Auto Lien Stripping Under the New Bankruptcy Act

If you filed for Chapter 13 bankruptcy under the old law, you could have chosen to "strip down" the auto lien on your vehicle. Stripping down an auto lien means reducing the debt you owe on your vehicle. In other words, you would reduce your car payment to the value of the car only and you get to pay a lower interest rate.

For example, you may owe $10,000 plus interest on a car that is worth only $5,000. If you stripped down your auto lien under a Chapter 13 bankruptcy, you would only have to pay the $5,000 plus a lower interest rate.

Note that your car is considered a secured debt under Chapter 13. A secured debt is a debt where the creditor takes your property as collateral. Homes and vehicles are examples of secured debts. If you do not pay your secured debt, your creditor has the right to take your vehicle or home.

New Bankruptcy Law Changes

With the new bankruptcy law in effect, auto lien stripping has been restricted. Now you can only reduce the principal owed and the interest rate on your vehicle if you bought your car more than two and a half years (910 days to be exact) prior to your bankruptcy filing.

Conclusion

Depending on your circumstances, the inability to "strip" the lien on your car could mean you can not afford a Chapter 13 plan. If you can not afford a Chapter 13 plan, you may not be able to prevent the repossession on your car. This could be disastrous. You would lose mobility. It could be difficult to travel to your place of employment. Since you must go to work to pay your living expenses, this obviously creates a hardship. If you are in serious financial trouble, you should NOT WAIT to file for bankruptcy immediately.

If you are in debt and would like to learn more about your legal options, give us a call at 888.743.5787 or fill out our free legal evaluation form.

http://www.legalhelpers.com/legal_helpers/brc_articles_auto_lien_stripping.html

Changes to the Scope of Chapter 13 Discharge

The new bankruptcy laws narrow the scope, or range, of debt you can discharge with a Chapter 13 bankruptcy. The following is a list of these restrictions.

Cash Advances

A cash advance is an amount of money that is paid before it is earned. An example of a cash advance would be money that a check casher lends you before you receive your next pay check. The check casher would then expect you to pay back the loan, including the loan's interest. With the new law in effect, you can't discharge a cash advance that is more than $750 and made within 90 days of filing for your Chapter 13 bankruptcy.

Student Loans

The new law will include student loans from for-profit institutions as non-dischargeable. Examples of for-profit educational institutions include beauty schools and truck driving schools.

Luxury Goods

You will not be able to discharge any purchases made within 90 days of filing that are worth $500 or more. Under the old bankruptcy laws the limit to dischargeable purchases was $1,500.

Credit Card Purchases and Fraud

Credit card fraud includes lying about income on a credit card application in order to get a higher balance on your credit card. It is also fraud to wrack up high credit card debts immediately before filing for bankruptcy. Under the new law, creditors will be able to prosecute these forms of fraud with an adversary proceeding in Chapter 13. An adversary hearing is a separate trial within a bankruptcy case. Your attorney will then have to prove your credit card debt is not fraud. These new, additional procedures could make your bankruptcy proceedings more costly and could result in discharging less debts under Chapter 13 than in the past.

Conclusion

The new law will narrow the scope of your dischargeable debts. It will restrict your options while going through the bankruptcy process. In the case of adversary hearings, the new law will make filing for a Chapter 13 bankruptcy more expensive.

If you are in debt and would like to learn more about your legal options, give us a call at 888.743.5787 or fill out our free legal evaluation form.

http://www.legalhelpers.com/legal_helpers/brc_articles_scope_of_chapter13.html

Homestead Exemption

If you decide to file for bankruptcy, it is likely that you will want to keep your home. Each state provides that debtors in the state are entitled to a "homestead exemption." A homestead exemption allows a debtor to protect equity in a homestead up to certain limits. Thus, if the equity in your homestead property is less than the exemption provided under state law, your house can be protected from creditors and you can file for Chapter 7 bankruptcy without having to sell your house to pay creditors.

There are a few things you should know about homestead exemptions. First, homestead exemptions differ from state to state. Second, the new bankruptcy law will place limits on how much equity you can protect, even if you are in a state that provides a generous homestead exemption.

State Laws

The state you live in will determine the amount of your homestead exemption. Your homestead exemption will be based on the laws of the state that you have lived in for the past two years before filing for bankruptcy. However, if you have recently moved, your home state will be considered the state you have lived in for the majority of the prior 180 days preceding the two years.

Limitations Under the New Law

Under the new bankruptcy legislation, you will not be able to exempt more than $125,000 on equity in a residence purchased within 1,215 days (or three years and four months) before filing for bankruptcy. This calculation does not include the equity of another home you may have bought previously in this 1,215-day period.

Additionally, if you are guilty of securities fraud or certain criminal conduct, your exemption will cap at $125,000. If the court finds you guilty of fraud, this could also hinder the amount of your homestead exemption. Fraud may include disposing of property in order to defraud a creditor or fraudulently converting nonexempt assets ten years before filing for bankruptcy.

Conclusion

Your home is likely an important asset to you. If you are in debt and would like to learn more about your legal options, give us a call at 888.743.5787 or fill out our free legal evaluation form.

http://www.legalhelpers.com/legal_helpers/brc_articles_homestead_exemption.html

New Limits to Automatic Stay

If you owe debt to creditors, they may be harassing you over the phone or through mail. An automatic stay would alleviate this cause of stress. The automatic stay is a federal court order that stops all collection proceedings against you. On the day that you file for bankruptcy, creditors have to stop their foreclosure proceedings. Creditors also must stop any pending lawsuits against you and stop garnishing your wages.

However, the new bankruptcy law places new limits to the level of protection the automatic stay provides in certain situations. The following is a list of circumstances that will lead a court to limit or cancel your automatic stay.

Second Time Filing for a Chapter 7 or Chapter 13 Bankruptcy

If you unsuccessfully filed for either a Chapter 7 or Chapter 13 bankruptcy within the past year, the courts automatically assume that your second bankruptcy is in bad faith. The courts will then limit the application of the automatic stay to 30 days when you file for bankruptcy again. You can try to extend the automatic stay by proving to the court that you have filed in "good faith."

If your previous bankruptcy was dismissed for failure to provide required documents without an excuse, the courts could say that your new bankruptcy is in bad faith. This is also true if your financial situation has not changed enough to allow a financial discharge or completion of a bankruptcy plan.

Note that the courts will not limit your automatic stay to 30 days if you were forced into filing a Chapter 13 bankruptcy after failing the Chapter 7 means test.

Third or Fourth Time Filing for a Chapter 7 or Chapter 13 Bankruptcy

If you have had two or more bankruptcy cases within the last one year and you file for bankruptcy again, the courts will not grant you an automatic stay at all. In order for you to benefit from an automatic stay, you will have to prove to the courts that your new bankruptcy is in good faith and must make an application with the court to impose the stay on your creditors. Thus, if you wait until the eve of a foreclosure sale, it could be too late.

Failure to Provide a Statement of Intent within 30 Days

If you owe debt on a secured property, such as a car or home, you will have to state what you plan to do with the debt. This is called a statement of intent. If you do not file a statement of intent within 30 days, the courts will take away your automatic stay with regard to the secured creditors. However, the trustee could ask the courts to extend your automatic stay if your secured property is valuable to your estate and your creditor would be adequately protected.

Conclusion

One advantage to filing for bankruptcy is the automatic stay. It will stop your creditors from punishing you for not paying your debts. If you would like to learn more about your legal options, give us a call at 888.743.5787 or fill out our
free legal evaluation form.

http://www.legalhelpers.com/legal_helpers/brc_articles_automatic_stay.html