Chapter 7 Bankruptcy Exemptions

Author: David Romito

Federal and state bankruptcy laws reflect the public policy value that no one should be deprived of all of their property.  The federal bankruptcy laws, as well as the state laws where you reside, therefore, both allow for certain “exemptions.”  Federal exemptions are the same for all bankruptcy filers nationwide, while state exemption limits vary from state to state. The debtor may choose whether to use the federal or state exemptions; in general it’s best to use the federal exemptions because they are more ‘generous’ (that is to say, higher).

How your assets will be treated with respect to these exemptions depends on how much ‘equity’ you have in the property. Equity for all property that is not collateralized (that is, there are no liens against it) is simply the fair market value of the property.  Equity for property that does have a lien against it (the most common examples being a house or a vehicle) is calculated simply by subtracting from the fair market value of the property any amounts you owe on loans secured by that property.  For example, let’s say your house has a fair market value of $200,000, and that you have a first mortgage outstanding balance of $150,000, and a second mortgage (or home equity loan) balance owed of $30,000.  Your equity would be calculated as:

            Fair market value:                                                         $200,000

            First mortgage balance:                                                $150,000

            Second mortgage balance:                                            $30,000

            Total debt secured by home:                                         $180,000

            Equity in home:                                                            $20,000        

Bankruptcy exemptions set a certain dollar limit on the amount of equity that you can have in a specific type of asset. If you have more equity than what the prescribed exemption allows, the bankruptcy trustee may seek permission from the court to ‘administer’ the property, that is, to sell it in order to distribute the proceeds among your creditors. 

And that raises the very important question, what are the exemption limits for the various types of property?  To help answer that question, below are listed the federal exemption dollar limits for the most common asset types.  Bear in mind, these figures are for a single debtor.  To calculate the figures for a married couple (that is, for joint debtors), simply double the dollar amounts indicated:

Real property                                                         $ 20,200

Vehicle                                                                  $   3,225

Household goods (clothes, appliances, etc.)             $ 10,775

Jewelry                                                                 $   1,350

Retirement accounts (401K, 403B etc.)                     unlimited

“Wildcard”                                                              $   1,075*

* There is actually a second, and much larger, “wildcard” exemption available, but it’s a function of what amounts the debtor has used in other categories and is therefore a little more complicated to calculate – you’d be well advised to talk to an attorney about this one.

In sum, then, the above should give you at least a rough idea of whether you are within the limits – as far as assets are concerned – for qualifying for a Chapter 7 bankruptcy.  If you’re not, don’t despair – this might just mean that you’ll need to consider filing under Chapter 13 instead.

Article Source: http://www.articlesbase.com/bankruptcy-articles/chapter-7-bankruptcy-exemptions-730505.html

About the Author

David Romito is a Bankruptcy Attorney handling matters in Pittsburgh and the Western District of Pennsylvania. For more answers to your bankruptcy questions, please visit his website at Pittsburgh Bankruptcy Attorney .

What Chapter 11 Bankruptcy Law Entails

Author: Peter Gitundu

Chapter 11 bankruptcy law is also known as the reorganization code applicable to partnerships and corporations. It allows for businesses to make a plan on how to pay off their debts without having to sell their property. This comes as an opportunity for businesses to keep on operating even when they are in a financial crisis. Partnerships and corporations are eligible to file under this chapter in court. It may be voluntary, meaning that the debtor will file the petition, or involuntary where creditors who meet some standard file the petition.

To have the court accept the bankruptcy petition, he should also attach financial documents of the previous years operations. They must have gone through credit counseling on how to manage the debt. A fee is paid to the court clerk to cover filing charges and to pay the trustee. These can be paid in installments for not more than one eighty days after filling the petition. Once a voluntary or involuntary petition has been filed, he assumes the position of a “debtor in possession” meaning that he is still in control of the property.

For the bankruptcy petition to be accepted in court, he should also file a reorganization plan and a disclosure statement which includes information on the assets, liabilities and the business affairs. This enables the creditor to have an informed perspective on the reorganization plan filed.

Chapter 11 identifies the debtor under a corporation or a partnership as a separate entity from the business and as such personal property is not at risk. However, for a sole proprietor, he is part and parcel of the business and therefore personal property may be at risk.

