Is your monthly car payment too high? Are you struggling to pay your monthly bills, and are in danger of falling behind or have already fallen behind on your car payments? Chances are you are reading this article because you have a monthly car payment and other bills you are having trouble paying, and you are considering filing bankruptcy. You may have heard that filing a bankruptcy petition entitles you to modify your car loan and pay less for your car than you promised to pay when you purchased it. This is true, if certain conditions are met. This article addresses the effect of filing a Chapter 13 bankruptcy petition upon your obligations under a retail installment contract for the purchase of an automobile. In other words, this article will tell you the basics of when and how you can modify your car loan, pay less for your car over a greater amount of time, and keep your car. As a Philadelphia bankruptcy attorney, I have done this successfully for my clients many times. What Does “Cram Down” Mean? When you file a Chapter 13 bankruptcy petition, your creditors are notified that they can file a “claim” in the amount owed by you. If you own a car but still owe money on the loan, that creditor will file a claim for the amount you owe, and that claim is “secured” by that car. However, the timing of the purchase of the car relative to the filing for bankruptcy may serve to greatly reduce that secured creditor’s claim to what the car is currently worth. This reduction is called a “cram down” and is available when you file your Chapter 13 bankruptcy petition 910 days or more after purchasing your car. Any sooner, and you will have to pay the full loan balance owed to that creditor. But if your loan qualifies, and your loan balance is greater than the amount the car is currently worth, you can force that creditor to accept payment of the car’s current value in full satisfaction of the loan just by filing a Chapter 13 bankruptcy petition and proposing to pay the car’s current value over time through your Chapter 13 plan. “Cramming Down” an Auto Loan Reduces Your Debt This may sound complicated at first, but consider this hypothetical example: let’s say you took out a five-year loan when you purchased your car four years ago (that’s 365 days/year multiplied by four years, which is somewhat greater than the 910 days required). With a year left on the loan term, you now owe $6,000 on the loan and you file your Chapter 13 bankruptcy petition. Your creditor files a secured claim for $6,000, but you can show the vehicle is currently worth only $2,500. In this instance you can cram that creditor down and pay that creditor only the $2,500 through your Chapter 13 plan in full satisfaction of this loan and the creditor’s claim.  When you’ve completed your Chapter 13 plan, you own your car. Cram Down Extends the Time to Pay Off Your Car Loan “Cram down” is a powerful tool for a second reason: in this example, not only will your obligation to this creditor be reduced from $6,000 to $2,500, but you will get more time to pay that $2,500 than the year left on the loan term, because that creditor will be paid the $2,500 through your Chapter 13 plan which can typically take three to five years to complete. Therefore, “cram down” not only allows you to pay less for your car in total, but gives you a longer period of time to pay it off, and upon successful completion of your Chapter 13 plan, the car is yours. The Impact of Cram Down on Co-Signers Although this simple scenario is an accurate illustration of the basic principles of “cram down,” many contingencies commonly arise that will affect your ability to cram down a car loan and the extent to which your loan obligation can be reduced. For example, if there was a co-signer on the loan who is not in bankruptcy, that individual’s obligation for the full amount of the loan is not affected by your bankruptcy. This is something you want to consider when contemplating a cram down, and you should consult with your attorney about the ramifications of that for you and for the co-signer. Modifying the Interest Rate and Creditor Resistance The issue of the appropriate interest rate to be applied is a hot subject for debate and requires skillful negotiation with the creditor to avoid paying more over time than you are required to pay. It is understandable