NEED A LAWYER ? CALL FLINT BANKRUPTCY ATTORNEY TERRY BANKERT 810-235-1970

File Flint Chapter Seven Bankruptcy you will not be alone. Call 235-1970

September 23, 2012

HAVING PROBLEMS PAYING YOUR DEBTS?

FLINT BANKRUPTCY Lawyer Terry R. Bankert 235-1970

Because of our poor economy nationally, and in Michigan, many families have economic problems.

Do you?

Are you having problems paying your debts?

Is your family threatened with garnishment, foreclosure or repossession?

If yes you are not alone.
see  http://goodmorningflint.blogspot.com/2012/09/having-problems-paying-your-debts-flint.html

We are a debt relief agency helping you as a Flint Bankruptcy Lawyer. We will help you   file and get debt relief.

Bankruptcy is a way to deal with your  financial problems , get a fresh start and care for your family.

You Did know you have the right under federal law to file for bankruptcy relief from your creditors just like General Motors, Big Banks and Wall Street..

The theory of Bankruptcy is that it is a legal proceeding in which a person can get a fresh financial start. Do you need as fresh start?

First try to pay your bills before filing bankruptcy because you can do so only once every six years and it is the right thing to do.

In most cases, you will want to save this valuable option until you really need it. Also, you may not need to file bankruptcy even though creditors are threatening you because you may have no nonexempt property or you wages are too high.


Just like Wall Street got their Fresh start a chapter seven Flint Bankruptcy it is your fresh start.

http://dumpmycreditors.wordpress.com/2011/11/15/your-persoanl-wall-street-type-bailout-a-chapter-sebven-bankruptcy-810-235-1970/

Some things bankruptcy can do:

Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts.

Stop foreclosure of your home and allow you to catch up on missed payments.

Stop repossession of a car or other property, or, in some situations, force the creditor to return property even after it has been repossessed.

Stop wage garnishments.

Stop debt collection harassment.

Restore or prevent termination of utility service for nonpayment of previous bills (you will probably have to pay a deposit, but the deposit cannot be more than 1-1/2 to 2 times your previous regular bills according to the Arizona Administrative Code).

Get your drivers license back if it has been suspended because you didn’t pay court-ordered damages for a driving accident (unless you were driving under the influence of drugs or alcohol).

Some things bankruptcy can’t do.

Eliminate certain rights of secured creditors. Some examples of secured debts are car loans and home mortgages. You can force secured creditors to take payments over time, but generally, you cannot keep the collateral unless you continue to pay the debt.

Discharge debts that arise after the bankruptcy has been filed.

Discharge certain types of debts, such as child support, alimony (spousal maintenance), certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and most taxes.

Eliminate the obligation of a co-signer on your loan in most cases.

Chapter Seven Bankruptcy is known as a “fresh start” bankruptcy, or “liquidation”. Your debts are discharged (canceled), but you must give up any nonexempt property to the trustee to pay to your creditors. You can keep secured property if you are current on the payments and continue making the payments regularly.

When you file for bankruptcy you will not be alone.

http://occupyflintlegal.wordpress.com/2012/09/11/when-you-file-for-chapter-seven-bankruptcy-you-will-not-be-alone-810-235-1970/

In Chapter 7 bankruptcy, the trustee must take your nonexempt property and use it to pay your creditors.Most debtors in Genesee County because of our loss of residential value keep all of their possessions that are not encumbered by a loan or mortgage.

If you have property, which is non-exempt, you could sell it before filing bankruptcy and use the money to purchase things, which are exempt; such are food, furniture, or clothing.

However, you cannot give property away to friends or relatives, and have them give it back to you after the bankruptcy.

Any transfers of property without receiving fair value for it within one year before filing bankruptcy are called a fraudulent transfer.

The property could be taken by the bankruptcy court and sold to pay some of your debts.

If the court finds you have been dishonest in your bankruptcy, you could be denied your discharge. You could also be charged with federal or state crimes, which carry serious fines and jail sentences.

Also, you cannot prefer one creditor over another by making payments on the debt within 90 days before filing bankruptcy (one year if the person paid is an “insider” (family, friend, etc.)

If you do so, the bankruptcy court can take that money away from the person you paid. This is to insure that all creditors are treated equally. This does not apply, however, to regular monthly payments such as your car payment, house payment, rent, utilities.

Call my office at 810-235-1970 andm make a free initial appointment so we can continue this discussion to gice you a fresh financial start.

 

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HAVING PROBLEMS PAYING YOUR DEBTS? FLINT BANKRUPTCY 235-1970

Because of our poor economy nationally and in Michigan many families have economic problems. Do you? Having  problems paying your debts? Is your family  threatened with garnishment, foreclosure or repossession? If yes you are not alone. see http://goodmorningflint.blogspot.com/2012/09/having-problems-paying-your-debts-flint.html

We are a debt relief agency helping you as a Flint Bankruptcy Lawyer h file and get relief.

