Articles Posted in Chapter 7 Bankruptcy

Many people think it is advantageous to only list certain creditors in their bankruptcy. This is not permissible in a bankruptcy because all creditors must be listed. You cannot favor one creditor over another. However, you can always voluntarily pay a creditor back after a bankruptcy if you wish.

Besides the creditors have their own subscription system with a third party that monitors PACER filings where they will generally learn of a client’s bankruptcy filing even if not listed. Moreover, if the bankruptcy is an asset case, by not listing the creditor, you’ve actually cheated them of monies they would have received in the bankruptcy.

You only become legally obligated to repay a creditor after filing a Chapter 7 bankruptcy if you sign and file a Reaffirmation Agreement with that creditor. A Reaffirmation Agreement reaffirms the debt and sometimes can be advantageous to the debtor if he wants to retain an asset but can’t pay for it outright and in full.

Many more bankrupt debtors will be able to keep their house in a Chapter 7 now!

In a surprising decision by a court of appeals not noted for its sympathy for debtors’ positions, the Eleventh Circuit Court of Appeals, held in a unanimous decision that a Chapter 7 debtor may strip off a second mortgage. Prior to this O’Neal decision on May 11, 2012, debtors could only do this in a Chapter 13 case. The Eleventh Circuit is the federal appellate court for the Middle District of Florida which includes the Tampabay area.

Twenty-three years earlier, the Court of Appeals had reached this conclusion in Matter of Folendore, 862 F.2d 1537 (11th Cir. 1989), and the present court reasoned that the decision in Folendore survived the Supreme Court’s decision in Dewsnup v. Timm, 502 U.S. 410, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992), which held that a Chapter 7 debtor may not cram down an undersecured claim to the value of the collateral. Here, the Court of Appeals reasoned, the creditor’s junior mortgage lien was both allowed under Code § 502 and wholly unsecured under § 506(a), and the lien was therefore voidable under the plain language of § 506(d). In re McNeal, Case No. 11-11352 (11th Cir., May 11, 2012).

Our Tampa, Florida bankruptcy law firm is small enough that we are able to help time our clients’ bankruptcy case for maximum results. Without proper timing, a bankruptcy can feel more like a trap than a remedy for financial ills. We are often able to save our clients several hundred dollars a month by simply correctly timing their case. A high volume mill firm won’t do this, their business model is based upon touching their clients’ files a minimum number of times and getting it filed asap.

However, the timing can be critical. Both in terms of assets that our clients can keep and the type of case or relief they qualify for. Most of our clients have something to lose. Our goal is to help ensure they come out ahead when their bankruptcy is filed.

Simple things to keep in mind. It is not wise to file a bankruptcy if you anticipate large expenses in the future, such as an upcoming surgery where there could be uninsured medical costs. It will be another 8 years before you can file Chapter 7 again so choose your timing wisely.