Many people, when filing bankruptcy, want to give back (surrender) their vehicles to the lender who holds their car loans.  The theory is that the lender will take possession and then re-sell the car, and the debtor will get a discharge of that entire debt in the bankruptcy.   If a chapter 7 debtor states on his Statement of Intention that he is surrendering the vehicle, then the debt will be wiped out when the bankruptcy is discharged.

The problem arises when the car is worth significantly less than what’s owed to the lender, and therefore the lender refuses to accept the car back.  You now have the car, but the lender is holding the title.  You can’t sell or trash the car without the title, and — guess what– the lender doesn’t want to give up the title unless you pay what you owe!  Neat little game they’ve got going there, isn’t it?  What can you now do with the car?  Unfortunately, it’s a scenario that’s been playing out frequently over the past few years.

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There is a lot of discussion now about whether people from foreign countries who live and work in the United States without seeking citizenship should be entitled to the same rights as citizens. Since these non-citizens are consumers who almost certainly will accumulate debt, they may wonder if they can seek relief from their debts under the bankruptcy laws, or whether that right is specifically limited to people who are citizens.

Actually, the bankruptcy laws allow non-citizens to file. The Bankruptcy Code defines “a debtor” as “a person that resides or has a domicile, place of business, or property in the United States,” without requiring that person be a citizen. Therefore, the right to seek relief under the bankruptcy laws is available to both citizens and non-citizens, so long as they can prove they make their home here.

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Do you feel like your debts are getting away from you? Are you overwhelmed and anxious about paying your bills? Do you need some relief from your creditors? Are you beginning to think that you should be looking into filing a bankruptcy?

Over the years, I’ve spoken to lots of people in your situation, who are just beginning to look into finding an attorney to help them with bankruptcy. Many of these people call with one question for me — “what’s y
our fee?”.   When I ask if they have any other questions about bankruptcy and how it works, they’re not interested. They want the cheapest attorney, no matter what kind of representation they get. [Read more…]

Most people looking into filing a bankruptcy understand that a chapter 7 bankruptcy wipes out all the debts you want to get rid of, while allowing you to keep certain exempt assets. If you file under chapter 7 and have assets that are not protected by exemptions, then those assets are “liquidated” (sold) by the chapter 7 Trustee and the proceeds are divided among your creditors. That is why chapter 7 is known as the Liquidation chapter.

Chapter 13 bankruptcy is a bit more complicated for people to understand. It is known as the Individual’s Debt Adjustment chapter. There are times when a chapter 7 bankruptcy doesn’t serve your purposes. Although you need to deal with your debts to get them under control, there is some obstacle in your way, such as a paid-off vehicle that you need to keep to get you to work. That is a situation where a chapter 13 bankruptcy could be more beneficial to you than filing a chapter 7 where you would lose the vehicle to the Trustee/creditors. Another instance where a chapter 13 is helpful is if you’ve fallen several months behind in your mortgage payments, and need time to bring them current. A chapter 7 will not give you that time, but a chapter 13 will.   Further, if your income is over the median amount for your state, as set up by the Census Bureau, current bankruptcy law compels you to file under chapter 13 rather than 7. [Read more…]