Bankruptcy is a way to deal with these problems.

You Did  know you have the right under federal law to file for bankruptcy relief from your creditors.

The theory of Bankruptcy is that it is a legal proceeding in which a person can get a fresh financial start. Do you need as fresh start?

Try to pay your bills before filing bankruptcy because you can do so only once every six years. In most cases, you will want to save this valuable option until you really need it. Also, you may not need to file bankruptcy even though creditors are threatening you because you may have no nonexempt property or wages.

This means you have nothing the creditors can take from you. You can't be put in jail for failing to pay your civil debts (other than fines or other court ordered amounts).

Some things bankruptcy can do:

• Eliminate the legal obligation to pay most or all of your debts. This is called a "discharge" of debts.
• Stop foreclosure of your home and allow you to catch up on missed payments.
• Stop repossession of a car or other property, or, in some situations, force the creditor to return property even after it has been repossessed.
• Stop wage garnishments.
• Stop debt collection harassment.
• Restore or prevent termination of utility service for nonpayment of previous bills (you will probably have to pay a deposit, but the deposit cannot be more than 1-1/2 to 2 times your previous regular bills according to the Arizona Administrative Code).
• Get your drivers license back if it has been suspended because you didn't pay court-ordered damages for a driving accident (unless you were driving under the influence of drugs or alcohol).

Some things bankruptcy can't do

• Eliminate certain rights of secured creditors. Some examples of secured debts are car loans and home mortgages. You can force secured creditors to take payments over time, but generally, you cannot keep the collateral unless you continue to pay the debt.
• Discharge debts that arise after the bankruptcy has been filed.
• Discharge certain types of debts, such as child support, alimony (spousal maintenance), certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and most taxes.
• Eliminate the obligation of a co-signer on your loan in most cases.

Chapter Seven Bankruptcy  is  known as a "fresh start" bankruptcy, or "liquidation". Your debts are discharged (canceled), but you must give up any nonexempt property to the trustee to pay to your creditors. You can keep secured property if you are current on the payments and continue making the payments regularly.

When you file for bankruptcy you will not be alone.
http://occupyflintlegal.wordpress.com/2012/09/11/when-you-file-for-chapter-seven-bankruptcy-you-will-not-be-alone-810-235-1970/

In Chapter 7 bankruptcy, the trustee must take your nonexempt property and use it to pay your creditors.Most debtors in Genesee County because of our loss of residential value keep all of their possessions that are not encumbered by a  loan or mortgage.  

If you have property, which is non-exempt, you could sell it before filing bankruptcy and use the money to purchase things, which are exempt; such are food, furniture, or clothing. However, you cannot give property away to friends or relatives, and have them give it back to you after the bankruptcy. Any transfers of property without receiving fair value for it within one year before filing bankruptcy are called a fraudulent transfer. The property could be taken by the bankruptcy court and sold to pay some of your debts. If the court finds you have been dishonest in your bankruptcy, you could be denied your discharge. You could also be charged with federal or state crimes, which carry serious fines and jail sentences.

Also, you cannot prefer one creditor over another by making payments on the debt within 90 days before filing bankruptcy (one year if the person paid is an "insider" (family, friend, etc.) If you do so, the bankruptcy court can take that money away from the person you paid. This is to insure that all creditors are treated equally. This does not apply, however, to regular monthly payments such as your car payment, house payment, rent, utilities.

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BANKRUPTY CHAPTER SEVEN COURT OPINION ON LANDLORD, RENT, SECURITY DEPOSIT BY FLINT BANKRUPTCY ATTORNEY TERRY BANKERT 235-1970

FEDERAL COURT ORDER REVERSING THE LOWER BANKRUPTCY COURT AND REMANDING ( SENDING IT BACK TO THE BANKRUPTCY COURT) FOR FURTHER PROCEEDINGS IN BANKRUPTCY COURT




I. BANKRUPTCY ISSUES





LANDLORD SAYS HE SHOULD NOT HAVE TO RETURN BANKRUPTY DEBTOR SECURITY DEPOSIT



Appellant challenges the Bankruptcy Court’s Order of May 26, 2011, compelling

him to return the full amount of security deposits paid by tenants Appellees Kristin

Zzz, Kelsea Zzz, and Cody Yyy in connection with the rental property located

at 274 E. St. Clair, Romeo, Michigan (the “Romeo property”). Appellees did not

respond to Appellant’s Brief, and the time to do so has passed.



