Archive for category chapter 7 bankruptcy

Bankruptcy effects on Retirement

Posted by denverheat in Uncategorized, bankruptcy, bankruptcy lawyers denver, chapter 7 bankruptcy, denver bankruptcy lawyer on June 14th, 2010

Denver Bankruptcy

Retirement

Bankruptcy is terrifying, especially for those nearing retirement. Current bankruptcy law allows you to keep pensions, 401k and other retirement plans with a few exceptions. Other aspects of retirement planning can be affected by bankruptcy, so it is a good idea to go over these regulations in detail with a Denver bankruptcy law.

Under the new federal bankruptcy laws established in 2005, retirement plans and pension plans are exempt from any claims by creditors. The exemptions are essentially unlimited as long as they qualify as a retirement plan. Examples of exempt retirement plans are 401k, 403b, IRAs, Keogh, and some more complicated plans like profit sharing and money purchase plans.

The main exception is that traditional and Roth IRAs are only exempt up to $1 million per person. If your total amount of retirement in different accounts is over a million then the excess amount can be claimed by creditors. The exempt amount is adjusted periodically to match the cost of living. Car accidents and other unforeseen accidents will probably need discussion with the court.

Funds inside an account are exempt, but payments are not. Funds in excess after paying for your living expenses can be garnished in a chapter 7 bankruptcy. Heating and air conditioning bills are considered living expenses. In chapter 13 bankruptcy, all income, including retirement income is included in the overall repayment plan. See my information on chapter 13 bankruptcy at denverinjured.blogspot.com

One more complicated thing you must take care of when it comes to retirement and bankruptcy is loans against retirement plans. Most retirement plans can be used as loan collateral. Whether or not your bankruptcy allows you to get rid of loan payments is dependent on the type of bankruptcy you file. Chapter 7 bankruptcy does not allow cancellation of loans from retirement plans. This is because the loan is technically owed to yourself and not another institution. In chapter 13 bankruptcy, all debts are paid back over a period of time, and once that time is reached, the debts can be discharged.

Regulated payments from your paycheck to an account will probably be held exempt by a Denver bankruptcy court, but voluntary additional payments are not considered necessary, and will not be allowed in a chapter 13 bankruptcy.

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2005 Bankruptcy Law Changes

Posted by denverheat in IRS forms, bankruptcy, bankruptcy lawyers denver, chapter 7 bankruptcy, denver bankruptcy lawyer on June 14th, 2010

Bankruptcy Denver

Bankruptcy

Bankruptcy lawyers are fully aware of the changes that have happened to both chapter 7 and 13 federal bankruptcy law since 2005 code changes, but the average person using old information from the library to file may not be so lucky. The main difference to the law is that chapter 7 bankruptcy is now harder to file.  States with personal income tax like Colorado make it harder to file without the help of a Denver bankruptcy attorney.

People with high incomes are now no longer eligible for to file for chapter 7 bankruptcy. Those with high incomes might have to file a hybrid that repays some debts with chapter 13. All applicants must now apply for credit counseling in addition to budget counseling like before.
The new rules encourage those with high incomes to repay their debts instead of choosing liquidation through chapter 7.
Under the new laws, anyone with a median income above their state average must pass another hurdle before they can file for chapter 7. This hurdle is called the means test, where the court decides if you have enough disposable income after debts to make chapter 13 payments every month. You and your Denver bankruptcy lawyer will go over your income and see if there is enough left after subtracting expenses and debts.
Most citizens choose chapter 7 if there is any possibility of not meeting these requirements.
A means test calculator is available from most bankruptcy lawyers. Let’s say you are a Denver HVAC company in serious debt but with enough income to meet secured payments without going under. In this case you would probably have to file for chapter 13 protection.
Credit counseling agencies approved by the federal government can be found through your court appointed trustee, or at www.usdoj.gov/ust
The counseling is another step where the court tries to see if bankruptcy is really necessary in your case. Even if the current state of affairs is obviously impossible, counseling is still required… but you do not have to follow the plan they set in place. The agency’s plan will have to be submitted to the court however.
After bankruptcy is filed, you must attend another session on budgeting and finance management. This is the last step before the court wipes out approved debts.
The main effect of the changes is that attorney fees and time and effort involved in bankruptcy has increased. Some lawyers are switching from injury and motorcycle law to bankruptcy because of the increased workload.
One more change to chapter 13 law is that expenses are calculated from IRS allowable expenses, instead of just total expenses.

