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Archive for the ‘Bankruptcy’ Category

Q: I filed for Chapter 13 bankruptcy in January 2008. I just paid it off and should be receiving my discharge soon, but I checked my credit report and there are two credit card accounts on my report that I included in my bankruptcy and that now say “transferred to another lender or claim purchased.” What does this mean? It also says “included in or discharged through Chapter 13 bankruptcy.” Am I going to be responsible for paying it now that it was sold? I don’t get it.”

A: This is understandably a confusing issue. But let me explain some of what’s going on here.

First of all, the short answer is that no, you’re not going to be responsible for paying it if the debt was sold either during or after your filing of your Chapter 13 bankruptcy.

Any debts that were included in your bankruptcy and that you’ve legitimately been paying off via your Chapter 13, you will not be financially responsible for subsequent to your discharge.

Let’s remember, your Chapter 13 bankruptcy is a reorganization plan. Unlike a Chapter 7 where you liquidate and where you basically completely wipe out those unsecured personal debts – such as your credit card bills or medical bills – with a Chapter 13 you’ve had to actually pay off some or all of your debts over a three‑to-five- year period.

Since a Chapter 13 can last as long as five years, that’s why they call it a “wage earner’s plan.” You’ve got to have some kind of income in order to show the court that you actually can repay part of your debts.

So I’m assuming since you said you’re just about done with your Chapter 13 bankruptcy that in your case you’ve paid what you rightfully owe through the system and that in or around the next few months you’ll actually be getting a notice that your bankruptcy has been completely done.

You bankruptcy repayment plan appears to have taken four years since it’s just about the end of 2011 and you stated that you started in January 2008.

So here is what’s going to happen.

Regarding those two credit card accounts that say “transferred to another lender or claim purchased,” essentially what that means is that your original credit card company sold the debt to someone else.

When that’s the case, on your credit report they have to show one of two things. They have to say that the account has been sold or they have to show your account reported with a zero balance on it.

Realize that different credit bureaus will report transferred or sold accounts in different ways. I’m going to assume that this is an Equifax credit report because usually with Equifax they’re the ones that’ll say “transferred to another lender or claim purchased.”

Your other credit reports might show it slightly differently. With Experian, for example, the account might be noted as “account transferred to another office.”

With TransUnion, the same account might be indicated by language such as “account transferred or sold, purchased by another lender.”

All of these basically mean the same thing — that the original creditor, the original credit card company that you owed, sold the account because after their own internal collection mechanisms failed they essentially wrote off the debt and assumed that they were not going to be able to collect any further from you.

Bottom line, though, is that once you finish up with your bankruptcy you will not have to pay any additional debt for this matter if those two credit card accounts were included in your bankruptcy.

If you find that those two accounts are not deleted from your credit report after the time frame that they’re supposed to be removed, or that they appear on your credit reports as duplicate accounts (i.e. not shown as included in your bankruptcy), then you can dispute them. In that case, you would just write the credit bureaus – Equifax, Experian, and TransUnion – dispute the information, and indicate that those accounts were included in your bankruptcy. That way, the credit bureaus can remove any erroneous or duplicate information about those old credit card accounts.

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We’ve all seen and heard them: the TV ads and the radio commercial promises touting bankruptcy as a “fresh start” to help you get rid of overwhelming bills.

While it’s true that Chapter 7 bankruptcy can wipe out many consumer debts, such as credit card payments and medical bills, it’s also the case that a lot of different types of debts don’t get eliminated in bankruptcy court.

Additionally, Chapter 13 bankruptcy—which consumer advocates say many African-Americans have been steered into recently—isn’t designed to allow you to completely walk away from your debts, but rather to reorganize your finances and pay off debt over a period of three to five years.

So before you take the step of filing for bankruptcy protection as a cure-all, it’s important to be aware of the various financial obligations you will still have to handle even after you go through the process of bankruptcy.

Student Loans

Generally speaking, you can’t say goodbye to those huge student loan balances when you declare bankruptcy. However, the bankruptcy court may make an exception if you can prove that repaying your student loans would pose an “undue hardship” for you.

In this situation, you have to prove that you cannot maintain a minimum standard of living and repay your loans, and that your financial situation is not expected to improve any time soon. Being unemployed isn’t proof enough. You must convince a court that you are practically unemployable and may not ever get a job.

So it is extraordinarily difficult to prove undue hardship. That’s why even though there were 1.5 million personal bankruptcy filings in the U.S. in 2010, virtually none of those bankruptcy petitioners received an undue hardship ruling from a court allowing them to discharge their student loan debt.