that creditors will resist being crammed down. One way in which they do this is to challenge your asserted value of the car and the valuation method used, and assert in turn that the car is worth more than you say it is. The condition of your car and its current value and how to calculate that value are important factors in calculating the cram down, and these are frequently issues that are subject to costly litigation if negotiation is not successful. The issue of valuation also arises in those close cases where the creditor asserts you have “equity” in the vehicle (in other words, you owe less on your loan than what the car is currently worth) and that therefore you must pay the amount due under the loan. However, if you can show that your car is in fact worth less than the amount you owe on the loan, you can still cram this creditor down and pay less. This is Not Advice for Filing Chapter 13 Please take note of this important caveat: this article is not legal advice, nor is it intended to be legal advice. The purpose of this article is merely to illustrate one possible advantage of filing a Chapter 13 bankruptcy petition if you have a car loan that qualifies for “cram down.” This illustration is but one way in which the Bankruptcy Code can be a powerful tool for an honest but unfortunate debtor like yourself, when utilized fully. While it is certainly possible to file your petition pro se, an experienced bankruptcy attorney can guide you through the intricacies of “cram down” and ensure that you pay only what you need to pay for your car and no more.   The post Lower Your Car Payment With Chapter 13 “Cram Down” appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

  In the case In re Green, 2019 Bankr. LEXIS 2643, Case No. 18-80768 (Bankr. W.D. LA, 20 August 2019) the court was faced with an above median income debtor that has surrendered a number of luxury items, but was still wanting to keep and pay for a 2014 Polaris RZR Ranger valued at $5,000, to which the chapter 13 objected.  Mr. Green had been a self-employed contractor whose income dropped from $709,787 in 2017 to approximately $62,325 for the first seven months of 2018.  Three months after filing he obtained new employment as an offshore worker at even less income.  Mrs. Green is a child welfare supervisor netting $2,465.95/mo income.  As of filing, the Greens owned a home, 2 acres of non-adjacent land, a 2018 GMC truck, a 2017 GMC truck, a 2008 Saturn Vue, and 2017 Avis utility trailer valued at $1500, a 2014 Polaris RZR Ranger valued at $4,000, a 2016 Polaris Ranger valued at $12,000, and a 2016 Coachman Camper valued at $35,000.  All but the Saturn and the utility trailer secured loans to various banks.   The original plan provided for $4,050/mo payments and retention of the home and vehicles, but surrender of the non-home real estate, and provided a $18,498 dividend to unsecured creditors, about 27.6%.  After objection by the trustee as to the plan not being filed in good faith because it retained property not reasonably necessary for the support of the debtor or dependents per 11 U.S.C. §1325(b)(2)(A)(i), specifically the $472.94/mo payment on the camper, the $350 lot rent for the camper, and the $4,000 payment for the Polaris RZR; the Greens amended the plan to reduce the plan payments to $300/mo and surrendering the GMC trucks, the camper, the 2 acres, and the 2016 Ranger.  The only collateralized property being retained was the 2014 Polaris and the homestead.   This plan provided $6,833.23 to the unsecured creditors, a 21% dividend.  The Greens also filed an unopposed motion to incur new debt to replace the surrendered vehicles with less expensive ones with a $64,000 total debt.  The trustee refiled the objection that the plan was not filed in good faith, referring to retention of the 2014 Polaris.   In a pre-hearing brief the trustee clarified that rather than seeking to require the Debtors to pay the full current monthly income to general unsecured creditors, it was only seeking to have the $5,000 plus interest being used to pay the Polaris be utilized instead to pay toward unsecured creditors.  The court looked to the code requirements.  §1325(a)(3) requires a court to confirm a plan if it has been proposed in good faith and not by any means forbidden by law.  