Colorado Bankruptcy Attorneys

WHAT HAPPENS TO MY MORTGAGE AND CAR LOAN IN A CHAPTER 7 CASE?

2011-04-27T14:05:00.000-07:00

The mortgage on your home, like the unpaid balance of your car loan, is a secured debt. In bankruptcy, the mortgage lender and the auto lender are referred to as “secured” creditors. Secured creditors hold collateral that may be taken in the event of a default, in the event you miss payments or fail to carry insurance.
In chapter 7 bankruptcy, if you want to keep your home or your car, you must continue to make payments according to the contract. Also, you must abide by other provisions of the contract, like maintaining insurance and providing the lender with proof of insurance.
After the filing of a chapter 7 bankruptcy, but before a discharge order, if you are in default, the lender will apply to the bankruptcy court for “relief from the automatic stay.” If you are in default, the court will grant the request and issue an order relieving the lender from the injunction of the court order that stopped all collection activity (the automatic stay).
A chapter 7 bankruptcy discharge eliminates your personal obligation on the home loan and car loan. After discharge, if you default in your obligations, the lender’s only means of getting paid is to repossess the collateral and sell it. If it’s a home, the process is called foreclosure. If, after sale, the full debt is not paid, the lender may not pursue you for the balance.

How is Chapter 7 bankruptcy different from Chapter 13?

2011-03-30T16:32:00.000-07:00

In chapter 7 bankruptcy, the debtor gives up non-exempt assets in exchange for a discharge of debts. Non-exempt assets are not protected from creditors. Most of what one owns is protected from our creditors: our home, a car to drive, tools of the trade, household goods, food, medicine, etc. On the other hand, typical non-exempt items include cash (whether in the bank, in your pocket or under the mattress), 25% of wages or monies for services owed, and 100% of any tax refunds, all measured on the day the case is filed. All debt is discharged in a chapter 7 bankruptcy, except tax debt, student loan debt, debt arising out of divorce, debt incurred through fraud, and debt arising out of criminal cases. Most cases are completed within 4 to 6 months after filing.

Chapter 13 bankruptcy is required if the debtor has disposable income, i.e. more income than reasonable living expenses. If the debtor has disposable income and is required to file chapter 13, a plan will be ordered that provides for payment of disposable income to the trustee every month for five years. Chapter 13 may also be a desirable option for the debtor in order to: save a home from foreclosure; discharge certain divorce related obligations (not child or spousal support obligations); or remove a second mortgage from a home. Upon successful completion of a chapter 13 plan, all remaining debt is discharged, except student loan debt, debt incurred through fraud, and debt arising out of criminal cases.

WHAT IS A BANKRUPTCY DISCHARGE?

2011-03-25T09:21:00.000-07:00

Generally, a discharge order in a chapter 7 bankruptcy protects the debtor from collection of all debts except those for taxes, student loans, child and family support, divorce court ordered obligations, and fines and penalties. A chapter 13 discharge will relieve the debtor of some divorce court ordered obligations, as well as the unpaid balance of debt not paid through plan payments.

A bankruptcy discharge also relieves the debtor of personal responsibility for payment of debts secured by a home or car. The debtor may continue to own and occupy the home, so long as payments are made and other terms of the mortgage are met. The debtor may also continue to own and drive the car, but may be required to reaffirm the loan.

The bankruptcy discharge is the key to receiving the “fresh start” that is the reason for bankruptcy.

For further information on frequently asked questions, you can check out our FAQ page at http://www.cobk.com.

May I keep my home after filing bankruptcy?

2011-03-18T08:31:00.000-07:00

When a bankruptcy petition is filed, all of the debtor’s assets and debts are listed; that includes the debtor’s home and the mortgage debt. Whether the debtor may keep the home depends upon:

First, what is the status of payments? Is the debtor in default in payments on the mortgage? If so, in a chapter 7 bankruptcy, in order to keep the home, the debtor must get current in payments and continue to pay, on time, every month thereafter. If the debtor is behind in payments and cannot get caught up, then a chapter 13 bankruptcy may be used to pay the missed payments over a period of three to five years. However, while missed payments can be brought current over three to five years, beginning the month following the filing of the petition, the debtor must start paying the regular mortgage payment each month, on time.

Second, how much equity is in the home? A homestead exemption may apply to protect the equity in a home. For debtors who have lived in Colorado for at least two years, a homestead exemption of $60,000 is available to protect equity in a home ($90,000 exemption for debtors who are 60 years of age or older, or who are disabled). If there is equity in excess of the exemption, in chapter 7, the trustee must be paid the excess, or he will sell the home and pay the excess amount to creditors. In a chapter 13, any excess equity in the home will be paid to the trustee over a period of three to five years.

Other facts and circumstances might come to bear on the issue of keeping a home. Therefore, consultation with an experienced bankruptcy attorney is recommended.