Article Source: http://www.articlesbase.com/personal-finance-articles/what-chapter-11-bankruptcy-law-entails-892126.html

About the Author

Peter Gitundu Researches and Reports on Bankruptcy. For More Information On Chapter 11 Bankruptcy, Read More Of His Articles Here CHAPTER 11 BANKRUPTCYYou Can Also Add Your Views About Chapter 11 Bankruptcy On His Blog Here CHAPTER 11 BANKRUPTCY

The Automatic Bankruptcy Stay Explained

Author: Dave D. Clark

When falling behind on mortgage payments, foreclosure is not inevitable. Since the real estate market collapsed, more than 5% of all homes loans are in default. Today, workout situations are common. Lenders try to avoid repossessing homes, which in turn, bloats their balance sheet with non-performing assets. You may have time to workout an arrangement with your lender. Perhaps a loan extension is available. You may consider a different lender to refinance, focusing on high risk specialists. You may consider a deed in lieu of foreclosure if you cannot make mortgage payments.

In every situation, borrowers have unlimited options that include working cooperatively with creditors, settling debts, litigating disputes, and confronting creditors in the U.S. Bankruptcy Court system.

Bankruptcy automatically stops all foreclosure proceedings. The mechanism is known as the automatic stay. Each time a case is filed, under any chapter, the automatic stay prevents creditors from collecting debts. The stay provides broader protection by prohibiting repossession of assets, home foreclosure, and the continuation of lawsuits seeking judgments on debts.

The stay is not permanent. Borrowers who file bankruptcy have two options to bring payments current. In Chapter 7, actual payment is required to prevent the court from lifting the automatic stay. In Chapter 13, the court indulges legal fiction. The inclusion of payments in the plan creates an assumption that payments are current. To maintain a Chapter 13 case in good standing, monthly payments to a trustee are required.

Future mortgage payments must be made to avoid foreclosure in all bankruptcy cases. If you home has negative equity, homeowners in bankruptcy should carefully consider the long-term impact of keeping their home. You may surrender your home and treat the deficiency balance as an unsecured debt. All remaining unsecured debts are discharged when a case is closed. Chapter 7 typically lasts about four months unless creditors file objections. Chapter 13 cases last from three to five years before receiving a discharge.

Timing a bankruptcy case properly is critical for your success. You may file too quickly or too late to receive the maximum benefit available. If you file too early, you may not qualify for Chapter 7 because of the means test. If you file too late, you may unnecessarily waste exempt assets and potentially incur imputed income. Imputed income creates tax liability when lenders charge off debts. The best bankruptcy strategies begin well in advance of the filing date. In this way, you will gain the maximum allowed benefit and prevent the accrual of non-dischargeable tax liability. If you consider a few advanced strategies, you may adjust debts in a plan and receive a quick discharge by using your options at the proper time and in the proper sequence.

Article Source: http://www.articlesbase.com/bankruptcy-articles/the-automatic-bankruptcy-stay-explained-1514831.html

About the Author

Dave Clark enjoys bankruptcy strategy questions. Can bankruptcy stop foreclosure? Find out more why Chapter 7 bankruptcy stops foreclosure temporarily through his website.

Bankruptcy Statistics

Author: Mercy Maranga

During these harsh economic times more and more people are filing for bankruptcy. Once frowned upon, it is now a common option for individuals with unmanageable debt. This is despite the fact that the laws have made it more difficult to file for bankruptcy. Plus let’s not forget the implications and the cost of filing for bankruptcy. Bankruptcy statistics clearly show there is an increase in large proportions of individuals filing for bankruptcy.

These statistics are normally complied by the administrative office of the U.S. courts. They are done quarterly with each quarter ending December, March, June and September. According to bankruptcy statistics released earlier this year, chapter 7 filings have increased 43%. Also on the increase are non business bankruptcies which have risen 31%.  On the other hand business bankruptcies have risen 54%. This increase is blamed on the fact that we are a society that is hooked on material things even when we have the inability to cater for them. If by some misfortune we are caught by an emergency that needs financial resources, we get into debt while trying to come up with the money.