Child Support and Alimony

Bankruptcy courts will not discharge any child support payments or alimony you owe. If you owe back child support, you are still responsible for paying that debt. Any debts incurred from “the nature of support”, which are debts that are the result from a child’s care and medical expenses, are also not discharged by the bankruptcy courts. Read the rest of Lynnette’s article on Black Enterprise.

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If you’re filing for bankruptcy to get some relief from creditors and get your financial situation back on track, you may have wondered what happens to personal assets like your car during the bankruptcy filing process. Many people fear losing their car to creditors when filing bankruptcy, but the good news is that in most cases, bankruptcy law will protect your vehicle from repossession. The key thing to remember when filing for bankruptcy is that you will be granted different types of protection based on the type of bankruptcy you are filing.

Whether you file Chapter 7 or Chapter 13, you’ll need to consider whether you can really afford to keep the vehicle given your current financial situation. Either way, filing for bankruptcy will cease repossession of your vehicle.

Saving Your Car with Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, you will need to evaluate how much your car is worth and decide if it’s time to surrender your vehicle as you liquidate assets during the bankruptcy process. If you decide to keep it, you need to make sure that you really can afford to make payments on time. You may have the option to sign a Reaffirmation Agreement with your lender that acknowledges that you still have the car loan while filing bankruptcy, and that the lender has the right to pursue legal methods for collecting that debt if you don’t make your payments on time. This agreement can only go into effect if you are current on your car payments.

Understand Your Personal Bankruptcy Options, Free Bankruptcy Evaluation

Every state has its own set of limitations on whether a car is exempt from bankruptcy, and this is usually based on how much the car is worth. For example, in the State of Oklahoma, a car that you don’t owe any money on is exempt if it is worth less than $7,500. You can talk to a bankruptcy attorney to find out if your car is exempt.

If you are leasing your vehicle and you find that you can’t afford to continue making lease payments, you will need to give the car back to the dealership.

Saving Your Car with Chapter 13 Bankruptcy

When you file for Chapter 13 bankruptcy, the courts will give you a chance to catch up on any outstanding debts, including your car loan debt. This means that you could be set up with a new payment arrangement so that your monthly payment becomes more affordable. Your creditors are also not allowed to harass you or threaten to take away your vehicle (or other assets) when you file Chapter 13. In some ways, you are granted immunity from your creditors so that you have a chance to catch up on your loans and payments. As long as you are making your payments on time, you will be able to keep your car.

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When you have taken the step to file for bankruptcy and are struggling to make ends meet, you may have wondered if your home will soon go into foreclosure. If you’re filing for bankruptcy, it’s likely that you’ve been struggling with finances for several months – even years – and may already have come close to losing your home. The good news is, you can actually end up saving your home from foreclosure when you file Chapter 13 bankruptcy.

Filing for Chapter 13 bankruptcy is basically a “debt reorganization” bankruptcy. It’s designed to help you reorganize your debts and repay your debt over a realistic timeframe. Chapter 13 bankruptcy does not require you to liquidate your assets, including your home, like Chapter 7 bankruptcy which is a liquidation bankruptcy. You will get to keep your home and will need to work hard to stick with the repayment plan for the next three to five years. After you have completed your repayment plan, you will have a “fresh start” and can even consider refinancing at this time.

Automatic Stay When Filing for Bankruptcy

In most cases, the bankruptcy court will grant you an automatic stay as soon as your Chapter 13 bankruptcy petition is filed. This temporarily stops your home from going into foreclosure, regardless of whether the foreclosure proceedings have already begun. This process gives you some room to work out a realistic repayment plan for your debts listed on your Chapter 13 filing.

An Automatic Stay does the following: halts foreclosure: stops any type of repossession of vehicles or assets; prevents creditors from contacting you about outstanding debts; and also stops any lawsuits or wage garnishments. Talking to a bankruptcy lawyer about your Chapter 13 filing and the automatic stay benefits can help you see how your home will be saved from foreclosure.

Keeping Your Home When Filing for Bankruptcy

During the bankruptcy filing process, it is critical that you continue to make all of your mortgage payments on time. Missing even one or a few payments may mean that your automatic stay is lifted and the mortgage company will be able to come after you. You need to continue making your mortgage payments on time!  Once the bankruptcy has been filed and you start making payments on the three to five-year repayment plan. You can then consider making a few extra payments on your mortgage to catch up, or even refinance your mortgage to get a lower interest rate and save on your monthly payment.

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