Does my business need to file bankruptcy?

2011-03-17T13:11:00.000-07:00

Small business people, that is, people who run their own business (whether a Sub-S corporation, regular corporation, limited liability company - LLC, or sole proprietorship - dba) often ask what kind of bankruptcy should they file. Also, should their corporation or LLC file bankruptcy?

In order to obtain credit in a small business the owners of the business usually have to sign for the debt personally or sign a personal guaranty for the debt. As a result, when the business fails, business creditors will commence collection action against the owners of the business, as well as against the business. Personal bankruptcy is necessary to protect personal income and assets.

If the business is a sole proprietorship, business assets are owned personally and debts are owed personally. If the business is a separate entity, such as a corporation or limited liability company, then business assets and debts are not personal. When the business fails, the entity should dissolve, that is, the assets should be sold and used to pay business debts. For small businesses, bankruptcy is rarely necessary and may be an unnecessary expense.

MAY I SELL MY HOME BEFORE I FILE BANKRUPTCY?

2011-03-11T10:03:00.000-08:00

Yes, the home may be sold before bankruptcy. It should be sold for fair market value and the transaction closed prior to filing bankruptcy. Any proceeds of sale should be deposited into a bank account separate from any other funds. The transaction will be disclosed in a statement of financial affairs and the proceeds of sale on deposit in the bank will be disclosed as an asset exempt from the bankruptcy estate.

Upon filing bankruptcy, the assets of the debtor become the assets of the bankruptcy estate, subject to available exemptions and exclusions. In the state of Colorado, there is a homestead exemption of $60,000 that protects equity ($90,000 for elderly or disabled persons). That same exemption can protect proceeds of sale for a residence, so long as they are segregated from all other funds and clearly traceable to the sale transaction.

If the sale of a home has not closed, as of the date of filing the bankruptcy, a court order declaring the home abandoned must be obtained before closing. This is an additional expense and may cause delay of the transaction.

WHAT IS CREDIT COUNSELING?

2011-03-10T07:45:00.001-08:00

In 2005, Congress passed a law that requires individuals to attend a session of credit counseling before filing a bankruptcy petition. Credit counseling is provided by non-profit agencies, approved by the United States Trustee.

In a credit counseling session, a professional counselor will review your financial circumstances and help you determine whether there are reasonable alternatives to filing bankruptcy. Credit counseling sessions are held either in-person, by phone or via internet, depending on the agency. Upon completion of an approved credit counseling session, a certificate will be issued which must be filed with the bankruptcy petition.

HOW DO YOU DETERMINE WHICH CHAPTER TO FILE, 7 OR 13?

2011-03-09T16:09:00.000-08:00

There are numerous factors that determine whether chapter 7 or chapter 13 is better. Here are some:
A. Disposable Income
The “means test” is a mathematical test for determining disposable income. The means test calculation is made based upon a debtor’s average monthly income less allowable expenses under IRS standards. Disposable income may also be determined by estimating income for the foreseeable future.
If there is significant disposable income, chapter 13 for a 5-year plan will be required.
If there is no disposable income, either chapter 7 or chapter 13 is available.
B. Prior Bankruptcy Filings
There are restrictions as to how often an individual may file a bankruptcy. If a chapter 7 bankruptcy discharge has been granted, a chapter 7 bankruptcy may not be filed for 8 years and a chapter 13 bankruptcy may not be filed for 4 years. If a chapter 13 bankruptcy discharged has been granted, a chapter 13 bankruptcy may not be filed for 2 years and a chapter 7 bankruptcy may not be filed for 6 years.
C. Protection of Assets
Most assets a debtor has are protected by the exemption laws of the state and will not be lost in a bankruptcy. Assets unprotected, i.e. non-exempt, will be turned over to the trustee and sold, in a chapter 7 bankruptcy. Assets that would be turned over to the trustee in a chapter 7 case may be kept in a Chapter 13, but the non-exempt value of those assets will be to the trustee as part of plan payments, over 3 to 5 years . Again, a review needs to be made for each case.
D. Saving a home from foreclosure
In chapter 13, unpaid amounts owed to the mortgage company may be paid over 3 to 5 years, as part of plan payments. The case must be filed before the foreclosure sale (Colorado law), plan payments will include an amount to cure the default, and regular mortgage payments must be paid beginning in the first month after filing the bankruptcy case.
E. Discharge certain divorce obligations
Marital debts that are required to be paid by the divorce court are not dischargeable in a chapter 7 bankruptcy. Except for domestic support obligations, court order obligations to pay the other parties debts or to protect the other party from collection efforts of marital creditors may be discharged in a chapter 13.

Does my business need to file bankruptcy?

