Category Archives: Bankruptcy

This week, our blog will be busting the top three bankruptcy myths for 2012. This blog has already discussed how bankruptcy will not destroy a person’s credit (it will likely improve a credit score,) how bankruptcy is not a moral failing  (honest individuals are forced to file every day,) and how debtors greatly benefit from having a qualified bankruptcy attorney (do not be fooled into using a “petition preparer.”) So this week, our blog will move on from those old bankruptcy myths and discuss some that are more relevant for 2012. The first myth, that running up credit cards is a sure way to gain access to Chapter 7, is based on people’s misunderstanding of the bankruptcy means test. To qualify to file for bankruptcy in a Chapter 7 proceeding, a person’s income must be below the median income for the state of residence. If the individual’s income is higher…
Read More »

Posted in Bankruptcy | Tagged , , , | Comments Off

Suspending a driver’s license is a tool many states use in order to coerce debtors to pay outstanding judgments, unpaid parking and traffic tickets, or child support arrearage. The problem with suspending a license, however, is that will only make it more difficult for individuals to retain employment in order to pay creditors. The good news for those who have steady employment is that filing for bankruptcy can allow for a reinstatement of a driver’s license, and a Chapter 13 repayment plan will allow the debtor to make payments on the outstanding debt over time. Without filing for bankruptcy, an individual’s license will only be reinstated if the judgment or debt is paid in full. It may also be reinstated upon a discharge of debt in bankruptcy, which may take months to complete in Chapter 7. Under Chapter 13, however, a person can get his or her license back once…
Read More »

Posted in Bankruptcy | Tagged , , , | Comments Off

One of the main benefits of filing for bankruptcy under Chapter 13 is most debtors are able to keep their homes and vehicles. Chapter 13 requires a debtor to file a payment plan and then follow the budgeted plan for three to five years. While that is a long time, the benefits far outweigh any inconvenience. The main benefit of Chapter 13 bankruptcy is the debtor can stop foreclosure, keep a home and pay the arrears on a primary mortgage throughout the bankruptcy while maintaining the regular payments. Additionally, the court may strip down other liens on the property, such as junior mortgages, when the house is worth less than the primary mortgage. Why does the court allow lien stripping for negative equity? Imagine a situation where a home is sold for $100,000, having a primary mortgage of $105,000 and a second junior mortgage of $5,000. The primary mortgage lender…
Read More »

Posted in Bankruptcy | Tagged , , , | Comments Off