Archive for April, 2012

Be Careful About Listening To Your Friends’ Explanations of Bankruptcy

Sunday, April 15th, 2012

article in Bankruptcy Network
by Adrian Lapas

I know that this has been said on this blog numerous times about listening to what others, particularly non-attorneys, say about bankruptcy. Just because your friend got to keep his car free and clear of the creditor’s lien does not mean that youwill. Often, there is a substantial amount of misunderstanding and just plain wrong information. The same can be said for information about bankruptcy over the internet (with the exception of Bankruptcy Law Network of course).

Just recently, I had a client call my office wondering if he might be convert his case from a chapter 13 to a chapter 7. His friend had converted his case and was able to get all his unsecured debt discharged. The client wondered why he couldn’t do the same thing? What the friend and the client have failed to realize is that the friend’s situation is dramatically different from the client’s situation. In the friend’s situation, the only debts remaining were unsecured debts. In the client’s case, a second mortgage had been “stripped off” and a conversion to a chapter 7 would torpedo the ” strip-off” of his second mortgage (meaning the mortgage remains in place).

As any lawyer will tell you, the outcome of any case depends on the particular facts in that particular case. It is very rare that two cases are exactly alike. It takes a knowledgeable and experienced attorney to help guide you through the maze of your particular case. You don’t want to be led into a dead-end by following advice that is wrong for your particular situation.

The same can be said for the huge amount amount of information available over the internet. While having a lot of information available is generally a good thing, you also need a certain knowledge base and experience to be able to sort good information from the bad or even just to know which information is applicable to your situation. Many times, clients will bring up a question involving bankruptcy based on what they read on the internet. Oftentimes, I will have to debunk what a client has read because it just does not apply to his situation.

Your best investment in navigating the bankruptcy maze is a skilled, experienced bankruptcy attorney.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.

Chapter 13 Bankruptcy Has No Minimum Payment For Credit Cards

Monday, April 2nd, 2012

article from Bankruptcy Law Network

by L. Jed Berliner, Springfield, MA Bankruptcy Attorney

Chapter 13 bankruptcy filings often requires that a filer pay something every month to a trustee. The trustee distributes those payments according to a court-approved plan. Nothing in the Bankruptcy Code requires a minimum payment, a minimum dividend, to be paid to any general unsecured creditor such as like a credit card. They often get zero.

The required payment to a trustee is based on a filer’s Projected Disposable Monthly Income. For a below-median filer, this is based on expected income and expenses over the next few months based on information from the recent past. Above-median filers are “blessed” with having to pay the results of the Means Test, Form B22C. Both filers may adjust for virtually certain expected changes. Above-median filers could end up paying nothing for five years. Below-median filers have to pay something. (I smell a rat, but that’s another blog.)

The Bankruptcy Code has requirements for the distribution of the payments: Administrative expenses like the trustee and perhaps your attorney, and family support obligations, and recent taxes must be paid in full. Anything left over goes to the general creditors. There is no requirement that anything be left over.

Underlying the entire filing is an obligation to act in good faith, and a trustee or creditor can explore the good faith of presenting zero payments to general unsecured creditors. That exploration looks at your accuracy, honesty, motivation for a Chapter 13 filing, among other factors. There is no requirement to pay the credit cards anything so long as the proposed payments are your best efforts under all your personal circumstances.

Many judges and trustees used to require something. In Massachusetts, the threat used to be a 10% dividend to avoid an extensive investigation and trial into the good faith. I’m told in parts of California there still is something of a requirement. But that requirement is not founded in the Code. It’s a morality play, a moral judgment being made by professionals who should know better and can know better if they do their research.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.