2011-01-06T15:29:00.000-08:00

Small business people, that is, people who run their own business (whether a Sub-S corporation, regular corporation, limited liability company – LLC, or sole proprietorship – dba) often ask what kind of bankruptcy should they file. Also, should their corporation or LLC file bankruptcy?
In order to obtain credit in a small business the owners of the business usually have to sign for the debt personally or sign a personal guaranty for the debt. As a result, when the business fails, business creditors will commence collection action against the owners of the business, as well as the business entity. Personal bankruptcy is necessary to protect personal income and assets.
If the business is a sole proprietorship, business assets are owned personally and debts are owed personally. If the business is a separate entity, such as a corporation or limited liability company, then business assets and debts are not personal. When the business fails, the entity should dissolve, that is, the assets should be sold and used to pay business debts. For small business entities, bankruptcy is rarely necessary and would be an unnecessary expense.

WHAT IS CREDIT COUNSELING?

2010-09-20T08:40:00.001-07:00

Individuals are not permitted to file a chapter 7 or 13 bankruptcy unless they have attended a session of creditor counseling with an approved non-profit credit counseling agency. In that session, your financial circumstances are reviewed with a professional who will help you determine whether there are alternatives to filing bankruptcy. There are approved agencies that make this service available in-person, by phone or via internet. Upon completion of an approved credit counseling session, a certificate will be issued which must be filed with your bankruptcy petition.

WHAT HAPPENS TO CO-SIGNED DEBTS IN BANKRUPTCY?

2010-09-20T08:31:00.001-07:00

If another person has co-signed a loan for you or if you have co-signed a loan for another person, your bankruptcy proceeding will discharge your obligation to repay that debt, but it does not discharge the co-signer.
For example, if you have co-signed a loan for your brother, your liability for the debt will be discharged but your brother’s obligation will be unaffected. Conversely, if your brother co-signed a loan that you do not intend to repay, your bankruptcy will discharge your requirement to pay, but the creditor will be able to pursue collection against your brother. A chapter 13 can be used to protect a cosigner, but will require payment of the debt.

WHAT IS THE MEETING OF CREDITORS?

2010-09-20T08:08:00.000-07:00

After a bankruptcy is filed the court schedules a Meeting of Creditors, which is also called a “341 Meeting.” The debtor and all creditors are notified of the meeting. At the meeting, the trustee and creditors will ask questions concerning the debtor’s eligibility to file bankruptcy, the petition, statement of financial affairs and schedules of assets, debts, income and expenses, filed in the case, and otherwise the debtor’s overall financial situation. Usually creditors do not attend the meeting. However, the trustee will want to know, among other things, how the assets were valued, whether there were monies owed to the debtor on the date of filing, if a tax refund is expected, and in general, what non-exempt assets can be collected for the benefit of creditors. Most chapter 7 cases are “no-asset.” In most cases, exemptions protect the debtor’s property and nothing is collected by the trustee. In a chapter 13, non-exempt assets are accounted for in plan payments and the client retains the property.

WHAT ARE THE DIFFERENT BANKRUPTCY CHAPTERS?

2010-09-17T11:54:00.000-07:00

Individuals file bankruptcy under one of four chapters of the Bankruptcy Code:

Chapter 7 is a liquidation bankruptcy for debtors without sufficient income or resources to pay their debts. Assets not protected are liquidated and the proceeds are paid to unsecured creditors. The debtor receives a discharge of debts, subject to certain exceptions.

Chapter 13 is an arrangement to pay disposable income, over a period of 3 to 5 years, for the benefit of creditors. Upon completion of the Chapter 13 Plan the debtor receives a discharge of the remaining balance of debts, subject to certain exceptions.

Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13.

Chapter 11, designed for the reorganization of a business, is also available to consumer debtors who have too much income for chapter 7, and too much debt for chapter 13.

WHAT ARE EXEMPTIONS?

2010-08-26T16:29:00.000-07:00

Debtors are entitled to claim certain types of property as exempt from the bankruptcy estate. The trustee in a chapter 7 bankruptcy will collect and liquidate non-exempt property. In a chapter 13 bankruptcy, the debtor must pay a minimum of the value of non-exempt property to the trustee, who will pass that along to unsecured creditors (e.g. credit card creditors).

The laws of the State of Colorado determine what types of property are exempt and how much of the equity in the property is exempt. Equity is the value of the property, less any amounts owed to a secured creditor.

The following are a few of Colorado’s exemptions:

Homestead $60,000.00 for equity in home
Homestead for elderly or disabled $90,000.00 for equity
Automobiles $5,000.00 per debtor for equity
Automobiles for elderly or disabled $10,000.00 per debtor for equity
Household goods $3,000.00 per debtor
Clothing $1,500.00 per debtor and dependent
Jewelry/furs $2,000.00 per debtor
Wages owed on date of filing 75% of net wages

WHAT IS A BANKRUPTCY DISCHARGE?