FLINT BANKRUPTCY LAWYER 235-1970



This post by Flint Bankruptcy Attorney Terry R. Bankert , 235-1970, principally from the case cited below and for social media and SEO.. Bankert comments CAP or cited [trb] Read the entire original opinion and seek competent legal counsel before you rely on this content.



THE FEDERAL COURT TELLS THE BANKRUPTCY COURT IT WAS WRONG.



The Court REVERSES the Bankruptcy Court and REMANDS for further

proceedings consistent with this order.



II. FACTS OF THE CASE



A. Brief Background



THE CAUSE BEGAN AS A CHAPTER SEVEN BANKRUPTCY



On November 8, 2010, Appellant John Robert Iwanski filed for Chapter 7

bankruptcy jointly with his wife Kay Ellen Collins.



DEBTOR FELL BEHIND ON MORTGAGE PAYMENTS



Prior to filing for bankruptcy, Mr. Iwanski fell behind on mortgage payments for an investment property, the Romeo property.



THE HOME WAS FORECLOSED



On October 8, 2010, the Mortgagee bank foreclosed on the Romeo property.



HOMEOWNER FILED FOR BANKRUPTCY



Mr. Iwanski filed for bankruptcy on November 8, 2010, to protect himself from creditors,

including a potential deficiency owed to the mortgage creditor regarding the Romeo

property.



TENANTS REMAINED IN THE DEBTORS HOME



Appellees Cody Yyy, Kristin Zzz, and Kelsea Zzz (collectively, the

“Tenants”) continued to occupy the Romeo property after the foreclosure and Mr.

Iwanski’s bankruptcy filing.



TENANT HAD SIGNED A SIX MONTH LEASE



Mr. Iwanski had signed six-month leases with the Tenants

for the Romeo property in September 2010.



TENANTS LEASE EXPIRED THEY STAYED AS A HOLD OVER TENANT



After the expiration of the leases in March 2011, the Tenants remained at the Romeo property as month-to-month holdover tenants.



BANKRUPTCY DISCHARGE ON 02/06/11



Mr. Iwanski received his bankruptcy discharge on February 16, 2011.



04/08/12 REDEMPTION PERIOD EXPIRED



On April 8, 2011, the redemption period expired for the foreclosed Romeo property.



04/19/12 BANK FILED FOR RELIEF FROM STAY



Soon after, on April 19, 2011, the Mortgagee bank filed a motion for relief from the automatic stay to allow it to take possession of the Romeo property. The Tenants filed written responses to the motion.



The Bankruptcy Court scheduled the motion for hearing on May 16, 2011.



Mortgagee’s counsel, Mr. Iwanski’s counsel, and the Tenants appeared. However,

based on the fact that he was not opposing the motion, Mr. Iwanski did not attend.

Because Mr. Iwanski was not present, the Court adjourned the hearing to May 23, 2011.



B. May 23, 2011 Hearing



The Court held a hearing on May 23, 2011, to consider the motion of the

Mortgagee bank to lift the automatic stay.



All the parties who appeared at the May 16 hearing appeared at this hearing, plus Appellant Mr. Iwanski.





At the hearing, the Bankruptcy Court took no sworn testimony, and admitted no

evidence.



MOTION TO LIFT AUTOMATIC STAY WAS LIFTED



The Mortgagee’s motion to lift the automatic stay was not opposed and was

granted. In connection with the motion, the Court inquired into who was entitled to rents

due regarding the Romeo property after the sheriff sale but before the expiration of the

redemption period.



ARGUED MICHIGAN LAW SAYS FORMER OWNER HAS RIGHT TO RENT UNTIL REDEMPTION PERIOD EXPIRES



Mr. Xxx’s counsel and the Mortgagee’s counsel stated that they

had researched the issue, and that they agreed that under Michigan law the former

owner (i.e., Mr. Xxx) is entitled to all rents due until the expiration of the redemption

period. Tr. at 3.



TESTIMONY THAT TENANTS BEHIND ON RENT



At the hearing, Mr. Xxx stated that the Tenants were behind in their rent and

that eviction proceedings had been initiated in state court. Tr. at 13.



TENANTS DEMANDED SECURITY DEPOSIT BACK



He also stated that Tenants were asking for their security deposits back despite the fact that they were still occupying the premises. Tr. at 14.





Mr. Xxx stated that Tenants Kristin Zzz and Kelsey Zzz had last paid

$100 in March 2011 toward the monthly rent of $475, and that they had paid nothing for

April and May.



The Zzz Tenants denied these allegations, stating “there’s no past

due rent owed to [Mr. Xxx] at all,” and “we have receipts for all our rent.” Tr. at 12,

13.



SECURITY DEPOSIT RETURN DENIED



They also demanded refund of their security deposit of $712.50. Tr. at 17.

