankruptcy attorneys are following the recent arrest of Real Housewife of New Jersey, Teresa Giudice. Teresa is best known for her table flipping rants and finger nail flying fights with her brother and sister and law, but she now has a bigger fight on her hand. Due to her recent arrest, she now has to battle with … Read More
The Birmingham bankruptcy attorneys at Parkman White, LLP are often faced with clients that go on a financed shopping spree just prior to contacting us about filing bankruptcy. Their theory is usually, “Why not go ahead and borrow all I can borrow if I am about to file bankruptcy anyway?” They convince themselves that they are entitled to one last splurge before submitting themselves to the oversight of the Bankruptcy Court.
Our lawyers have seen clients that are doomed for bankruptcy intentionally max out their credit cards just months prior to seeking bankruptcy protection. They spend thousands of dollars racking up additional debt by purchasing unnecessary items, even though they have no money in the bank. It is common to see family trips to Disney World, or purchases of expensive clothing on the credit card invoices of clients that know they can’t afford it and that know they are destined … Read More
There are many types of bankruptcies – up to 6 different types! However, the most common types of personal bankruptcy fall under two chapters: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
The “fresh start” bankruptcy filing. Chapter 7 is for individuals who cannot pay all of their debts, this makes up most of the bankruptcy filings in the United States! Under a Chapter 7 filing you are no longer responsible to pay back old debts once the bankruptcy has been completed. A court appointed trustee will determine what assets you may have and sell them in order to pay back creditors as much as possible.
Chapter 13 Bankruptcy
The “reorganization” bankruptcy filing. Chapter 13 is for individuals who are currently unable to pay back some debts. This filing allows people to keep their property with the promise to pay back creditors in the future with future income over … Read More