2010-08-17T16:34:00.000-07:00

For individual consumer debtors, generally, the goal of filing bankruptcy is to receive a discharge of debts. Successful completion of a bankruptcy results in a court order that discharges debts. Once a debt is discharged, the creditor is stopped from attempting to collect on that account from the debtor.

Generally, a discharge order in a chapter 7 bankruptcy protects the debtor from collection of all debts except those for taxes, student loans, child and family support, divorce court ordered obligations, and fines and penalties. A chapter 13 discharge will relieve the debtor of some divorce court ordered obligations, as well as the unpaid balance of debt not paid through plan payments.

A bankruptcy discharge also relieves the debtor of personal responsibility for payment of debts secured by a home or car. The debtor may continue to own and occupy the home, so long as terms of the mortgage are met. The debtor may also continue to own and drive the car, but may be required to reaffirm the loan.

The bankruptcy discharge is the key to receiving the “fresh start” that is the reason for bankruptcy.

For further information on frequently asked questions, you can check out our FAQ page at http://www.cobk.com.

WHAT IS THE FORECLOSURE PROCESS IN COLORADO?

2010-08-11T08:06:00.000-07:00

The foreclosure process begins with the filing of Notices of Election and Demand with the public trustee of the county in which the real estate is located. Notices are mailed to the property owner, as well as others who have recorded interests in the property; the notices advise of the commencement of the process, the relative rights of interested parties, and the date of sale. The owner is allowed from 110 to 125 days (215 to 230 days for agricultural land) before sale, to cure the default. The owner has no rights of redemption after sale.

The filing of a petition in bankruptcy prevents the commencement or continuation of a foreclosure until an order for relief from the automatic stay of the bankruptcy court is obtained. A chapter 7 bankruptcy (liquidation) will stop the foreclosure process only until the lender can obtain an order allowing it to continue. The balance of the mortgage debt will be discharged.

In a chapter 13 bankruptcy, amounts in arrears on the mortgage can be made up through a payment plan over 3 to 5 years; or, the home may be surrendered to the lender and the balance of the debt will be discharged. The lender will be compelled to cease further collection processes until the plan is completed or it fails.

WHAT DEBTS MUST BE REPAID IN A CHAPTER 13?

2010-08-05T09:05:00.000-07:00

While chapter 13 is generally an arrangement for repayment of debts, it does not mean that all debts must be repaid. Unsecured creditors (i.e. creditors that do not have collateral securing repayment of debts) must receive only as much as they would have received in a chapter 7 case or as much as the debtor can afford to pay, whichever is greater.
For example, if in a chapter 7 case, the debtor would have turned over to the trustee a timeshare valued at $10,000, the unsecured creditors in chapter 13 would receive at least $10,000. However, if in that same chapter 13 case, the debtor has $200 per month of disposable income, the unsecured creditors will receive $12,000 over a 60 month plan ($200 x 60 payments). This is true even if the debtor owes $60,000 in unsecured debt. Unpaid balances of unsecured debts are discharged upon completion of the plan payments.
Priority debts such as child support, alimony, and most taxes must be paid in full under a chapter 13 plan. For example, if the debtor owes $10,000 in federal income taxes, over a 60-month plan, $167 per month must be paid on that tax debt.

What is a trustee in bankruptcy?

2010-08-03T09:39:00.000-07:00

The trustee in a bankruptcy case is the representative of the bankruptcy estate. In chapter 7 cases, the United States Trustee (a division of the U.S. Department of Justice) appoints the trustee, whose duties include collection of the property of the estate, liquidation of same, investigation of the financial affairs of the debtor, and disbursement to creditors. In chapter 13, in the District of Colorado, the United States Trustee has appointed a Standing Chapter 13 Trustee, whose duties are the same as those of the chapter 7 trustee, but who also must appear upon any issue concerning the value of property subject to a lien, and confirmation or modification of a plan.

HOW WILL MY PROPERTY BE VALUED?

2010-07-27T08:13:00.000-07:00

In bankruptcy, one must state values for all real and personal property. The valuation of personal property is the “liquidation value,” which is not the purchase price of an item, nor is it the replacement cost, nor is it the price received if you advertised it in the newspaper, Craigslist.com, or on ebay.com. Typically, the liquidation value is what one would receive if the item was sold at a garage sale, or if it was sold at auction. For example, if one paid $300.00 for a couch, it might now cost $400.00 to replace it, but might only sell for $25.00 at a garage sale.

The valuation of real estate is the “fair market value” or the price a reasonably prudent buyer and seller would agree on. What similar properties are selling for in your area is usually a good indicator of fair market value.

If you have questions or are unsure of what value to place on your personal property, ask a dealer how much, in cash, he would pay you for the item (not on consignment). In the case of real estate, consult with a real estate agent.

IS A MARRIED PERSON REQUIRED TO FILE A JOINT PETITION WITH A SPOUSE?