Tenant Cody Yyy said that he last paid rent in February 2011. Tr. at 20. He

said he did not pay because he was not aware who owned the building on account of

Mr. Xxx’s foreclosure. He also said he was entitled to return of his security deposit

in the amount of $787.50. Tr. at 17.



MICHIGAN LAW ON RENTS DISTRIBUTION TIMING



Mr. Xxx’s counsel admitted that under Michigan law Mr. Xxx is entitled to

rent only until the expiration of the redemption period on April 8, 2011. Tr. at 14. Any

rent owed after that date would be payable to the Mortgagee bank.



SECURITY DEPOSIT CAN BE USED FOR UNPAID RENT



However, he also maintained that under Michigan law, Mr. Xxx is entitled to apply the Tenants’ security deposits to unpaid rent. Tr. at 18. He mentioned that because there is unpaid rent for at least March and April, Mr. Xxx is entitled to apply the Tenants’ security deposits to the rent.



BANKRUPTCY COURT ORDERED RETURN OF FULL SECURITY DEPOSIT



At the end of the hearing, the Bankruptcy Court ruled: “Mr. Xxx, I hereby

order you to refund to these tenants their full security deposits within seven days . . . .”

Tr. at 21.



The Bankruptcy Court issued a one-sentence order on May 26, 2011,

compelling the return of the security deposits for the reasons stated on the record.



III. WHAT IS THE STANDARD OF REVIEW WHEN THE FEDERAL COURT REVIEWED THE BANKRUPTCY COURT



COURT WILL ASK WAS THERE CLEAR ERROR ON THE PARTY OF THE BANKRUPTCY JUDGE



The Court reviews the Bankruptcy Court’s findings of fact for clear error and its

conclusions of law de novo. Batie v. Investors Credit Corp., 995 F.2d 85, 88-89 (6th Cir.

1993). If the Bankruptcy Court’s factual findings are silent or ambiguous as to an

outcome determinative factual question, the district court may not engage in its own

factfinding but, instead, must remand the case to the Bankruptcy Court for the

necessary factual determination. Hardin v. Caldwell, 851 F.2d 852, 857 (6th Cir. 1988).



IV. THE PARTIES ARGUMENT



On appeal, Mr. Xxx argues that the Bankruptcy Court’s order ignores the fact

that he was entitled to apply security deposits to unpaid rent, and that he had no

obligation to return security deposits until 45 days after the termination of occupancy by

Tenants.



He also argues that the May 23, 2011 hearing involved a number of

procedural irregularities, including that the Bankruptcy Court ruled without any evidence because nobody at the hearing was sworn in, and there was no opportunity for cross examination or discovery. Therefore, he says the Court’s order lacks an evidentiary basis. This Court agrees.



V. THE FEDERAL COURT ANALYSIS



MORTGAGE HOLDER IN MICHIGAN STAYS IN PROPERTY UNTIL REDEMPTION PERIOD ENDS



Michigan law clearly states that a mortgagor is entitled to possession of the

mortgaged property, and all the benefits of possession, until the expiration of the

redemption period.



The Michigan Supreme Court says, “[T]he bank ha[s] no legal right

of possession during the [ ] redemption period. . . It has been the definite and

continuous policy of this State to save to mortgagors the possession and benefits of the

mortgaged premises, as against the mortgagees, until expiration of the period of

redemption.” Kubczak v. Chemical Bank & Trust Co., 575 N.W. 2d 745, 747-48 (Mich.

1998).



The benefits of possession include the right to collect rent. Bennos v.

Waderlow, 289 N.W. 267, 269 (Mich. 1939) (“[I]t is settled law that, until after the

expiration of the equity of redemption through foreclosure proceedings, a mortgagee is

not entitled to the rents and profits of the sold or mortgaged premises.”).





There is no dispute that the redemption period for the Romeo property expired on

April 8, 2011. Tr. at 15. There is also no dispute that the Tenants continued to occupy

the property as of this date, and, indeed, were still occupying the property as of the May

23, 2011 hearing. Therefore, Mr. Xxx is entitled to all rents due on the Romeo

property through April 8, 2011.



Additionally, under the Michigan Landlord and Tenant Relationship Act of 1972,

M.C.L. §§ 554.601 et seq., a security deposit may be used for “all rent in arrearage.” Id.

§ 554.607.



A landlord is also entitled to retain a security deposit for 45 days after

termination of the occupancy, and to begin an action for a money judgment against the

former tenants during that time. Id. § 554.613. The landlord may retain the portion of

the security deposit necessary to satisfy any money judgment against the tenant. Id.





Lastly, it appears that this matter may have been subject to mandatory

abstention by the Bankruptcy Court. See 28 U.S.C. § 1334. Mr. Xxx states that

eviction proceedings were ongoing in state court at the time of the Bankruptcy Court’s

order, but the Bankruptcy Court did not give him the opportunity to file a motion

requesting abstention.