In the Fifth Circuit, a totality of circumstances test is used to analyse good faith, including 1) the reasonableness of the repayment plan, 2) whether the plan shows an attempt to abuse the spirit of the bankruptcy code, 3) whether the debtor genuinely intends to effectuate the plan, 4) whether there is any evidence of misrepresentation, unfair manipulations, or other inequities, 5) whether the filing of the case was part of an underlying scheme of fraud with an intent not to pay, 6) whether the plan reflects the debtor's ability to pay, and 7) whether a creditor has objected to the plan.  The court found that the amended plan was reasonable in that it reflected the Greens' steady adjustment to the loss of income.  The surrender of the luxury trucks, land, and other expensive items, combined with replacement of the vehicles with less expensive ones evidences the Green's sincere attempt to reorganize under a reasonable plan paying creditors more than they would have received in a liquidation.  The court compared this case to that of Matter of Booker, 735 F.App' 316, 317-18 (5th Cir. 2019) reversing a bankruptcy court's order requiring surrender of collateral securing a loan including a fishing boat, equipment, 3 tvs, and a riding lawn mower as a requirement to find good faith on a 4% dividend chapter 13 plan.  The court concluded that a chapter 13 trustee cannot predicate a lack of good faith on the fact that a debtor retains a fully encumbered asset, especially when the debtor has, as here, added the equivalent of the collateral value to the unsecured distribution.  Similarly, the trustee's objection that the Greens had not committed all their available disposable income to the plan was rejected by the court.  Per Hamilton v Lanning1 post-petition changes in income must be taken into account in computing the disposable monthly income in the means test.   Additionally, disposable income  is what remains after allowed expenses and payments on secured debt.  11 U.S.C. §§1325(b)(2-3) and 707(b)(2).  The amount 'reasonably necessary to be expended' under §1325(b)(2) includes deduction for the payments on secured debts that will be made by debtors during the term of the plan.  The trustee's argument that the allowed payments on secured debts under §1325(b)(2)(A)(i) only includes assets necessary for the maintenance of support of the debtor or dependent circumvents the Code's basic waterfall structure for payment of secured claims before unsecured claims under §§726 and 1326; and rewrites the test computations under §707(b) while making meaningless §1325(b)(3)'s reference to §707(b)(2) as the determination of what is 'reasonably necessary' for above-median income debtors.  Prior to BAPCPA bankruptcy courts had discretion to determine whether debtors' expenses for secured claims were reasonable and necessary for above-median income debtors.  However §1325(b)(3) provides clear Congressional intent to depart from such practice, which finding is supported by a majority of courts that have held that above-median-income debtors may deduct ongoing monthly payments on secured debts in accordance with the formula set forth in §707(b)(2)(A)(iii) for property debtors intend to retain, regardless of whether such payments are subjectively reasonably necessary to be expended for the maintenance of support of the debtors or the debtors' dependents.2   Courts have gone so far as to find that with respect to secured debt on luxury items or excessive vehicles, it is the plan proponent who determines its necessity.3  Rather than being part of the disposable income analysis, the debtor's decisions regarding retention of collateral are part of the 'good faith' factors described above.  Here the Greens have met this good faith requirement by surrendering collateral and replacing vehicles with less expensive versions.   1 560 U.S. 505, 520-21, 130 S. Ct. 2464, 2475-76, 177 L. Ed. 2d 23 (2010).↩2 Baud v. Carroll, 634 F.3d 327, 347-48 (6th Cir. 2011).↩3 Section 707(b)(2)(A)(iii) allows deduction as an expense of payments on secured debt, unless the debtor determines that payment on the outstanding amount of the secured claim is unnecessary by either surrendering the property or avoiding the lien securing the claim. The bankruptcy court did not err in allowing debtors in calculating their disposable income to deduct their secured debt payments on the six vehicles that they intend to retain.In re Welsh, 465 B.R. 843, 851 (B.A.P. 9th Cir. 2012), aff'd, 711 F.3d 1120 (9th Cir. 2013).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