2010-07-27T08:04:00.000-07:00

A married person may file a separate individual bankruptcy, or a joint bankruptcy petition with a spouse. There is no requirement that both husband and wife file bankruptcy. A joint petition might be recommended if both parties are liable for one or more debts that could be discharged by filing bankruptcy. If only one spouse files, creditors may attempt to collect a joint debt from the non-filing spouse.

Does my business need to file bankruptcy?

2010-07-23T08:37:00.000-07:00

Small business people, that is, people who run their own business (whether a Sub-S corporation, regular corporation, limited liability company (LLC)), or sole proprietorship) often ask what kind of bankruptcy should they file. Also, should their corporation or LLC file bankruptcy?

In order to obtain credit in a small business the owners of the business usually have to sign for the debt personally or sign a personal guaranty for the debt. As a result, when the business fails, business creditors will commence collection action against the owners of the business, as well as the business assets. Personal bankruptcy is necessary to protect personal income and assets.

If the business is a sole proprietorship, business assets are owned personally and debts are owned personally. If the business is a separate entity, such as a corporation or limited liability company (LLC), then business assets and debts are not personal. When a corporate or limited liability business fails, that entity should dissolve, that is, the assets should be sold and used to pay business debts. For small corporations and LLCs, bankruptcy is rarely necessary and would be an unnecessary expense.

What is the automatic stay?

2010-07-22T09:38:00.000-07:00

Upon filing of a bankruptcy petition a court order enters automatically that stays, or prevents, almost all creditors from taking collection actions against the debtor, property of the bankruptcy estate and property of the debtor. While the bankruptcy case is being processed, collection action must stop. If the debtor receives a discharge of debt, creditors who were listed in the bankruptcy are barred from taking any further action to collect on debts that existed at the time of the bankruptcy filing.
There are some exceptions to the automatic stay of bankruptcy. Many aspects of divorce actions are not stayed by bankruptcy, especially the establishment, modification or collection of support and actions to determine child custody or visitation. Criminal actions are not stayed by bankruptcy. Also, if the debtor is the subject of a subpoena to appear in court or a citation to show cause for contempt, those actions are not stopped by bankruptcy.

WHAT IS THE MEETING OF CREDITORS?

2010-07-21T13:51:00.000-07:00

After a bankruptcy is filed the court schedules a Meeting of Creditors, which is also called a “341 Meeting.” The debtor and all creditors are notified of the meeting. At the meeting the trustee and creditors will ask questions concerning the debtor’s financial situation. Usually creditors do not attend the meeting. However, the trustee will want to know, among other things, how the assets were valued, whether there were monies owed to the debtor on the date of filing, if a tax refund is expected, and in general, what non-exempt assets can be collected for the benefit of creditors. Most chapter 7 cases are “no-asset," which means that exemptions protect the debtor’s property and nothing is collected by the trustee. In a chapter 13, non-exempt assets are accounted for in plan payments and the client retains the property.

Will I have to lose assets in a chapter 13 bankruptcy?

2010-07-20T08:30:00.000-07:00

Generally, in a chapter 13 plan, the value of non-exempt property becomes a factor in determining how much must be paid to unsecured creditors over the life of the plan. For example, if the debtor owns a rental property with equity of $10,000, the plan will provide for payment of that amount over the life of the plan (e.g. If the plan requires payments over 5 years, part of the total plan payment will be $167/month, representing the value of that non-exempt property).
Experienced bankruptcy attorneys may also assist the debtor in other ways to minimize the amount of non-exempt property. First, is there an exemption that may be claimed to protect the asset? Or it may be possible to sell property before filing bankruptcy and use the proceeds in a manner beneficial to the debtor.

There are definitely things not to do, or actions that may create problems rather than solve them. It cannot be emphasized enough that consultation with experienced bankruptcy counsel is very important before taking any action to protect assets.

Protecting Assets in Bankruptcy

2010-07-15T08:11:00.000-07:00

How can I protect myself from losing my assets in a chapter 7 bankruptcy?

Generally in a chapter 7 bankruptcy, the debtor will be required to turnover non-exempt assets to the trustee. Non-exempt assets are things that are not protected from creditors. For debtors who have lived in Colorado for at least two years, most property is protected; for example: $60,000 for equity in a home ($90,000 for those 60 years or older or disabled), $5,000 per debtor for a personal auto ($10,000 for those 60 years or older or disabled), $3,000 per debtor for household goods, $1,500 per debtor and each dependent for clothing, and $2,000 per debtor and each dependent for jewelry.
On the other hand, most people have a few things that are not protected by exemptions; for example: cash, whether in the bank, in the pocket or under a mattress; 25% of wages owed to the debtor on the day the bankruptcy case is filed; and tax refunds not yet received. The loss of these non-exempt items can be minimized by the timing of the bankruptcy filing. Beyond these common non-exempt items, in a chapter 7 bankruptcy, the debtor must either turn over non-exempt property to the trustee or, if one wishes to keep the property, pay to the trustee the value of the item. For example, if the debtor owns a rental property (non-exempt) with equity of $10,000, one might be able to negotiate with the trustee for payment of the equity in lieu of having it sold.
Experienced bankruptcy attorneys may also assist the debtor in other ways to minimize the loss of property. First, is there an exemption that may be claimed to protect the asset? Or, it may be possible to sell property before filing bankruptcy and use the proceeds in a manner beneficial to the debtor. Finally, there are definitely things not to do, actions that may create problems rather than solve them. It cannot be emphasized enough that consultation with experienced bankruptcy counsel is very important before taking any action to protect assets.

