General Bankruptcy

13 Myths About Chapter 13 Bankruptcy

So much is written and put out on the internet about the “Individual Repayment” option contained in the Bankruptcy Code under Chapter 13 that it probably is not surprising that much of it is either skewed for one reason or another - or is outright misinformation. This article includes some of the fairly constant refrains we as bankruptcy lawyers hear from clients to explain their hesitancy to consider Chapter 13. It is further an attempt to clarify and/or reassure individuals who may be considering Chapter 13 or desperately need its enhanced protections under the Bankruptcy Code.

Most people have heard of the basic Chapters of Bankruptcy filing; Chapter 7, 11 or 13.   Some are even aware of the less used provisions of Chapter 12 (for farmers or fishermen) or Chapter 9 (municipal entities) or even of late Chapter 15 (for foreign corporations).  But a hybrid approach called "Chapter 20" is getting a lot more attention.

The notions of filing for Bankruptcy and enjoying the holidays are not as foreign as one might think. Most people will try to forget their financial issues around this time of the year, but the financial stress can never be far from the surface. Creditors do not go on holiday. One of the primary goals of a bankruptcy filing is to restore some financial sanity to people's existence - so that they can enjoy the rest of their lives.

The ability to create a plan of action which deals with the overwhelming burden of out of control debt is itself a form of relief. Long before the actual bankruptcy petition is filed with the Court, our office will tell clients to refer creditor and collection calls to us so that we can inform them of the pending Bankruptcy filing, and with it the imposition of the federally mandated automatic stay which stops everything in its place. Even though there may not be a legal bar for collection (although harassment is always prohibited under law), most creditor are not terribly interested in pursuing individuals about to file Bankruptcy. It is not in their financial interests to do so.

Check out this article from Business insider How bankruptcy has changed since the Great Depression 

Phone scammers are targeting bankruptcy filers in several states, using personal information from filings and posing as attorneys to get intended victims to immediately wire money to satisfy a debt.

The National Association of Consumer Bankruptcy Attorneys issued a warning that “Under no circumstances would a bankruptcy attorney or staff member telephone a client and ask for a wire transfer immediately to satisfy a debt. Nor would the bankruptcy attorney and staff ever threaten arrest if a debt isn’t paid.”

Bankruptcy filers in Vermont and Virginia reportedly have received calls. Vermont’s Attorney General says scammers use software to “spoof” the Caller ID system so the call appears to be originating from the phone line of the consumer’s bankruptcy attorney. Typically the calls come late in the evening or during non-business hours to make it difficult for intended victims to verify the call by contacting their attorney.

October 17, 2015 marked the ten year anniversary of the implementation of the 2005 "reform" legislation (entitled the Bankruptcy Abuse Prevention and Consumer Protection act and commonly known as BAPCPA.). While some of the doom and gloom predictions that the Bankruptcy practice would be eradicated in this country were obviously overstated and have proven utterly groundless, it would equally be inappropriate to deny the reality that the practice has substantially changed in these years- and has become much more difficult, aggravating and expensive for bankruptcy debtors.

This peculiar concept in Bankruptcy Law can offer immeasurable relief to bankruptcy debtors in general, and struggling homeowners in Chapter 13 Bankruptcy specifically. It refers to whether or not a creditor’s claim is truly “secured” under the Bankruptcy law, and if not –it potentially can be treated as an unsecured creditor and be paid little (or even nothing) in the Bankruptcy and the lien on the collateral voided.

Bankruptcy filing is rarely the first option for debt relief.  People normally try to move heaven and earth to avoid this alternative, which while understandable and even commendable at times, can often lead to unanticipated and extremely negative consequences.

Misconceptions abound respecting the treatment of Condominium and Association fees in Bankruptcy filings. Certain changes in the law starting in 2005 gave such associations greater protection from the ability of debtors to totally eliminate these fees in bankruptcy.

Unfortunately in these recent times, this has become an all too familiar problem. The years of ever climbing home values were certainly rewarding, but in many ways sowed the seeds for the 2007/2008 economic meltdown.

For adult children, the death of a parent is a fraught experience. Adding to the stress: the unwelcome surprise that Mom or Dad died with big debts.

It’s the time of year where society’s noteworthy and notables appear on college campuses to congratulate and inspire the newest members of the college-educated workforce.

There are creditors who on some occasions insist on being heard, and there is a Bankruptcy Trustee who is appointed by the United States Trustee’s office to administer the case and review assets and income.

So much of our region has been physically and materially devastated over the last months. Added to the already existing weak and fragile economic situation, the overall effects of this storm may be beyond repair for many.

On average, 5,102 Americans filed for bankruptcy each day that court was in session over the first four months of this year — and that’s the good news.