   The 11th Circuit Court of Appeals reaffirmed the liberal interpretation of the Florida homestead exemption in Advance Credit, Inc. v. Gamboa (In re Gamboa), 2019 U.S. App. LEXIS 24625, Case No. 18-14367 (11th Cir., 19 August 2019).  The chapter 13 debtor, Gamboa, had been residing in a 40' trailer on the 14 acre property claimed as his homestead since 2013.  The trailer has a living room, two bedrooms, a bathroom, and a kitchen; has electric power, satellite televesion service, water from a well, and is attached to a septic tank.  Gamboa has received mail at the location since 2014.  The property is classified as agricultural land for purposes of Florida's ad valorem tax.   Creditors had obtained judgments against Gamboa in Illinois totaling over $200,000 and perfected the judgments in 2015.  Judge Mark, the bankruptcy judge below had overruled the creditors objections, finding that residing in a property in violation of city or county ordinances or zoning laws does not defeat an otherwise valid homestead claim.1   It also rejected the argument that Gamboa's failure to claim homestead property tax exemption on the property zoned as agricultural defeated the exemptions, as the creditors had failed to show Gamboa had another residence.  Finally, the bankruptcy court after trial held that at the time the judgment was perfected Gamboa indeed intended to make the property his permanent residence and thus qualified for the homestead exemption.  The district court affirmed, accepting as facts 1) at the time the case was filed Gamboa was living in the trailer on the 14 acre parcel outside of a municipality; 2) the parcel was classified as agricultural for property tax purposes, and Gamboa did not claim the property tax homestead exemption; 3) Gamboa was living in the trailer in violation of a Miami-Dade county ordinance; and 4) at all times, Gamboa intended to reside permanently in the trailer.   The court otherwise adopted the bankruptcy court's findings.   The 11th Circuit first examined the applicability of Drucker v Rosenstein, 19 Fla. 191 (Fla. 1882) relied upon by the creditors.  In this case, the debtor had purchased a vacant unoccupied lot, filed a statement in the county alleging it was his homestead, drew up plans and hired a contractor to build a house on the lot, and had lumbered delivered for such purpose.  However, the debtor in Drucker never occupied the lot.  The 11th Circuit found that Drucker stood for the proposition that a person claiming a homestead exemption from forced sale must show he actually occupied the property as a residence.  The Drucker court noted that the residence need not be a house, but could include a tent set upon poles or a cabin erected while building the house.  Given that it is undisputed that Gamboa resided on the property since November 2013, such is sufficient to satisfy Drucker's actual residency requirements.  Nothing in the decisions cited by the creditors requires the trailer to be permitted or permanently placed on the premises in accordance with applicable law and building code requirements for it to qualify as actual residency.  Otherwise, the 11th Circuit likewise adopted the reasoning of the bankruptcy court.  The court did stress in a footnote that the case did not involve a motor home or recreational vehicle that could be used for transportation and is not affixed to real property (though one might wonder how much more fixed a tent is than a recreational vehicle). 1 Judge Mark's full decision in the bankruptcy case can be found at In re Gamboa, 578 B.R. 661, 27 Fla. L. Weekly Fed. B. 133, Case No 16-22495-RAM (Bankr. S.D. Fla. 2017).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

New Law Helps Disabled Veterans in Chapter 13 Plans Disabled veterans facing bankruptcy, got a big boost yesterday when the HAVEN Act became law. From now on, disabled veterans can’t be forced to use their veterans disability payment to fund debt repayment plans.  Here in Northern Virginia, there are many disabled veterans, who are also […] The post New Law Helps Disabled Veterans in Chapter 13 Plans by Robert Weed appeared first on Robert Weed - AE.