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Can I File Bankruptcy If I Own A Small Business?

Posted by hawkeye11 in bankruptcy, chapter 7, chapter 7 bankruptcy, filing for bankruptcy on December 13th, 2009

The answer is Yes. For example, I had a prospective client come in recently, and he had a lot of credit card debt, about $75,000 but he also owned a small business that was just getting off the ground, a corporation, and he had a small rent house with some equity in it and he successfully filed bankruptcy.

If he filed a Chapter 7 bankruptcy, otherwise known as “liquidation” bankruptcy, there is a liquidation Trustee appointed, whose job is to sell any “non-exempt” or extra property that the debtor has, and use the money to pay the debts as far as the money will go.

In this example, a Chapter 7 Trustee or liquidation Trustee may take the client’s stock in the business away from him, and either sell it or liquidate the business and use the equity to pay the creditors. And, a liquidation Trustee may try to sell the rent house, which the debtor did not want to sell because a relative was renting it from him.

But, if the client files a Chapter 13 bankruptcy, we could propose a plan to pay about $250 per month to a Chapter 13 Trustee for 5 years. The Chapter 13 Trustee then pays that money to the creditors, and when the plan is completed, the rest of the $75,000 debt is “discharged” or cancelled, and the client no longer owes it.

And the client can keep and continue to operate the small business, and keep the rent house. In Chapter 13, the debtor remains in possession of all property, unless the plan provides otherwise.

Also, the creditors cannot try to collect the $75,000 during the Chapter 13, because the client is protected by the “automatic stay,” a bankruptcy court order that goes into effect as soon as a bankruptcy case is filed.

Chapter 13 bankruptcy can be an excellent tool to help a consumer reorganize or rehabilitate their finances, while keeping their property and paying their creditors at a level that they can afford. It also stops the debt collectors from calling, and stops all other collection actions such as lawsuit and garnishments from creditors.

Article Source: Bankruptcy Attorney | Legal Blog

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Chapter 7 Liquidation

Posted by hawkeye11 in bankruptcy, chapter 7, chapter 7 bankruptcy, denver bankruptcy lawyer on November 20th, 2009

When one researches the generalities of bankruptcy, it is easy to get overwhelmed by the many different forms of bankruptcy one may choose to file.  One of the most popular forms of bankruptcy filed by individuals is Chapter 7 bankruptcy.  Often times individuals choose Chapter 7 when they have nothing to offer or give to their creditors.  A general thought of bankruptcy is a debtor hounded by their creditor looking to take all of his assets and then distributes his assets to those creditors.  In return, the debtor is discharged from all liabilities and is granted a “new start” or a clean slate.

This is not exactly what happens when an individual files Chapter 7 bankruptcy.  In fact, there is no collection and distribution of the debtor’ assets, but rather the discharge of the debtor without any distribution whatsoever to his unsecured creditors.  In a representative case, all of the assets belonging to the individual filing bankruptcy will be taken by a secured creditor.  In some instances, the debtor will be able to keep some of their assets under certain exemption laws.  There should be some allowance for legal fees to the debtor’s Denver bankruptcy lawyer.

It is incorrect ot think that Chapter 7 Bankruptcy primarily is a mode of collecting and distributing assets of the debtor.  Chapter 7 filed by an individual is really a formal way of clearing their debt and allowing that individual a chance to start over with a “fresh start.”

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