Sunday, May 20, 2012
Should I maintain a home when the bankruptcy petition says I am surrendering the home?
If you file a Chapter 7 bankruptcy petition, and you own a home, it is possible that the bankruptcy court will sell your home
for the benefit of your creditors. It is also possible that the court will abandon your home because a large mortgage makes
is difficult or impossible to sell your home for a profit. Likewise, the mortgage company may delay foreclosure in the hopes
the housing market will improve or because documents are missing.
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The end result is that your bankruptcy case may close
leaving you as the owner of record for home which you intend to surrender. If that happens, you will remain responsible for
future homeowner association fees, future property taxes, and future land maintenance fees. If you do not keep the grass cut
and rubbish removed from the property, the City or County will send a work crew to the property and then send you a large
bill for its services.
Your debt to the mortgage company may have been discharged by the bankruptcy petition, but you
are still the home owner until the mortgage company files the foreclosure deed or accepts a deed in lieu of foreclosure. You
can also be held liable is someone is injured while on your property; therefore you should discuss with your insurance agent
what type and how much insurance you should purchase.
Monday, May 7, 2012
What is the Virginia Homestead Exemption?
If property is exempt, a creditor cannot involuntarily seize the property, sell the property, and apply the sale proceeds
to the debt. If you file bankruptcy, the bankruptcy court will not seize exempt property. After you file bankruptcy, you are
permitted to keep basic possessions to move forward with a fresh start.
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Some items are automatically exempt. Some exemptions
must be claimed. If you do not claim the exemption in time, you loose the exemption.
The homestead exemption is an
exemption that must be claimed. You claim the exemption by filing a homestead deed in the courthouse of the city or county
where you live. It is not a deed of sale such a the deed you get when you buy a home. It may not have anything to do with
your home. An example can be found at http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+34-14.
It is a document on
which you list property that you wish to keep out of the hands of your creditors. It can be thought of as a wild card exemption
because you get to choose the property that you wish to keep. It would be a mistake to "homestead" property that
is already exempt. A common strategy is to claim property that has personal value to you and which is not exempt from the
claims of creditors. An example would be a base ball card collection.
The amount that you can claim on a homestead
deed is limited and varies from person to person based upon age, military disability, the number of dependents, prior homestead
deeds, and waives of the right to claim the homestead exemption.
Most individuals are able to claim a minimum of $5,000.00
the first time that they file a homestead deed.
I have successfully helped individuals use a homestead deed to recover
garnished wages or to keep their tax return when the debtors filed bankruptcy.
This information is for advertising purposes only. The information is not complete. Bankruptcy
questions in Virginia are governed by the Bankruptcy Code, the Virginia Code, the Federal Rules of Bankruptcy Procedure, the
Local Rules of Bankruptcy Procedure, the Federal Rules of Evidence, and the specifics of each case.
You may file bankruptcy in Virginia if you have lived in Virginia more than 90 of the last 180
TYPES OF BANKRUPTCY
CHAPTER 7: It is frequently referred to as a liquidation
bankruptcy. Most debtors keep all of their property because all of their property is necessary for a
fresh start. Unnecessary property, sometimes called unexempt property, such as luxury goods, is sold by the trustee to pay your creditors. It is used primarily
by individuals who wish to free themselves of debt simply and inexpensively, but may also be used by businesses that wish
to liquidate and terminate their business. Unexempt property is collected and reduced to cash. The cash is then distributed
to creditors. An unsecured creditor will only receive a share of the cash if it files a proof of claim. Secured creditors
retain the right to repossess collateral if the debt is not paid as it comes due. The debtor normally receives a discharge
a few months after the case is filed.
CHAPTER 13: It is frequently referred to as a "wage earner" bankruptcy,
although it is available to individuals with regular income from any source, not just wages. You can usually keep your property.
The court must approve your repayment plan and your budget. Under this chapter, debtors are permitted to repay creditors,
in full or in part, in installments over a three-year period, during which time creditors are prohibited from starting or
continuing collection efforts. The debtor normally receives a discharge after all of the monthly payments have been tendered.
CHAPTER 11: Filed by corporations
CHAPTER 12: Filed by family farmers.
IMPORTANT ISSUE TO REVIEW WITH YOUR ATTORNEY
Prior Bankruptcies: There are limits on how often you can file bankruptcy. The length of the time limit depends
upon the type of bankruptcy to be filed this time and the type of bankruptcy last filed.
Taxes: A bankruptcy discharge does not discharge an individual of an income tax unless the tax is more than three years old. The age of the tax is measured from the date the return was
due. In addition, the tax return must have been filed at least two years ago. Lastly, the tax return cannot have been a fraudulent
tax return. There can be mistakes, but not fraud. Tax liens survive bankruptcy. If a lien has attached to your property, the
lien can be enforced.