How to Halt a Wage Garnishment When Filing for Bankruptcy Getting over your head in debt doesn’t just create financial pressures for you. The more delinquent you become with your accounts, the more calls and emails you will get from your creditors, both at home and at work. You will get the calls every day of the week and during the day or at night. It will get to the point that you don’t want to answer the phone or open up your email. As time goes on, your creditors will take more measures to try to get you to pay your debt. Eventually, they may even file for a wage garnishment, which would allow them to automatically deduct your paycheck for a specific amount. Your creditors can’t just decide to do this on their own. They have to petition the court to approve the process, and they are limited in how much they can garnish. The court will determine how much can be garnished based on how much you make, how much you owe, and how long it will take to pay back the debt. You can put an immediate stop to wage garnishment by filing for bankruptcy in Mesa. Whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, an automatic stay is issued, which puts a stop to all collection activities, including wage garnishment and harassing phone calls. What Happens after the Automatic Stay Filing for bankruptcy around Mesa and getting the automatic stay issued is just the first step in the bankruptcy process. After that, you will need to provide information about your income and your debts in your filing. If you are filing for Mesa Chapter 7 bankruptcy, you will be asking to have all your unsecured debt, such as credit cards, discharged. You will provide all the information, and you will attend a meting of the bankruptcy trustee to review the information and to get a judgement. Your creditors will have a chance to attend that meeting, but few do. If the Chapter 7 bankruptcy is issued, that debt will be discharged. If the creditor that was garnishing your wages was an unsecured creditor and that debt was discharged, the wage garnishment will be ended permanently. If you are filing for Chapter 13 bankruptcy, you will work with your attorney to develop a debt repayment plan that will last between three and five years. Your Mesa Bankruptcy attorney will negotiate your debt so that you have an affordable monthly payment and perhaps a lower interest rate. You may get some of your debt discharged if you are not able to repay everything within that three- to five-year period. Wage garnishment will stop since you will have a new repayment plan. Qualifying for Bankruptcy You can’t just decide that you want to declare bankruptcy and then file the paperwork. You must meet the eligibility criteria to file. For Chapter 7 bankruptcy, you must meet a “means test,” which looks at how your income compares to the poverty level where you live. The means test also takes your monthly bills into consideration, as well as your assets. Chapter 13 bankruptcy also has eligibility criteria, but they are not as strict. It is best to talk through the criteria with a qualified bankruptcy attorney who can help you understand the best strategy. Wage garnishment can be embarrassing, and it can end up causing more financial hardship for you since you now have to operate with even less free income each month. But filing for bankruptcy can put an immediate end to the wage garnishment and can help you get lasting debt relief. Talk to one of the experienced Phoenix bankruptcy attorneys at My AZ Lawyers to learn about your options. An attorney from our team will review your finances and debts to get a better picture of your situation and will recommend a course of action. You will learn whether Chapter 7 or Chapter 13 bankruptcy would be better for you, and your attorney will help you understand how to get maximum debt relief. Call our office in Mesa right now to talk with an experienced bankruptcy lawyer about your options for debt relief. We serve clients through the Phoenix, Glendale, Mesa, and Tucson areas. Published By: My AZ Lawyers Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 399-4222 The post How to Halt a Wage Garnishment When Filing for Bankruptcy appeared first on My AZ Lawyers.

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I have represented individuals in bankruptcies for many years, and many of these debtors are also burdened by Student Loan Debt.  In Maryland, filing bankruptcy does not usually result in discharge or reduction of Student Loan Debt. The usual mantra from bankruptcy attorneys in Maryland is, “sorry, I can’t help. Bankruptcy won’t discharge your Student Loan Debt.” But, I was growing tired of that line and the fact that many people were left without help. So, I attended seminars to try to give people solutions. Every case is different and negotiating the debt is often a fact-driven process. Negotiations can drag out for months at a time and I write long emails that explain the exigent and compelling circumstances of my client. There are many pages of documents to be reviewed and issues to litigate. Yet, I have seen real opportunities to help debtors saddled with these loans and with the low credit scores that result from the defaults on the debt. Recently, I represented a woman who was being sued for approximately $60,000.00 based on the principle of the loan, accrued interest, late fees, etc. After almost a year, we convinced the lender to accept $12,500.  My client was able to pay this amount in a lump sum and put the whole matter behind her! Obviously, every case is different and this reduction resulted from the special circumstances that I highlighted to the Loan company attorney.  My client will have to pay taxes on the part of the loan that was forgiven.  But, we were able to bring some sanity back to this college graduate who is in a Masters’ program and allow her to move forward with her life. It always feels wonderful to make a difference in someone’s life by helping solve a legal problem.  What the compelling circumstances that will allow me to help you with your Student Loan Debt? For more information about how I can help, get in touch with me today.The post Not All Student Loan Lawsuit Defenses are Created Equal first appeared on Scholnick Law.

