Chapter 13 Bankruptcy Information

Sometimes it’s hard to give up old habits.  Paying debts feels right.  Even when it’s right and necessary. filing bankruptcy still feels like it out to be “wrong.”

So sometimes folks ask us if it would look better — to the court and to future lenders — if they paid off or settled some debts before filing bankruptcy.

Indeed, my friend Cathy Moran wrote this week about a similar question from a client and made some useful points I encourage you to check out.

Sometimes it’s hard to give up old habits.  Paying debts feels right.  Even when it’s right and necessary. filing bankruptcy still feels like it out to be “wrong.”

So sometimes folks ask us if it would look better — to the court and to future lenders — if they paid off or settled some debts before filing bankruptcy.

Indeed, my friend Cathy Moran wrote this week about a similar question from a client and made some useful points I encourage you to check out.

Some “experts” have commented on how hard it is to reorganize a business in Chapter 11. However, it is possible. Recently, we have been representing a small manufacturer of industrial equipment. They had well under a million dollars in debt. Just under 10 employees. The bank, for unknown reasons, wanted them out of business.  The bank would have lost quite a bit of money in the process. The bank must have had its reasons but they were unclear to say the least.

Some “experts” have commented on how hard it is to reorganize a business in Chapter 11. However, it is possible. Recently, we have been representing a small manufacturer of industrial equipment. They had well under a million dollars in debt. Just under 10 employees. The bank, for unknown reasons, wanted them out of business.  The bank would have lost quite a bit of money in the process. The bank must have had its reasons but they were unclear to say the least.

Reaffirmation agreements are the subject of great debate.  Secured creditors, like auto lenders, want you to sign them if you file Chapter 7 bankruptcy.  Reaffirmation agreements prevent debt from being discharged, and lenders like that.  But because your discharge is the Holy Grail of the bankruptcy process, you need to weigh your options very carefully before signing a reaffirmation agreement.

Recent BLN Posts on Reaffirmation

Reaffirmation agreements are the subject of great debate.  Secured creditors, like auto lenders, want you to sign them if you file Chapter 7 bankruptcy.  Reaffirmation agreements prevent debt from being discharged, and lenders like that.  But because your discharge is the Holy Grail of the bankruptcy process, you need to weigh your options very carefully before signing a reaffirmation agreement.

Recent BLN Posts on Reaffirmation

When you are filing a bankruptcy case, you have many duties.  More duties than we can cover in one post.  Your bankruptcy lawyer should make it easy for you.

It’s important that your bankruptcy papers are true. One of the questions in your bankruptcy papers asks how much money you have in the bank and in what accounts.  This should not be guess-work. You should know exactly how much you have in the bank on the day you file your case.  And you should also know how much you have in any investment account, securities account, savings account, credit union account, thrift savings plan, IRA or any other financial account of any kind.

When you are filing a bankruptcy case, you have many duties.  More duties than we can cover in one post.  Your bankruptcy lawyer should make it easy for you.

It’s important that your bankruptcy papers are true. One of the questions in your bankruptcy papers asks how much money you have in the bank and in what accounts.  This should not be guess-work. You should know exactly how much you have in the bank on the day you file your case.  And you should also know how much you have in any investment account, securities account, savings account, credit union account, thrift savings plan, IRA or any other financial account of any kind.

“Don’t ruin your credit by filing bankruptcy!”

“The secret the credit card companies don’t want you to know!”

“If you owe at least $10,000 in credit card debt, you are eligible for our program!”

“Recent changes in federal law require credit card companies bailed out by the federal government to settle their debts with you!”

Hey, when something sounds too good to be true, it is.

Most recently, the Minnesota Attorney General sued six of these debt settlement outfits

“Don’t ruin your credit by filing bankruptcy!”

“The secret the credit card companies don’t want you to know!”

“If you owe at least $10,000 in credit card debt, you are eligible for our program!”

“Recent changes in federal law require credit card companies bailed out by the federal government to settle their debts with you!”

Hey, when something sounds too good to be true, it is.

Most recently, the Minnesota Attorney General sued six of these debt settlement outfits