Without making any factual findings or stating the legal basis for its ruling, the

Bankruptcy Court simply ordered Mr. Xxx to return Tenants’ security deposits within

seven days of its order.



The Bankruptcy Court’s order does not take into account clear

Michigan law which states that the mortgagor is entitled to all rent due until the

expiration of the redemption period, and that the mortgagor may apply money from a

security deposit to unpaid rent.



The Bankruptcy Court’s order is “silent or ambiguous as to an outcome

determinative factual question.” Caldwell, 851 F.2d at 857.



This Court remands this matter to the Bankruptcy Court to make the appropriate factual findings.



Specifically, the Bankruptcy Court must determine what rent, if any, was owed by Tenants to Mr. Xxx at the end of the expiration of the redemption period on April 8, 2011.



If the Bankruptcy Court determines that Tenants were in arrears as of that date, it must allow Mr. Xxx to apply the necessary portion of Tenants’ security deposits to the unpaid rent.



Additionally, the Bankruptcy Court must give Mr. Xxx the opportunity to file an

abstention motion before proceeding to adjudicate these matters.



VI. THE FEDERAL COURT CONCLUSION



The Bankruptcy Court’s Order of May 26, 2011, is REVERSED. The matter is

REMANDED for further proceedings. IT IS ORDERED.,S/Victoria A. Roberts Victoria A. Roberts United States District Judge



[1]



UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION,In Re: Chapter 7, John Robert Xxx, and, Case No. 10-74033, Kay Ellen Collins, Hon. Steven W. Rhodes,Debtors.

Case No. 11-12379,Appellant, Hon. Victoria A. Roberts,v.

Federal Home Loan Mortgage Corp., Cody Yyy, Kristin Zzz, and

Kelsea Zzz, Appellees.



[trb]

This post by Flint Bankruptcy Attorney Terry R. Bankert , 235-1970, principally from the case cited [1]. Bankert comments CAP or cited [trb] Read the entire original opinion and seek competent legal counsel before you rely on this content.

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THE ONLY OPTION FOR SOME. YOU WILL NOT BE THE ONLY RETIREE YOU WILL NOT BE ALONE.

The only option for some. You are not alone.,
originally uploaded by terrybankert.

According to a recent story in USA Today, the Consumer Bankruptcy Project found that bankruptcy filings by those 65 and older jumped by 150 percent from 1991 to 2007. At the same time, bankruptcy filings for U.S. residents from the ages of 75 to 84 increased 433 percent.[9] You may need a bankruptcy attorney.


FILING FOR CHAPTER 7 BANKRUPTCY FOR SOME MAY BE THE ONLY WAY TO GET A FRESH START TO BEGIN RETIREMENT YEARS.

We work our jobs raise our kids pay our taxes and what happens? We have to beg our way through retirement. Is this a option that you want?


Instead of saving for retirement, a growing number of elderly Americans are instead preparing to file for Chapter 7 bankruptcy. At least that’s what the results of a new survey say.[9]


If you are approaching retirement years your  age group ranks are growing in bankruptcy court.

According to a recent story in USA Today, the Consumer Bankruptcy Project found that bankruptcy filings by those 65 and older jumped by 150 percent from 1991 to 2007. At the same time, bankruptcy filings for U.S. residents from the ages of 75 to 84 increased 433 percent.[9]

ELDERLY HEALTH CARE AND BANKRUPTCY
see notes at;

http://goodmorningflint.blogspot.com/2010/11/only-option-for-some-you-are-not-alone.html

Who do you trust to advise you?



A study was conducted by Professor John Pottow, an expert on bankruptcy at the University of Michigan Law School. He found that even though the elderly account for a relatively small share of overall bankruptcy filings, the growth rate in their filings has been dramatic. For example, from 1991 to 2007, the percentage of bankruptcy petitioners age 65 to 74 rose 178 percent. Those figures reflect trends before the recession began in 2008, so it’s fair to assume the situation has worsened in the past few years due to job losses, diminished retirement portfolios and housing equity.[7]



Our economy and housing values will only slowly recover. How much time do we have? What are our choices? The notes in the following section show you choice, filing for personal bankruptcy.

Posted here by Flint Area Bankruptcy Attorney Terry Bankert  810-235-1970

PERSONAL BANKRUPTCY

Is personal bankruptcy -- filing Chapter 7 -- the right solution for you? For millions of debt-ridden people, it's the only way out of their financial quagmire. Today's high level of unemployment is resulting in waves of desperate folks seeking shelter under Chapter 7 of the U.S. bankruptcy code. [1]



What It Is:

Chapter 7 refers to the section of U.S. bankruptcy law under which companies and individuals liquidate their assets in order to repay their debts.[2]

WHY ARE MORE ELDERLY GOING BANKRUPT?