The bankruptcy process in the United States is regulated by federal bankruptcy code. This means the process is the same, legally speaking, in all 50 states, Washington D.C., Puerto Rico and all other commonwealths and territories.  Local states can make additional protections and unique property exemptions. Various states also may have different statutes of limitation for old debt and rules for repossession. but a bankruptcy filing and its automatic protections use the same system and documents from Maine to Florida. State law will also determine how long you must be a resident before you can file. The Most Common Bankruptcies in America From 31 March 2018 to 31 March 2019, 772,646 bankruptcies were filed under all applicable chapters of the bankruptcy code. Chapter 7 was the most common relief sought. Last year 62% of bankruptcies, being 477,106 cases, were filed as Chapter 7s. With 288,038 cases filed, Chapter 13 was a distant second. That is 37% of all bankruptcies filed from 2018-2019. Just 6,891 Chapter 11 cases were filed, 0.8% of all national cases. Chapters 9 and 12 were not reported individually, but made up 610 “other chapter” filings. These statistics can be broken down further into business and personal bankruptcies. It is interesting to note that while other options are available, individuals and corporate filers chose to pursue Chapter 7 bankruptcy at the same rate. National Statistics for Business Bankruptcies The majority of bankruptcy filings were individual or joint personal bankruptcies. Businesses accounted for  22,157 cased of bankruptcy last year, or just 2% of all cases. When businesses did file for bankruptcy, they choose to pursue Chapter 7 asset liquidation at the exact same rate (62%) as personal filers. Just over a quarter (26%) of businesses chose to pursue a Chapter 11 restructuring when filing for bankruptcy. National Statistics for Personal Bankruptcies In the past year, 750,489 cases of personal bankruptcy were filed. This number includes individuals and joint filings. Of these cases, 463,000 were filed as Chapter 7 bankruptcies. 286,230 were filed as a Chapter 13 case, where the debtor enters a repayment plan.. 1,039 were filed as Chapter 11 bankruptcies, which apply to large land holdings and unsecured debts in excess of the Chapter 13 caps, currently $419,275 for unsecured debts and $1,257,850 in secured debt. Bankruptcy Enforcement Statistics The Department of Justice’s U.S. Trustee Program is tasked with the administration of laws relating to abuse of the bankruptcy system. They protect both debtors and creditors from abuse and fraud in the bankruptcy system. Their most recent public report was for Fiscal Year 2016. Some of the numbers are surprising! Despite the appeal of easily discharging debts, there was shockingly little abuse of the bankruptcy system Out of 764,214 cases filed in FY 2016: Just 3,155 bankruptcies (0.41%) were dismissed for fraud or abuse in FY2016. Only 1,176 (0.15%)  bankruptcy discharges were denied for fraud or abuse. 136 cases were converted to another chapter of bankruptcy. Presumed Abuse in Bankruptcy Bankruptcy guidelines create a presumption of abuse when disposable monthly income is above a certain level. For FY2016, the threshold was $214.17 for an individual. In every case where a debtor exceeds the threshold, the U.S. Trustee Program had to decide whether to move to dismiss the case. Of all cases flagged as abusive in 2016, the Department of Justice allowed 63% to proceed uncontested. It was noted that in most cases, attorneys were clearly working within known exemptions. Their official report shows several sample cases where they did move to dismiss–like a teacher claiming thousands of dollars in housecleaning expenses per month or a millionaire gifting $60,000 worth of automobiles to close family in the month before filing. The Common Types of Bankruptcy Chapter 7 Bankruptcy: Asset Liquidation Chapter 7 is by far the most common relief sought through bankruptcy. There are a series of tests, based on income and the level of debt, meant to keep individuals from abusing the system, but these are not a problem for the majority of debtors who file bankruptcy. A bankruptcy attorney can often protect most, if not all, of a debtor’s personal property through bankruptcy exemptions. Any non-exempt property will pass