CAN LIENS ON REAL ESTATE BE REMOVED BY FILING BANKRUPTCY?

2010-07-14T10:19:00.000-07:00

Some liens on the residence can be removed when a bankruptcy is filed. However, be aware that removal is not automatic. A separate motion must be filed in the bankruptcy proceeding in order to seek avoidance of liens that impair the owners’ homestead. For example, if a credit card lender records a judgment and the owner’s equity is under the current homestead exemption of $60,000 (or $90,000 for elderly or disabled), a motion can be filed to avoid that lien. Liens that are statutory, such as homeowner associations, utilities, and property taxes, cannot be removed.

May I Keep a Vehicle?

2009-10-12T14:37:00.000-07:00

May I keep a vehicle after filing bankruptcy?
David C. Hoskins

Some answers to that question that might change depending on the facts of each case; however, the general rules about keeping a vehicle are:

First, if there is a loan, are payments current? In order to keep a car in a chapter 7 bankruptcy, the debtor must first get current in payments and stay current. In a chapter 13 bankruptcy, if the payments are not current, a plan may be proposed to pay the arrears over a period of three to five years. However, while the missing payments may be brought current over the life of the plan, the debtor must begin making the regular monthly payments starting the month after filing the bankruptcy petition.

Second, what is the value of the vehicle? Debtors who have lived in Colorado for at least two years have a $5,000 exemption to protect the equity in a personal automobile (or $10,000 for debtors who are 60 years of age or older, or are disabled). If there is equity in excess of the exemption in a chapter 7, the debtor must pay the trustee the excess amount or the trustee will sell the automobile. If there is excess in a chapter 13 bankruptcy, the debtor will pay the excess as part of plan payments over three to five years.

Finally, in chapter 7 cases, automobile lenders may have a right to repossess the vehicle unless the debtor either reaffirms the debt (signs a new agreement which isn't discharged in bankruptcy) or redeems the vehicle (pays off the loan). One must carefully assess the need to keep a vehicle in bankruptcy versus the potential costs, and should be guided by an experienced bankruptcy attorney to see if there are any other considerations.
For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

What Are the Fees for Filing Bankruptcy?

2009-10-09T07:05:00.001-07:00

What are the fees for filing bankruptcy?
David C. Hoskins

The fees charged by attorneys vary based on the type of bankruptcy that is being filed and the specific facts of each case. The court filing fee is $299 for a chapter 7 and $274 for a chapter 13. Our office offers a free, one-hour consultation during which an attorney meets with the client, reviews the assets, debts, income, and other general information, and discusses the options that are available.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

Can a Discharge in Bankruptcy Be Denied?

2009-10-08T13:34:00.000-07:00

Can a Discharge in Bankruptcy Be Denied?
David C. Hoskins

Yes, the bankruptcy court may refuse to allow your debts to be discharged. The process is called denial of discharge, or if the discharge has already been granted, it is called a revocation of discharge. Denial or revocation of discharge may occur when a debtor does not follow the bankruptcy laws. For example, a discharge may be denied if the debtor misrepresents facts, hides assets, or does not cooperate with the trustee or court. The consequences for violating bankruptcy law include denial of a discharge of any debts, loss of assets, and criminal prosecution.

Bankruptcy is a complicated process, with demanding rules and deadlines. Proceeding without the assistance of an experienced bankruptcy attorney may have serious consequences.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

Keeping a Home After Bankruptcy

2009-09-16T12:55:00.000-07:00

May I keep my home after filing bankruptcy?
David C. Hoskins

When a bankruptcy petition is filed, all of the debtor's assets and debts are listed, including the debtor's home and the mortgage debt. Whether the debtor may keep the home depends upon the following:

First, what is the status of payments? Is the debtor in default in payments on the mortgage? If so, in order to keep the home in a chapter 7 bankruptcy, the debtor must get current in payments and continue to pay, on time, every month thereafter. If the debtor is behind in payments and cannot get caught up, then a chapter 13 bankruptcy may be used to pay the missed payments over a period of three to five years. However, while missed payments can be brought current over three to five years, the debtor must start paying the regular mortgage payment each month beginning the month following the filing of the petition, and must make these payments on time.

