April 3

BANKRUPTCY AND A SHORT SALE

When confronting a home that is “under-water”, it is important to understand how bankruptcy can impact the situation.  Sometimes bankruptcy and a short sale work together for the benefit of the seller/debtor and other times it makes sense to wait to filebankruptcy.

Benefits of Chapter 7 Bankruptcy and a Short-Sale:

Lien Strip:bankruptcy and a short sale

One of the best reasons to file a bankruptcy prior to a short-sale, is to take advantage of the debtor’s ability to strip judicial liens off of title. Following a motion and order to strip the lien, the property may be sold free and clear of these unsecured junior liens. This sale may now to be negotiated with just secured lien-holders, reducing the negative equity in the property. A lien strip must be done while the debtor owns the property and is in an active bankruptcy.

Automatic Stay:

After a bankruptcy is filed the automatic stay goes into effect, stopping any attempt to sell or fore-close on a property. This restriction is not removed until the case is closed or a relief from this stay is requested and granted by the Court. This can create additional time to negotiate the short-sale, but should only be used when it is in your best interest.

Issues with Chapter 7 Bankruptcy and a Short-Sale:

Trustee:

Once a bankruptcy is filed, the property no longer belongs to the debtor but rather the Chapter 7 Trustee. In order to move ahead with a sale, while the bankruptcy is still active, you will need to get permission from the Trustee. They may be willing to abandon the property since it has no value or they may want to negotiate with you instead.

Unexpected Costs:

Any costs related to the short-sale incurred after the seller has filed for bankruptcy will not be forgiven. This may include liability for any deficiency judgment created through the sale.

Ability to File:

In order to qualify for bankruptcy, it may be necessary for the seller to file before the short-sale rather than afterwards.  Please consult a bankruptcy attorney for a free consultation to understand if this applies to your situation.

March 30

Common Debts Discharged in Bankruptcy

It’s time to schedule a free initial consultation when you find yourself struggling to pay your bills or know you will be having issues in the future.  Consulting with a Bankruptcy Attorney is the best way to know what debts are discharged in Bankruptcy, the Bankruptcy Court has information, and here are some debts discharged in bankruptcy.

Common debts discharged in Bankruptcy:discharge debt

Medical bills-

Get rid of past medical debt, but know that you will owe all post-bankruptcy medical debt.  Bankruptcy can be the best way to handle one time medical debt occurring from an accident or for debt accumulated over a long time.

Deficiencies-

Stop paying the debt on collateral, such as a car or RV, which you no longer own.  It is hard enough to handle payments on current vehicles and in most situations bankruptcy will get rid of the amount you owe on vehicles you no longer own.

Long-term Secured Debts-

Get rid of both the debt and the collateral that you no longer need, want, or can afford such as RVs, boats, cars, ATVs.

Credit Cards-

Stop paying credit cards that you can no longer use and are demanding high monthly payments that you can’t afford.  After bankruptcy you will need to work to rebuild your credit, but your daily finances will not be crippled by excessive credit card payments.

Old Household Bills-

Move on from unpaid phone bills, cable bills, utility bills that have hung around for years.  Lose debt left behind from old moves and unfair landlords.  Depending on the circumstances debt remaining from moving out of old rentals can be discharged in bankruptcy.

Time Shares and Unfair Contracts-

Take advantage of the opportunity to disengage from the time-share that won’t let you use your time because you owe too much in fees.  Break the one sided home protection or mail order cd program that refuses to allow you out of a bad deal.

There are many types of debt, most of which aren’t mentioned here.  Please schedule a free consultation to discuss the one that is effecting you. We will explore all of your options.

March 26

The Right Time to File Bankruptcy

Bishop Bankruptcy Law specializes in helping people out of financial difficulties and getting them the Fresh Start that they deserve. The right time to file bankruptcy is different for each individual and everyone is urged to seek out a consultation with a Bankruptcy Attorney before making a decision.

Determining the Right Time to File Bankruptcy:

There are two typical sets of circumstance that merit a consultation with a Bankruptcy attorney.Fresh-Start-1

The Ideal Situation:

A Fresh Start –

The best time to file bankruptcy is when any issues leading to your situation are resolved, or being resolved, and you are building toward a stronger future.  Look at what you own, or are entitled to, and see if it will protected by the Bankruptcy Exemptions that you can use.  Look at the debt you have accumulated and determine whether it is dischargeable (will go away in a bankruptcy).  Finally determine if you are at risk of falling back into debt once you file.  When you can lose old debt that is dragging you down, while protecting what you own and will own in the future, you are truly able to get a Fresh Start.  Unfortunately that is not always the case.

Situations requiring an immediate consultation:Garnishment -1

Received a Court Summons –

If you have received a summons to appear in court for failing to pay a debt, contact an attorney and know your rights.  Waiting to respond to a summons can make your situation much worse.  Even if bankruptcy is not the right choice, it is important that you take some action,

Garnishment –

If you are being garnished for an unpaid debt, bankruptcy may be your best chance to end it.  Each garnishment becomes more money that you may never get back, so you should act quickly.  Even if you are ineligible for a chapter 7 bankruptcy, you may still be able to stop a garnishment by filing a chapter 13 bankruptcy.

October 14

Bankruptcy and Divorce

The Frequent Alliance between Bankruptcy and Divorce:

Bankruptcy-and-Divorce

Every individual situation is unique in both bankruptcy and divorce.  There are many important considerations when divorcing, often deciding when to file bankruptcy is one of them.  The descriptions and information provided here should not be construed as legal advice and anyone contemplating filing bankruptcy should speak with an attorney familiar with their State and it’s laws. Oregon residents are encouraged to contact me.

Situations where bankruptcy may be an option.

Losing half your income but keeping all the debt:

After a divorce there are usually two households, but the same amount of money to run them. A troubling situation is one in which there is less money, but the same amount of bills. Despite what you and your former spouse agreed upon in the divorce, you can be held responsible by your credit card companies for all debts in your name. Unless you are removed from the loan, you will also be responsible for the payments on any vehicles purchased through a loan under your name. A chapter 7 bankruptcy can eliminate that debt and free up money necessary for utilities and rent.

Can’t have one without the other:

There are certain requirements in bankruptcy for household income as well as debt limitations. Whether you are part of a married couple or freshly single can have a profound impact on you or your spouse’s eligibility to file. If there is substantial debt in the marriage it can be very helpful to meet with a bankruptcy attorney early on in the process to explore your options.

It’s time for a true Fresh Start:

A lot of shared debt that needs to be gone in order to start anew.  Perhaps a truck or Recreational Vehicle (RV) was repossessed leaving a deficiency judgment that neither party can pay. Sometimes the debt on a boat, a car, or an ATV was affordable before the divorce, but there is now no way to repay it. In order for each party to truly start over, it is necessary to get out from under these expenses.

Sometimes what is good for one person may not be good for the other:

There are many situations in which it may be advantageous for one party to file bankruptcy pre-divorce, while the other party would benefit by waiting. If one party is starting over with a new career or has been out of the job market for a while, it can take some time to get re-established. If accidents happen after you file bankruptcy, those debts can’t be included. Many times it is better to wait until after you have gotten back on your feet before filing, but the other party may not see it that way. A good general rule is to visit a bankruptcy attorney yourself for a free initial consultation and, after you find out how it would affect you, then decide whether to bring your spouse in to consult. There is a clear conflict of interest between a divorcing couple and this may effect a bankruptcy attorney’s ability to represent both parties. It is a good practice to recommend that both parties consult separate attorney’s to determine whether filing bankruptcy is in their best interest.