into the possession of a trustee. This trustee will liquidate assets as necessary to satisfy liens, then distribute the remaining assets to creditors, equitably and according to federal guidelines. Some creditors will be paid in full, some in part, often, some are paid nothing at all. Once the bankruptcy estate has been exhausted of assets, a discharge will be granted to the debtor. This discharge will absolve the debtor of responsibility for any outstanding debts, and creditors will not be allowed to begin or resume collection actions on the discharged debts. Chapter 13: Reorganization and Repayment The second most commonly filed, as shown above. Chapter 13 has long been held out as the preferred means of saving a home when suffering from crushing debt and potential foreclosure. While a person qualifies for chapter 7 based on their income and obligations, the so-called “means test”, there are hard limits for how much debt can be restructured through chapter 13. This is intended to prevent high-income individuals and corporations from abusing the bankruptcy system. The Average Chapter 13 Filer The Minnesota Law Review published a comprehensive study on the demographics of Ch 13 filers and how they influenced the success for failure of a repayment plan. Here are some key takeaways: 74% of Chapter 13 filers were homeowners. Most Chapter 13 filers had children. 80% of filers have a high school diploma or some college, but no degree. 65% of filers would be in affordable housing if there debts were discharged. The average debtor had $35,000 in unsecured debt (credit cards, medical bills, etc.) The average debtor owed $119,000 on secured debts (homes, automobiles, motorcycles etc. ) These numbers suggest a caricature of the average Chapter 13 filer, largely working and middle class families trying to save their home. Most of the time their home is at risk because of other debts, not the cost of the home itself. If these debts are payed down and discharged, nearly 2/3rds of Chapter 13 filers would be in affordable housing. There are, of course, the outliers–the other 25% of Chapter 13 seekers, each with their own reasons for seeking a repayment plan instead of a Chapter 7 discharge. Chapter 11: Debt Modification and Reorganization Chapter 11 bankruptcy is designed to allow creditors and debtors to work together towards the creation of a plan to pay off debts in the federally mandated priority. Businesses receive their discharge soon after creditors have voted to approve the proposed restructuring, while individuals must complete their repayment plan in full to receive their discharge. These bankruptcies are typically thought of as a solution for businesses, but almost a third of Chapter 11 filings are made by individuals whose debts and circumstances do not fit within the limits and tools of Chapter 7 or Chapter 13 relief. Why Individuals File Chapter 11 Why do thousands of individuals, nearly half (46%) of whom technically qualify to file a Chapter 13 bankruptcy, choose to file Chapter 11? While there is limited research available on individuals filing Chapter 11, the available numbers allow for some valuable insights: On average, it takes 208 days for individual Chapter 11 filers to pitch their first plan to creditors. Chapter 11 plans take an average of 450 days, and as long as 930 days, to confirm with creditors. Personal Chapter 11 plans are approved at nearly the same rate (33% vs. 35%) as business plans. On average, 33% of personal Chapter 11 cases succeed to discharge. The rate is higher for married couples and those retaining a lawyer, lower for single filers, and in the single digits for those who chose to self-represent. More than two-thirds (68%) of those seeking personal Chapter 11 relief had never filed bankruptcy before. The average monthly income of a Chapter 11 filer is $8,600 to $11,700 dollars. 36% of Chapter 11 filers were in the top 20% of households by income. 