Not only have bankruptcy filings within the general populace increased in Colorado but so have bankruptcy filings for those over 60 years of age, with the primary reason attributed to credit card debt. Many of the elderly have limited incomes, typically Social Security retirement benefits combined with a pension income, and such limited income is unlikely to offset the increasing interest, late charges and other fees charged by the credit card companies.[8]

There’s no empirical evidence as to why bankruptcy filings have increased among the elderly but my experience (from years of experience handling bankruptcy matters in Denver and most areas of Colorado) is that the elderly are generally less sophisticated with using credit cards and do not have similar access to other types of credit (due to having a fixed income). Additionally, many of the elderly are not as likely to negotiate with creditors and are typically less inclined to request financial help from family and friends.[8]

Most of the bankruptcy filings I see from elderly clients are chapter 7 cases. Having a limited income due to being retired, the overwhelming majority of my clients pass the Means Test and are not required to pay back any debts to unsecured creditors in a chapter 13 payment plan.[8]

The minority of my elderly clients who do file for chapter 13 in Colorado do so because of a pending foreclosure (with their house being their most valuable asset) or because of a previous chapter 7 filing within the past 8 years. Those facing foreclosure often lack the ability to keep up with monthly mortgage payments (especially as they simultaneously tackle the aforementioned credit card debt). [8]

Many of my elderly clients are also upside down on their mortgages as housing prices have decreased in Colorado (and nationwide) and are forced to file for chapter 13 bankruptcy to prevent against foreclosure.[8]


How It Works/Example:

Individuals, partnerships, or corporations can file bankruptcy under Chapter 7.[2]

Individuals
To file Chapter 7, the debtor files a petition with the local bankruptcy court (in some cases, creditors can force a debtor into Chapter 7 by filing the petition themselves). The debtor must provide the court with financial and tax information, as well as a list of creditors and outstanding debts. In most cases, the court also requires proof that the individual has obtained credit counseling. Filing the Chapter 7 petition automatically stops most collection actions against the debtor, including lawsuits, garnishments, and phone calls.[2]


Here's a shocking statistic to put the current financial environment in perspective: 1,512,989 people filed for bankruptcy in the 12 months ending June 30, 2010, a +21% increase from the 12 month period ending June 30, 2009. That's more people than the populations of any of these 10 states: New Hampshire, Maine, Hawaii, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota or Wyoming. It's also the most bankruptcies filed for any period following the Bankruptcy Prevention Act of 2005. [1]



Bankruptcy cases filed in federal courts for Fiscal Year (FY) 2010, the 12-month period ending Sept. 30, totaled 1,596,355, up 13.8 percent over total FY 2009 bankruptcy filings of 1,402,816; according to statistics released Monday by the Administrative Office of the U.S. Courts. While non-business bankruptcy filings continued to rise in FY 2010, business filings dropped slightly for the first time since 2006. The bankruptcies reported are for Oct. 1, 2009 through Sept. 30, 2010.[5]



There are many advantages to declaring bankruptcy. In most cases, filing for Chapter 7 will automatically stop most collection actions, including lawsuits, wage garnishments, and those never-ending phone calls. [1]



A TRUSTEE GETS INVOLVED

The U.S. trustee (or the court itself, in some states) then appoints an impartial trustee to handle the case and liquidate the debtor's assets. If all the debtor's assets are exempt or subject to liens, there may not be any assets to liquidate and hence no money to distribute to creditors. If there are assets to liquidate, however, the creditors usually file a written claim so that they can receive some of the proceeds. The trustee handles the liquidation and determines which creditors are paid first.[2]



However, before you take the drastic step of filing under Chapter 7, you need to be fully apprised of the potential pitfalls. Here's a look at a few nasty surprises that may await you:[1]

Bankruptcy laws vary from state to state.
Every state has its own peculiarities and exemptions; some state laws are more generous than others. Some states allow exemptions to shelter your automobile, household goods, Individual Retirement Accounts (IRAs), etc. Other states are more restrictive. Before you file for bankruptcy, do some homework to find out the laws applicable to your home state.[1]

Mortgages and any other secured loans are not eliminated.
Bankruptcy is designed to get creditors off your back, so you can get some breathing room to right yourself. Certain types of unsecured debt (e.g., credit cards) can be wiped off the books. However, to the consternation of many who file for bankruptcy, the laws don't allow you to just walk away from your mortgage or any other secured loan (any loan in which you've pledge some kind of "collateral" -- like your car or your home -- for the loan). Bankruptcy only keeps those payments at bay until you have dealt with other creditors.[1]



Collateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation.[3]



