Archive for the ‘Chapter 7 Bankruptcy’ Category

Car Loans In Chapter 7 Bankruptcy

Sunday, November 28th, 2010

If you file a Chapter 7 bankruptcy case and have an outstanding car loan, you have the option of doing any one of the following:

A.    Surrender your car;

B.    Reaffirm your car loan;  or

C.    Redeem your car from the debt.

These options exist for all bankruptcy filings in Northeastern Pennsylvania and Central Pennsylvania, including Luzerne County, Lackawanna County, Monroe County and Lycoming County:  From Wilkes-Barre to Scranton to Hazleton to Stroudsburg to Willliamsport.

Surrendering your car involves returning the car back to the lender, after which you will have no further personal liability to the lender.

Reaffirming your car loan involves your agreement to continue to be personally liable on the car loan in order to keep the car.  There is more detail involved with this choice, which you can read by clicking here: Reaffirming Car Loans.

Redeeming the car involves paying a lump sum amount to the car lender that is equal to the value of the car in order the keep the car loan. This option is best when your car is worth less that the balance that you owe on your car loan. You can read more about this option by clicking here:  Redeeming Car Loans.

If you have any questions about these options, please call me or send an me an e-mail.

Please also visit MY HOME PAGE to learn more about my law practice and me.

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Can I Transfer My Property To Friends or Family to Keep From Losing It in a Bankruptcy

Saturday, December 19th, 2009

Generally a debtor cannot transfer property to others to keep from losing it in bankruptcy…unless the debtor has transferred the property for fair value or in exchange for other property of the same value or, in Pennsylvania, the debtor has transferred the property more than 4 years prior to a bankruptcy filing.

The Bankruptcy Code allows a bankruptcy trustee to “avoid” any transfer of property by a debtor if: (a) the debtor intended to hinder, delay or defraud creditors, or (b) the debtor receives less than a reasonably equivalent value (in money or other property) in exchange for the property, (c) the debtor was insolvent at the time of the transfer or was made so as a result of the transfer, and (d) the transfer occurred within 2 years of the date of the bankruptcy filing. Pennsylvania law extends the “lookback” period to 4 years.

“Avoid” means that the trustee can retrieve or repossess the transferred property or obtain a judgment (against the debtor or the person who receives the property) in an amount equal to the value of the transferred property as of the date of the transfer.

What is worse is that once the trustee retrieves the transferred property, the debtor will not be entitled to exempt any portion of the property because, technically, the debtor is not the owner of the property on the date of his or her bankruptcy filing (a prerequisite under the Bankruptcy Code to being allowed to take an exemption).

Nevertheless, there are several legal, ethical and court-approved ways to transfer property to keep from losing property in a bankruptcy case.

If you wish to discuss the content of this post, please feel free call me at (570) 823-9400 or write to me at davidharrisesq@epix.net.

How Long Does Bankruptcy Take

Saturday, December 12th, 2009

I have known bankruptcy cases to take anywhere from 5 months to 24 years!

Most consumer Chapter 7 cases take approximately 5 to 6 months from the date that it is filed until the date that it is closed, unless: (a) the debtor has assets to be liquidated and distributed in the case, (b) when the Chapter 7 trustee is investigating past actions of the debtor, (c) when the Chapter 7 trustee is investigating whether unreported assets exist, or (d) when the Chapter 7 trustee simply forgot to close the case as a matter of oversight.

Most Chapter 13 cases take from 3 to 5 years.

A Chapter 13 case will take 3 years where the debtor’s household income is less than the debtor’s residence state’s median income for a same-sized household or where the debtor has significant income and can pay all his or her debts in 3 years or less.

A Chapter 13 case will take 5 years where the debtor’s household income is more than the debtor’s residence state’s median income for a same-sized household or the debtor simply chooses a 5-year plan term instead of a 3-year term.

A choice of this nature may exist if the debtor is seeking to cure a mortgage arrearage as part of his or her Chapter 13 plan and would prefer a lower monthly payment by spreading out the cure obligation over 60 months (5 years) instead of 36 months (3 years).

A choice of this nature may also exist if the debtor is compelled to file a Chapter 13 case rather than a Chapter 7 case as a result of having non-exempt equity in assets that would have been liquidated in a Chapter 7 case. Thus, a debtor who had $20,000 of non-exempt equity may prefer paying $333.33 to a Chapter 13 trustee over a 60-month period instead of paying $555.55 over a 36-month period.

A debtor will not have the option of a 3-year Chapter 13 plan where the debtor is an “above median debtor,” unless the debtors pays all his or her unsecured debts within the 3-year period in the plan. Simply, an “above median debtor” is required to commit all his or her income to a 5-year plan, unless the debtor has certain, but significant, expenses. However, as stated earlier, if a debtor has significant income and, as a result, can pay all his or her debts in less than 5 years, he or she will conclude his or her case in a shorter period of time.

And now…the case that lasted 24 years…the “Blue Coal” case, here in my home town of Wilkes-Barre, Pennsylvania. The case was filed one year after I graduated from high school. I spent four years in college, three years in law school, two years in grad school, began my career far from home, then moved back home and had the unique experience to participate in the case, more than 12 years after the case was filed.

If you have any questions about this post, please write to me at: davidharrisesq@epix.net or call me at my Wilkes-Barre, Pennsylvania office at (570) 823-9400.