15% of Chapter 11 filers were in the top 5% of households by income. In the “average” consumer bankruptcy, where the majority of debt comes from credit cards and a home or auto loan, establishing a repayment plan is straightforward. But when an individual is tied up in a complicated financial arrangement, especially with real estate holdings, it may not even be possible to get the required paperwork done in 14 days, let alone to write an entire repayment plan. Chapter 11 plans are also far more flexible in their restructuring of debts, often allowing a mortgage to be restructured on a 30 year plan. Many individuals seeking Chapter 11 relief are also very high income individuals, and their comparatively high debts might disqualify them from seeking other forms of bankruptcy. Other Types of Bankruptcy – Chapter 9, 12, and 15. Chapter 9 Chapter 9 bankruptcies are extremely rare. They are a special restructuring meant for entire towns, municipalities, school districts, and other public entities which are insolvent. From FY2008 to FY2015, during some of the worst years of the financial crisis, the Northeast United States only saw 8 cases filed; 3 in Pennsylvania, 3 in New York, and 2 in Rhode Island. In many states, no municipality has ever tried to file Chapter 9 on its debts. Infamous cases of public mismanagement ending in a Chapter 9 filings include Detroit, the largest city to ever go bankrupt, and Orange County, California. Harrisburg, Pennsylvania’s state capital, tried to file Chapter 9 but had its case dismissed in late 2011. Chapter 12 Chapter 12 bankruptcies number in the hundreds every year, with the American Farm Bureau Federation tracking 468 cases in FY2018, down 8% from FY2017. Chapter 12 is meant to allow small family farms and fisheries to keep their land and farm equipment while restructuring the farm’s debt and has some special protections, but is otherwise similar to a normal business restructuring. Chapter 15 Chapter 15 is the least used and least well-known chapter of the United States’ bankruptcy protections. Chapter 15 allows foreign companies who operate in the US to enjoy American bankruptcy protections while restructuring in their native courts. There are typically under a hundred Chapter 15 filings in any given fiscal year. These cases usually extend an automatic stay or some other temporary relief so that the business can keep operating on US soil until its restructuring has been settled with creditors. In 2017, Italian airline Alitalia used a Chapter 15 filing to keep its leased terminal at JFK Airport while the Italian government proceeded with a $600 million dollar bailout of its flag carrier.   The post Major Bankruptcy Types Explained – with Statistics appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

From: Acumen | OZY By: Patti Waldmeirhttps://www.ozy.com/acumen/who-goes-bankrupt-in-america-increasingly-the-elderly/96096

On July 30th, United States Bankruptcy Judge Carol Doyle issued an opinion with the specific goal of providing “guidance to parties and to state courts” about the intersection of divorce and bankruptcy. Steven Welsch was in a chapter 13; his plan is confirmed, and the case is proceeding without incident. Steven’s ex-wife, Trenda, filed a request to modify the automatic stay so that she could ask the state court to modify a domestic support order from their divorce case.When a debtor files for bankruptcy, the debtor and his property are immediately protected by the “automatic stay,” which stops many efforts at collecting debt owed the debtor. The automatic stay, in essence, freezes everything into place.At issue in the Welsches’ case was, however, one of the major exceptions to the automatic stay. The automatic stay does not stay a civil action or proceeding (i) for the establishment of paternity, (ii) for the establishment or modification of a domestic support obligation, (iii) concerning child custody or visitation, (iv) for dissolution of marriage (with one exception – the division of property that’s already in the bankruptcy estate), or (v) regarding domestic violence. These proceedings can continue as if no bankruptcy was in effect.Ms. Welsch was seeking a modification of the debtor’s obligation to pay child support. That would be a modification of domestic support obligation, and so is specifically excepted from the stay. State courts, Judge Doyle held, may enter orders establishing a party’s right to alimony, maintenance, or support, and may modify such an order without violating the stay. As such, Ms. Welsch’s request was denied – but it was denied as unnecessary, because she was seeking permission from the bankruptcy court to do something that didn’t need permission.The post Bankruptcy and Divorce appeared first on Lakelaw.