Any cosigners of any collateral are in the same boat with you.
Likewise, if any of your collateral involves consignors, your cosigners won't be able to emerge out of debt with you. They will be liable for part or all of the debt you discharge through bankruptcy.[1]

Bankruptcy is reported on your credit report for 10 years.
Bankruptcy is like a Scarlet Letter that follows you around for a decade. The good news is that within this time frame, you can still re-establish a good credit rating, through frugality and paying off your debts in a timely fashion.[1]



What It Is:

A credit report is a report detailing a person's financial history specifically related to their ability to repay borrowed money.[4]

How It Works/Example:

There are three major credit bureau s in the United States: TransUnion, Experian and Equifax. Each keeps a database of financial information about borrowers, including the names of all their creditors (past and present), the dates when their accounts opened and closed, whether the account is a joint account, the balance and credit limit on each account, and the number and dates of late payments.[4]

Related information is also including such as previous names, address history, birth date, phone numbers, social security number, marital status, any legal judgments, child support owed, arrests, indictments, convictions, etc. Not just anyone can view someone's credit report --it is only available to those with a legally permissible purpose.[4]

Information on credit reports are used to determine a person's credit score. The credit score (or FICO score) in turn reflects a person's credit risk--that is, whether he or she is a trustworthy borrower. The more prompt and responsible a person is financially, the higher his or her FICO score is.[4]

In general, negative information (such as late payments or tax liens) remains on a credit report for seven years. Bankruptcies stay on the report for 10.

By law, credit bureaus must send you one copy (at your request) of your credit report each year. Additionally, if you have been denied a credit card because of information on your credit report, you may receive another free copy within 60 days of the denial. In most other circumstances, you usually have to pay the credit bureau for a copy of your credit report.[4]

Why It Matters:

Your credit report and the creditworthiness it reflects tells banks, credit card companies, retail stores, utilities, landlords, and even employers whether you are a financially responsible person. Bad credit causes people to be denied for loans, pay higher interest rates on loans, and have trouble in even the most minor areas of life, such as renting a video, getting utilities turned on or renting a car. Character and collateral also influence a person's creditworthiness, but the credit report often outweighs these attributes.[4]

It is important to note that credit reports often contain errors, so a consistent periodic look at your credit report can be very helpful. This also goes a long way toward preventing identity theft, because any accounts opened in your name will appear there. You have the right to contest incorrect information in your credit report, and credit bureau s by law must provide toll-free phone numbers, live customer-service representatives, and an expeditious investigation process. [4]



Bankruptcy does not wipe out withholding or sales taxes.
It's possible to get rid of old income taxes that are more than three years old, but this benefit has given rise to a myth that you also can eliminate withholding or sales taxes. This is not possible, no matter how old the taxes.[1]

You can't cherry pick the debts and property to list in your bankruptcy.
Many people seem to think that they can go through their portfolio of possessions and pick and choose what they want to list in the bankruptcy. They're shocked when they discover that it's all fair game. When you file bankruptcy, the law mandates that you list all your property and debts.[1]

Declaring bankruptcy does not get your "ex" off your back.
Bankruptcy does not allow you to cease payment on child support or alimony. Sorry, but you still need to write those checks. Although divorce is one of the most common causes of bankruptcy (click here to see the Top Causes of Bankruptcy...And How to Avoid Them), your agreement is not affected by a Chapter 7 filing. So, if you're thinking that you can wiggle out of those responsibilities, think again.[1]

Declaring bankruptcy does not get you off the hook on student loans.
Your student loan payments still need to be made. They can't be wiped out, as with a credit card balance.[1]

You must still fear the repo man.
A bankruptcy discharge doesn't eliminate liens. A secured debt is a debt where the creditor has a lien on your property and can repossess it if you don't pay the debt. Bankruptcy can wipe out the debt, but it still doesn't prevent the secured creditor from repossessing your property.[1]



HEALTH CARE AND BANKRUPTCY

healthcare expenses can wreck retirement security - a fact underscored by a recent study that found medical expenses are a major contributor to bankruptcy among older Americans.[6]

The study was conducted by Professor John Pottow, an expert on bankruptcy at the University of Michigan Law School. He found that even though the elderly account for a relatively small share of overall bankruptcy filings, the growth rate in their filings has been dramatic. For example, from 1991 to 2007, the percentage of bankruptcy petitioners age 65 to 74 rose 178 percent. Those figures reflect trends before the recession began in 2008, so it's fair to assume the situation has worsened in the past few years due to job losses, diminished retirement portfolios and housing equity.[6]

Healthcare is a major area of expense in retirement, and costs are rising more quickly than overall inflation.[6]

