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Episode 2: What is Chapter 13 Bankruptcy?



Are you wondering what it means to file for Chapter 13 Bankruptcy?  In this episode Indianapolis Bankruptcy Attorney John Bymaster explains what it means to file for Chapter 13 Bankruptcy.

Remember that the Podcasts are for informational purposes only and should not be taken as legal advice. If you have additional questions, Indianapolis Bankruptcy Attorney John Bymaster offers free consultations. Don’t hesitate to give Bymaster Bankruptcy Law Offices a call at 317-769-2244.

For more information on bankruptcy, visit Bymasterbankruptcy.com.

Bymaster Bankruptcy Law Offices
4435 Whitestown Parkway
Lebanon, IN 46052
317-769-2244 (Office Phone)
317-769-4545 (Office Fax)
john@bymasterbankruptcy.com

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Podcast Episode 1: What is Chapter 7 Bankruptcy?



Indianapolis Bankruptcy Attorney John Bymaster explains what it means to file for Chapter 7 bankruptcy.

Remember that the Podcasts are for informational purposes only and should not be taken as legal advice. If you have additional questions, Indianapolis Bankruptcy Attorney John Bymaster offers free consultations. Don’t hesitate to give Bymaster Bankruptcy Law Offices a call at 317-769-2244.

For more information on bankruptcy, visit Bymasterbankruptcy.com.

Bymaster Bankruptcy Law Offices
4435 Whitestown Parkway
Lebanon, IN 46052
317-769-2244 (Office Phone)
317-769-4545 (Office Fax)
john@bymasterbankruptcy.com

Bankruptcy Attorney John Bymaster

 

 

Can I Surrender My Car When I File for Bankruptcy?

Can you surrender your car when you file for bankruptcy?  The answer is “Yes.”  You can surrender vehicles during bankruptcy.  Surrendering your car or truck during bankruptcy can greatly assist in your total economic recovery.   Let’s talk about how and why you would surrender your vehicle during bankruptcy.

In Chapter 7 bankruptcy, you must prepare a “Statement of Intention.”  This statement declares what you want to do with all “secured” loan items such as house and car loans.  On this statement of intention, you would need to list your intention as “Surrender.”  Then you can give back your automobile and not be required to repay the debt.

In Chapter 7, all of your debts are “discharged” which means that they are forever eliminated.  Therefore, you will never be required to repay the balance of the loan (after the automobile creditor sells the vehicle).    You will have to give the vehicle back to the lender in a timely fashion.  Even though you are protected for a time by the automatic stay in Chapter 7, you should still make arrangements during the case to give the car back to the lender.  If you do not make these arrangements, your auto creditor may forcefully repossess the car at an inconvenient time and place after the automatic stay protections stops.

In Chapter 13, you can also choose to “Surrender” your automobile through a section in your Chapter 13 plan.   Chapter 13 works very similar to Chapter 7 cases except that you may be required to pay a portion (or in rare cases the entirety) of the balance that remains after the automobile is sold by the lender.  The auto lender may amend their “secured” claim in the case to an “unsecured” claim to allow them to participate in the Chapter 13 pay-out.  In every case, surrendering an automobile in Chapter 13 requires much less (or virtually no) payback because the unsecured debt will be less than the original debt and will not require the payment of interest.

If you are stuck in bad automobile loan, surrendering the vehicle back to the lender during your bankruptcy filing can be very advantageous.   By getting out of a bad automobile situation, you will have a much better overall recovery.   Surrendering the vehicle may also give you the chance to be truly debt free: you will have a complete fresh start to build upon.

Image depicting that a vehicle can be surrendered in bankruptcy

 

 

Credit Offers After Filing for Bankruptcy?

Credit offers after filing for bankruptcy?   Yes, you will likely receive several credit offers after filing for Chapter 7 bankruptcy.  Recently, one of our clients volunteered the above photograph of how many automobile credit offers he received after filing for bankruptcy.   He quickly trashed them thereafter!  Credit offers surprisingly do come right after filing for bankruptcy.  They can be a good thing or bad thing after you file for bankruptcy.

Credit Offers after Bankruptcy: My Credit Was Not Destroyed by Bankruptcy?

Nothing proves the fact that your credit was not destroyed by bankruptcy greater than receiving innumerable credit offers after your bankruptcy filing.  Remember, bankruptcy many times can be the start to rebuilding your credit.  If you had “F” credit before you filed for bankruptcy, your credit ability will instantly increase after filing.  If you had stellar “A” credit, your credit ability will obviously decline.   I usually like to express after-bankruptcy-credit by saying that you have “C” credit.  (Note – this is all for illustration purposes only: you are not actually in A to F credit grading system).

