Chapter 13 Bankruptcy Information

With apologies to Paul Simon:

     You Just slip out the back, Jack
     Make a new plan, Stan
     You don’t need to be coy, Roy
     Just get yourself free
     Hop on the bus, Gus
     You don’t need to discuss much
     Just drop off the key, Lee
     And get yourself free
            50 Ways to Leave Your Lover

Until you get the property out of your name, you are still responsible for it, a fact recently pointed out by my colleague, Jay Fleischman.  You have to do something to get that property out of your name so you can walk away with peace of mind.  How do you do it?

That’s the cry of the “debt settlement” industry.  They claim that they will help you rid yourself of debt without bankruptcy. If you avoid the out-right crooked companies, can they do it?  Sure…

But at what cost?

There are two types of these companies. One, simply takes a portion of your monthly income, negotiates with your credit card companies to stop or lower interest, and, in return, makes a monthly payment to each company.  After several years of those payments your debts will be gone.  Assuming, of course that you can make all the monthly payments to the credit negotiator and assuming you don’t incur any new debt. Oh yes, you’ll pay them a percentage of your income to do this – often several hundred dollars or more a year.

You walk into bankruptcy to get rid of your mortgage. You walk out still owning real estate. How’s that happen?

It’s almost a joke – when does surrender not mean surrender? It’s not a funny joke, but one nonetheless.

Here’s the tip: when you surrender property in Chapter 7 bankruptcy, you’re doing nothing more than indicating a willingness to let it go. You’re not actually handing it off to anyone.

When you go through Chapter bankruptcy, you’re looking to discharge your obligations. In return, you’re surrendering your property that’s not considered exempt under the bankruptcy laws as applied in your state.

Remember, when you were a child, you assumed that anything written in a book was true.

And then, as you got older, you realized that there were books in print  that said utterly opposite things.  Both couldn’t be true, yet there they were, in print.

And then came the internet, and anyone with a computer could became an author.

I know, because 14 years ago I sat down to write about bankruptcy for the internet public.  Four pages became 160, and then I started writing here too.  Bankruptcy law is as complex as the people who need bankruptcy, and then the law changed and it became even more so.  There’s lots to tell you about.

Georgia bankruptcy filers got two pieces of good news this past week – the Governor has signed Senate bill 117 increasing the bankruptcy homestead exemption from $10,000 to $21,500, and the median income tables for Georgia families has been adjusted upwards, reversing a steady downward trend.

By far, the new homestead exemption is the most significant of these two events.   Georgia, like several other states, has opted out of the federal exemption statute, substituting in its place Georgia Code Section 44-13-100.  For the past 10+ years, Georgia permitted bankruptcy filers to shelter or exempt $10,000 of equity in real estate ($20,000 for a  married couple filing jointly).

Common courtesy and respect are essential life skills.

It never ceases to amaze me as to how people act in bankruptcy court regardless if it is the attorney, debtors or creditors.  As with all things in life, common courtesy and respect are skills that will take you far.  But sometimes what I think should be second nature to people are things that others just don’t think about or simply don’t know because no one has ever shared this knowledge with them. So please allow me to share some bankruptcy courtroom etiquette with you.

Filing a chapter 13 bankruptcy case is sometimes necessary because of having debts which can’t be discharged in chapter 7, having non-exempt property, or having too much income to file chapter 7.  When you make the decision to file a chapter 13 case, be sure you consider your options regarding the financing on your motor vehicle.  If you don’t give this careful thought, you might end up falling into the chapter 13 “car trap.”

Filing a chapter 13 bankruptcy case is sometimes necessary because of having debts which can’t be discharged in chapter 7, having non-exempt property, or having too much income to file chapter 7.  When you make the decision to file a chapter 13 case, be sure you consider your options regarding the financing on your motor vehicle.  If you don’t give this careful thought, you might end up falling into the chapter 13 “car trap.”

On February 22, 2012, the Court issued the In re:  Bowden decision.  The Bowden decision will affect the way attorneys and their clients approach reaffirmation agreements in the Eastern District of North Carolina (EDNC).

First, a little background.  What is a “reaffirmation agreement?”  A reaffirmation agreement is a contract between a debtor and a creditor.  The debtor agrees to be responsible for that debt as if he never filed bankruptcy on that particular debt.  See glossary. By agreeing to personal liability for the debt, if there is a default later on, the debtor can be sued as if the debt never went through bankruptcy.

It seems pretty clear to me that student loan debt has reached crisis proportions.  I’ve posted about the growing amount of student loan debt, which now exceeds credit card debt, and the increasing attention drawn to the issue by politicians, protesters, and the media.  The simplest and most direct solution to the problem is to allow some (not all, but some) student loan debt to be discharged in bankruptcy.  Here’s why I think that is the only logical, effective, solution to the problem.