The Center for Retirement Research at Boston College (CRR) reports that the typical married couple at age 65 can expect to spend $197,000 in lifetime uninsured health costs, including insurance premiums, out-of-pocket and home healthcare. That figure excludes any long-term care need. When nursing care is factored in, the typical cost rises to $260,000, with a 5 percent chance of hitting $570,000.[6]

Research by Fidelity Investments shows that retiree healthcare expenses this year are 4.2 percent higher than in 2009, and have jumped 56 percent since 2002. By contrast, overall consumer prices are up just 1.1 percent so far this year. Fidelity also found that monthly healthcare costs average $535 this year, second only to the cost of food.[6]

A JUDGE GETS INVOLVED



Ultimately, a judge decides whether to discharge an individual's debt. The judge can deny the discharge if the debtor failed to keep adequate records, failed to explain the loss of any assets, committed a crime, disobeyed court orders, or did not seek credit counseling. Alimony, child support, and student loans generally cannot be discharged in a Chapter 7 case, nor can most judgments against the debtor for criminal acts.[2]

Why It Matters:

Chapter 7 is usually the last resort for individuals and businesses. For individuals, the goal of Chapter 7 is to get a fresh start by removing debts. However, bankruptcy virtually ruins a person's credit for several years, making it very difficult and expensive to borrow money in the future.[2]

The law works to prevent people from filing Chapter 7 merely to avoid repaying a debt. This is why not all individuals qualify for Chapter 7, especially those with high monthly income or those primarily saddled with consumer debts (i.e., credit card debt). If the individual does not qualify for Chapter 7, the case usually becomes a Chapter 13 filing, where the individual must still repay the debt, albeit under a payment plan.[2]




ELDERLY AMERICANS AND BANKRUPTCY



From these unsettling numbers, it seems that more elderly Americans will soon need to learn how to claim bankruptcy.[9]

This is a shame: U.S. residents who are nearing their retirement ages are supposed to be worrying about how much money they’ll need to save to spend their post-working years in a state of peace. They’re not supposed to learning the ins and outs of how to file bankruptcy.[9]

However, this is exactly what is happening. As usual, blame falls on the struggling national economy. Older Americans are facing the same problems that all U.S. residents are facing: Some have lost their jobs late in life. Others have had to cope with medical bills that are simply overwhelming. Still others have watched as their homes have fallen in value. Many U.S. residents had been counting on their homes’ ever-increasing values to help fund their retirement years. The Great Recession has certainly scuttled that dream.

Of course, the entire country is struggling these days, or so it seems. The number of bankruptcy filings, both of Chapter 7 bankruptcy and Chapter 13 claims, is on the rise. Bankruptcy filings aren’t discriminating based on age, gender, or wealth. U.S. residents of all kinds are facing overwhelming debt and declining yearly incomes.[9]

It’s a situation that won’t improve until the national economy shows some sign of regaining momentum. Unfortunately, it doesn’t look as if this is going to happen any time soon. Yes, it’s true that officially the economy is in recovery mode, but because unemployment remains so high, and because home values continue to fall or remain stagnant, the recovery doesn’t feel like one.[9]

Older Americans struggling with their finances do have some options to avoid Chapter 13 or Chapter 7 bankruptcy. [9]





DO YOU WANT TO BORROW FROM FAMILY MEMBERS?



They can try to borrow money from family members. They can work with non-profit credit counselors to set up budgets that allow them to pay down their outstanding debt. They can also take out debt consolidation loans or work with debt settlement providers. Of course, none of these options is perfect. They call come with negatives, everything from high fees and interest rates to the embarrassment of asking family members for financial help.[9]

FILING FOR CHAPTER 7 BANKRUPTCY FOR SOME MAY BE THE ONLY WAY TO GET A FRESH START TO BEGIN RETIREMENT YEARS.]



Posted here by Terry R. Bankeret
http://attorneybankert.com/



[1]

http://www.investinganswers.com/education/going-bankrupt-isnt-easy-startling-facts-you-never-knew-about-filing-bankrup-1958




[2]



http://www.investinganswers.com/term/chapter-7-352




[3]

http://www.investinganswers.com/term/collateral-1034




[4]

http://www.investinganswers.com/term/credit-report-113


[5]

http://www.grandrapidsmn.com/business/article_13b0cf04-ee8e-11df-8d50-001cc4c03286.html


[6]

http://www.reuters.com/article/idUSTRE6A73M920101108


[7]

http://www.americasnewsonline.com/study-on-bankruptcy-shows-dramatic-growth-in-filings-from-elderly-911/


[8]

http://www.jdsupra.com/post/documentViewer.aspx?fid=0dfce5a1-baa3-41f2-b47c-ea24f4efc410




[9]

http://www.creditloan.com/blog/2010/10/29/chapter-7-bankruptcy-filings-on-rise-among-older-americans/

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