This digs us into a hole that is very difficult to get out of. Most families that usually file for bankruptcy do so for a number of reasons. The leading cause are jobbing loss, medical problems and credit card debt. According to bankruptcy statistics, credit card debt can be avoided if people just have discipline and learn how to use cash when making purchases. It is a very easy trap to get into because you do not actually see how much you are spending at any given time and you end up spending more than you earn.

According to the demographics the average age of people filing for bankruptcy is 38 years. According to The Fragile Middle Class: Americans in Debt by Elizabeth Warren, 44% of filers are couples, 30 % are women filing alone while 26% are men filing on their own. In addition, two out of three people who have filed have suffered a job loss. The states with the highest bankruptcy rates are Alabama, Georgia, Tennessee, and Utah.

Article Source: http://www.articlesbase.com/finance-articles/bankruptcy-statistics-1170442.html

About the Author

Mercy Maranga writes content on Finance and Debt Management. Visit her site here for more information on Finance and how to effectively Manage your debts. Bankruptcy

Pitfalls Of Filing Bankruptcy

Author: Legal Helpers

Bankruptcy is often the choice that many people lean towards when they are severely and overwhelmingly in debt. Bankruptcy can be seen as an easy way out of debt issues though it is truly a last resort method to debt freedom. There are pitfalls and downsides to bankruptcy.

Bankruptcy can relieve you from financial debt and obligation, but does come with a price. You do have to pay a bankruptcy attorney, usually a minimum of $200.00. On top of this fee you will have permanent results to your credit report. For the next 10 years, both chapter 7 and chapter 13 bankruptcies appear on your credit report. Eighty percent of all credit reports carry errors that can harm your chance of a home loan, car loan or personal loan. Some employers require a credit report for position consideration. Poor credit reports showing unsatisfactory payment history can keep you from receiving a job. Newspapers will often carry a section releasing bankruptcy information, since bankruptcy is public knowledge. This could lead to embarrassment from friends, family and co-workers.

Though bankruptcy is not a process in which a person should be ashamed society does often frown upon it. With pitfalls being attached to bankruptcy a better choice perhaps may be debt consolidation. You can have all of your credit cars and unsecured debts consolidated into one easy monthly payment. You can pay down your debts and regain control over your finances. The choice is up to each individual and decisions vary upon the situation. It is best to speak to both a debt counselor and a bankruptcy attorney to see whether or not the pitfalls of bankruptcy are worth the while.

You do have the option of filing for bankruptcy yourself if it is unavoidable. This can save the time and money you would normally spend on a lawyer who would proceed with your claim. It has been said that a person who represents himself at court has a fool for a client. Yet with the many do-it-yourself legal kits that are available for purchase from office supply stores and via the Internet, those with a straightforward legal case may be able to save the money they would otherwise have to pay a lawyer and simply apply to meeting their personal needs.

Keep in mind that a do-it-yourself bankruptcy is easy to do if you do not have a plethora of fiscal assets and instead your financial portfolio consists mostly of debts. Yet at the same time there are some drawbacks to going it alone and prior to deciding on a course of action, decide if the do-it-yourself option is really for you!

Filling out the forms is probably the easiest part. Taking them to the courthouse, having them date stamped, and paying the filing fee is also a task that can be easily done by you. Yet where it gets tricky is the burden of informing creditors of your filing – you need to be able to document that you followed all of the requirements set forth by the state with respect to your filing – and also preparing to potentially defend your assertion that you do not have the funds needed to pay your obligations against a creditor.

If something changes and you want to include a previously excluded debt, there are also provisions that must be met and you need to ensure that you are able to meet each of these head on to avoid any penalties for filing late. In the same vein, any communication from the court must be immediately read and responded to, and sometimes the legalese is hard to understand. The clerks of the court cannot give legal advice and you may find yourself putting in quite a bit of time in front of the computer doing legal research.

If none of these deter you, then a do-it-yourself bankruptcy kit might be the way to go for you!

Article Source: http://www.articlesbase.com/finance-articles/pitfalls-of-filing-bankruptcy-319924.html

About the Author
Bankruptcy Attorneys