Second, how much equity is in the home? A homestead exemption may apply to protect the equity in a home. For debtors who have lived in Colorado for at least two years, a homestead exemption of $60,000 is available to protect equity in a home ($90,000 exemption for debtors who are 60 years of age or older, or who are disabled). In a chapter 7, if there is equity in excess of the exemption, the trustee must be paid the excess, or he will sell the home and pay the excess equity amount to creditors. In a chapter 13, any excess equity in the home will be paid to the trustee over a period of three to five years.

Other facts and circumstances might come to bear on the issue of keeping a home. Therefore, consultation with an experienced bankruptcy attorney is recommended.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

CLE on Bankruptcy and Divorce

2009-09-02T09:34:00.000-07:00

Continuing Legal Education: Bankruptcy & Divorce
David C. Hoskins

Bankruptcy sometimes leads to divorce and divorce often leads to bankruptcy. The timing of each of these proceedings, with relation to each other, is very important. One should consult with both divorce and bankruptcy counsel before commencing either action.

Attorneys: I have recently produced a continuing legal education podcast on the relationship between bankruptcy and divorce. Please visit http://www.clestreet.com to purchase the podcast for download.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

How Do I Know If It "Makes Sense" to File?

2009-09-02T06:54:00.000-07:00

I feel uncomfortable about filing bankruptcy. How do I know if it "makes sense" to file?
David C. Hoskins

Bankruptcy provides a "fresh start" to people who do not have sufficient resources to pay their debt. It is the choice of last resort. It is an appropriate option when one has no reasonable alternative.

The law now requires that before one may file bankruptcy, one must attend a session of credit counseling through an approved agency. There are many approved agencies for credit counseling that may be found in the phone book or on the internet. The purpose of that credit counseling session is to review one's budget and debt to determine whether there is a reasonable alternative to bankruptcy.

Before filing bankruptcy, it is also important to meet with an experienced bankruptcy attorney and review how bankruptcy will resolve one's financial difficulties. In addition to the need for bankruptcy, it's also important to know when to file and what chapter is appropriate. There are many other issues in bankruptcy that must be reviewed by bankruptcy counsel.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

Should relatives be paid before a bankruptcy is filed?

2009-08-13T10:17:00.000-07:00

Should relatives be paid before a bankruptcy is filed? I’ve heard the term “preference.” What is a preference?
David C. Hoskins

If you are contemplating filing bankruptcy, do not repay your relatives.

In chapter 7, as well as in chapter 13, the bankruptcy trustee may seek to avoid and recover preference payments to creditors. A preference payment is a payment made to a creditor on a debt, within 90 days before the bankruptcy petition was filed (or within one year for payments made to “insiders”), that enabled the creditor to receive more proportionately than was received by other creditors.

For example, if a debtor made a payment of $750 on an outstanding credit account, within 80 days before the bankruptcy filing, the trustee will ask that creditor to return the $750 to the bankruptcy estate. In another, more common example, if the debtor paid his father $2,500 on a loan, 9 months before the bankruptcy filing, the trustee will demand that the father return the $2,500 to the bankruptcy estate. The father is, because he is a relative, an “insider” and the trustee may demand return of the preference payment because it was made within one year before the bankruptcy filing.

For further information on frequently asked questions, you can check out our FAQ page at our website (http://www.cobk.com/).

What is a trustee in bankruptcy?

2009-08-11T11:06:00.000-07:00

What is a trustee in bankruptcy?
David C. Hoskins

The trustee in a bankruptcy case is the representative of the bankruptcy estate. In chapter 7 cases, the United States Trustee (a division of the U.S. Department of Justice) appoints the trustee, whose duties include collection of the property of the estate, liquidation of same, investigation of the financial affairs of the debtor, and disbursement to creditors. In chapter 13, in the District of Colorado, the United States Trustee has appointed a Standing Chapter 13 Trustee, whose duties are the same as those of the chapter 7 trustee, but who also must appear upon any issue concerning the value of property subject to a lien, and confirmation or modification of a plan.

For further information on frequently asked questions, you can check out our FAQ page at our website (http://www.cobk.com/).

How is Chapter 7 Bankruptcy Different from Chapter 13?

2009-08-06T07:17:00.000-07:00

How is Chapter 7 bankruptcy different from Chapter 13?
David C. Hoskins

In chapter 7 bankruptcy, the debtor gives up non-exempt assets in exchange for a discharge of debts. Non-exempt assets are not protected from creditors. Most of what one owns is protected from our creditors: our home, a car to drive, tools of the trade, household goods, food, medicine, etc. On the other hand, typical non-exempt items include cash (whether in the bank, in your pocket or under the mattress), 25% of wages or monies for services owed, and 100% of any tax refunds, all measured on the day the case is filed. All debt is discharged in a chapter 7 bankruptcy, except tax debt, student loan debt, debt arising out of divorce, and debt arising out of criminal cases. Most cases are completed within 4 to 6 months after filing.