Student Loans: A bankruptcy discharge does not relieve an individual of liability for government guaranteed
student loans unless denial would impose an undue hardship.
Child Support: A bankruptcy discharge does not relieve an individual of liability for overdue alimony or child
Fines and Restitution: A bankruptcy discharge does not relieve an individual of liability for court fines
Injury Caused by Drunk Driving: A bankruptcy discharge does not relieve an individual of liability
for debts incurred while operating a motor vehicle or boat while under the influence of a drug or alcohol.
A bankruptcy discharge only protects the individual or married couple which filed the bankruptcy petition.
The nonfiling co-debtor will remain liable for debts which he or she guaranteed or cosigned. If one spouse has guaranteed
or cosigned the debtors of the other spouse, the creditor may be able to seek payment via the sale of the debtor's home. If
there is no joint debt, it is more likely the married couple will be able to keep their home.
Gifts: The bankruptcy court can order the return of all gifts made while the debtor's liabilities
exceeded the value of his or her property.
of Debt: You cannot give preferential or special treatment to creditors prior to filing
bankruptcy. The bankruptcy court can order creditors to return payments totaling more than $600.00 if tendered during the 90 days proceeding the filing of the bankruptcy petition. The bankruptcy court
can order family members
and business partners to return all payments in any dollar amount made during the 12 months proceeding the filing of the bankruptcy
Bad Checks: Bankruptcy does not stop the initiation or continuance
of criminal prosecution arising from bad checks.
Debt incurred with the intent to file bankruptcy or while at risk of filing bankruptcy may not be discharged. Because payday loans are generally the most recently obtained debt and are often less than
a week old, there is a greater likelihood the debt will not be discharged.
Virginia Code section 18.2-115 makes it a crime to sell, pawn, give
away, or dispose of property used as collateral for a loan or purchased on credit with the right of repossession for nonpayment.
For example, you cannot pawn jewelry purchased on credit unless the jewelry has been paid for and the lien released.
of Furniture, Jewelry, Etc.: Virginia Code section 18.2-115 makes it a crime to sell,
pawn, give away, or dispose of property used as collateral for a loan or purchased on credit with the right of repossession
for nonpayment. For example, you cannot pawn jewelry purchased on credit unless the jewelry has been paid for and the lien
Accounts: If you owe money to the same bank or credit union at which you keep a checking or savings account, the bank can
freeze your account and apply the funds in the account against your debt. This is called a right of settoff.
Inheritance: If you inherit property
or life insurance proceeds within 180 days of filing bankruptcy, the inheritance or life insurance will be used to pay your
Estate Transactions: The bankruptcy court can order the return of all gifts made while the debtor's liabilities exceeded the value of
his or her property.
Recently Incurred Debt: Debt incurred with the intent to file
bankruptcy or while at risk of filing bankruptcy may not be discharged.
Future Anticipated Debt: Bankruptcy can be though of as a snap
shop in time. Debt incurred after the filing of the petition is classified as post-petition debt and is not subject to the
order of discharge.
OPTIONS REGARDING SECURED DEBT
AUTOMOBILE LOANS MORTGAGES FURNITURE LOANS
IN STOR CREDIT CARDS
What is a lien? A lien is the right to repossess collateral if a debt
is not paid as the debt comes due. The lien might be a voluntary lien such a lien securing the repayment of an automobile
loan, or it might be involuntary such a a property tax or a judgment lien.
Examples: Automobile loans, mortgages, furniture loans, jewelry purchases, and pawn shops
are the most common types of liens; but liens also include purchases made with a merchant's credit card, tax liens, mechanic
liens, judgment liens, and blanket business property liens. A lien is also created when you pledge your TV, VCR, stereo, or
other household goods as collateral to obtain a loan.
Reaffirm: A reaffirmation agreement is a written contract between the debtor and the
creditor in which the debtor promises to repay a portion or all of the debt and the creditor promises to let the debtor keep
the collateral. The debt is usually repaid in monthly installments. The reaffirmation agreement is
voluntary and the creditor can refuse to accept installment payments.
Redeem: A debtor may keep the collateral and remove the lien by making a lump sum payment
equal to the lesser of the value of the collateral or the balance due on the loan.
Chapter 13: A debtor may keep the collateral and pay for the collateral in monthly installments
through a confirmed chapter 13 plan.
Surrender: The collateral may be surrendered to the lien holder. If the collateral is
sold by the creditor for less than the amount owed, the remaining balance will be subject to the bankruptcy order of discharge.