How much can “C” credit get you?   It certainly appears to get you automobile offers and sometimes small balance credit lines.   It also many times revives the ability to enter a residential lease to rent a home or apartment.   It appears that “C” credit can get you the “essentials” on credit.   But do you want to buy the essentials on credit?   Can you afford the higher interest rates they may be offering?   Be careful jumping back into credit situations just because of piles of credit offers you may receive.

Credit Offers and Bankruptcy: Which Offers Should I Consider?

Credit offers after bankruptcy should generally be ignored.  You should pursue very few of them.   Any offer that you do pursue should be geared toward responsibly rebuilding your credit.

We have seen numerous times when a new automobile loan eventually failed when it was purchased directly after filing for Chapter 7.   In fact, purchasing automobiles (even brand new automobiles) directly after filing for Chapter 7 causes many of our client to return to our office a short time later to file a Chapter 13 case or a subsequent Chapter 7.   The best way to guarantee a return to bankruptcy court is to immediately pursue credit opportunities.   You must change your approach to incurring new debts if you want to avoid a future bankruptcy filing.

Any credit offers you consider must be capable of rebuilding your credit in a responsible and manageable manor.  If you take on too much debt, you will likely fail regardless of your motives.   We strongly recommend that you only pursue light credit responsibilities and set up automatic payments to ensure that the payments are always made on time.   Live under your means and develop a paid-in-full mentality to your finances.  Credit should only serve you, you should not serve credit!  Therefore, use only light credit only to make sure that your credit eventually fully recovers.

Image of credit offers for automobiles after filing bankruptcy

 

Mistakes to Avoid Before Filing Bankruptcy

Mistakes to avoid before filing bankruuptcy

If you are about to file bankruptcy, there are many mistakes you should avoid before filing.  Although it is impossible to describe every mistake in this article, we will discuss some of the biggest mistakes to avoid here.    Remember, bankruptcy filings should always be done through attorney representation.   Even if you read this general-information article, you will not be equipped to understand all the nuances of bankruptcy law.  You will still need an attorney.

1. Transferring or Hiding Assets

Assets transferred in anticipation of filing bankruptcy may be recovered by the bankruptcy trustee in a Chapter 7 as a fraudulent transfer.   Assets hidden during the bankruptcy process are simply fraud.   It is important to be very truthful and straightforward during the bankruptcy process.  If you do not transfer assets and tell the truth, then your attorney many times can protect your property through the bankruptcy exemptions or other proper and correct bankruptcy planning.

2. Repaying Family Members, Friends, or Business Associates before Filing

Do not pay back an “insider” such as a family member, friend, or business associate any time within one year of filing for bankruptcy.  If you pay back any such “insider,” then the bankruptcy trustee can reverse these “preference” payments.   This means that either you will be forced to repay the trustee the money or they will go after your family member or friend.

3.  Having Your Name on Someone Else’s Property

Regardless of the reason, having your name on someone else’s property can sometimes be a huge mistake in bankruptcy.    Even if your family member has added your name to a home or bank account simply for “estate” or “convenience” purposes, you may still be considered to be a 50% owner of such house or account.  Is your name on your elderly mother’s house?   Then, you are 50% owner any may not be able to protect the house during bankruptcy.

4.  Large Credit Card Use before Bankruptcy

Do not charge more than $1000 on any single credit card within 90 days before you file your bankruptcy case.  In fact, if you are even considering bankruptcy, you should use no credit cards at all. Without the intent to repay your credit card, any credit card usage is fraud.   The court will presume that you were committing fraud on any credit card usage that occurred within 90 days before the bankruptcy case was filed.

5.  Not Obeying the Rules of the Court, Trustee, or your Attorney

The court gives absolutely no “wiggle room” on this: you must obey the rules of the court, the trustee, and your attorney.  If you do not attempt debt relief through the bankruptcy system legitimately, then you will find yourself in a world of trouble.  You could lose assets needlessly, be required to produce higher levels of documentation, or could even lose your bankruptcy discharge (the forgiveness of your debts).   If you go too far, you can even be held in contempt of court or be prosecuted by the Department of Justice for fraud.   Although the bankruptcy system is welcoming and accommodating, you must follow ALL the rules.