Chapter 13 bankruptcy is required if the debtor has disposable income, i.e. more income than reasonable living expenses. If the debtor has disposable income and is required to file chapter 13, a plan will be ordered that provides for payment of disposable income to the trustee every month for five years. Chapter 13 may also be a desirable option for the debtor in order to: save a home from foreclosure; discharge certain divorce related obligations (not child or spousal fcsupport obligations); or remove a second mortgage from a home. Upon successful completion of a chapter 13 plan, all remaining debt is discharged, except student loan debt and debt arising out of criminal cases.

For further information on frequently asked questions, you can check out our FAQ page at our website (http://www.cobk.com/).

Definition: Automatic Stay

2009-08-05T11:43:00.000-07:00

WHAT IS THE AUTOMATIC STAY?
David C. Hoskins

Upon filing of a bankruptcy petition a court order enters automatically that stays, or prevents, almost all creditors from taking collection actions against the debtor, property of the bankruptcy estate and property of the debtor. While the bankruptcy case is being processed, collection action must stop. If the debtor receives a discharge of debt, creditors who were listed in the bankruptcy are barred from taking any further action to collect on debts that existed at the time of the bankruptcy filing.

There are some exceptions to the automatic stay of bankruptcy. Many aspects of divorce actions are not stayed by bankruptcy, especially the establishment, modification, or collection of support and actions to determine child custody or visitation. Criminal actions are not stayed by bankruptcy. Also, if the debtor is the subject of a subpoena to appear in court or a citation to show cause for contempt, those actions are not stopped by bankruptcy.

For further information on frequently asked questions, please visit the FAQ page at our website (http://www.cobk.com/).

Definition: Bankruptcy Discharge

2009-07-15T09:42:00.000-07:00

WHAT IS A BANKRUPTCY DISCHARGE?
David C. Hoskins

For individual consumer debtors, generally, the goal of filing bankruptcy is to receive a discharge of debts. Successful completion of a bankruptcy results in a court order that discharges debts. Once a debt is discharged, the creditor is stopped from attempting to collect on that account from the debtor.

Generally, a discharge order in a chapter 7 bankruptcy protects the debtor from collection of all debts except those for taxes, for student loans, for child and family support, for divorce court ordered obligations, and for fines and penalties. A chapter 13 discharge will relieve the debtor of some divorce court ordered obligations, as well as the unpaid balance of debt not paid through plan payments.

A bankruptcy discharge also relieves the debtor of personal responsibility for payment of debts secured by a home or car. The debtor may continue to own and occupy the home, so long as terms of the mortgage are met. The debtor may also continue to own and drive the car, but may be required to reaffirm the loan.

The bankruptcy discharge is the key to receiving the “fresh start” that is the reason for bankruptcy.

For further information on frequently asked questions, you can check out our FAQ page at our website (http://www.cobk.com/).

Welcome to Our Bankrupcty Blog

2009-07-13T09:57:00.000-07:00

If the loss of a job, the failure of a business, a medical emergency, a divorce or some other situation has made you unable to pay your debts, filing bankruptcy may be an opportunity to stop creditor harassment and obtain debt relief. Despite rumors to the contrary, bankruptcy is still an option you can use to get a financial fresh start.

At George T. Carlson & Associates in Englewood, Colorado, our experienced bankruptcy lawyers will help you determine whether this option is right for you, and if so, we will be your representatives and advocates. Contact us to schedule a free initial consultation.

One Hundred Percent of Our Attention on Bankruptcy

Our law firm is focused exclusively on bankruptcy law. Our only business is helping people like you who are in financial trouble. We skillfully assess each client's unique financial situation in order to advise him or her on the consequences of Chapter 7 or Chapter 13 personal bankruptcy.
Each of our three attorneys has decades of legal experience in Colorado. We are widely recognized for our in-depth knowledge of bankruptcy law, and our exclusive focus on this practice area enables us to keep on top of all the most recent developments.

Avoiding Foreclosure, Repossession and Debt Collection

Depending on your individual circumstances, filing bankruptcy may help you avoid foreclosure on your home, repossession of your car or other property, garnishment of your wages, harassing letters and phone calls from collection agencies, lawsuits by creditors and other oppressive debt collection practices.

Contact us to discuss your debt relief needs with an experienced attorney, and make an educated decision about whether bankruptcy is right for you.

At George T. Carlson & Associates, based in Englewood, Colorado, we represent clients throughout Colorado, including Denver metro, and the cities of Aurora, Centennial, Denver, Greenwood Village, Highlands Ranch, Littleton and Lone Tree; and Adams County, Arapahoe County, Denver County, Douglas County, Elbert County and Jefferson County.