Rego & Rego Attorneys At Law

Bankruptcy Chapter 7 and 13 Information

2011-07-12T17:50:00.000-07:00

Rego & Rego Attorneys At Law

443 Hope Street, Bristol, RI 02809

401 253-2500 Fax 254-0235

www.regolaw.net

Chapter 7 and 13 Bankruptcy

When you need debt relief, you may be concerned about the consequences of bankruptcy. You may wonder what will happen to your credit score, if you will ever be able to purchase a home, and what will happen to your existing assets. Attorney Al Rego we will help you explore all of your debt relief options and alternatives so that you understand all of your rights and obligations before filing for bankruptcy.

Bankruptcy is a debt relief option available to you to provide a fresh start:

Attorney Al Rego can help you explore all of your options and claim your right to financial security and debt relief. Telephone for a free consultation on Chapter 7 and 13 bankruptcy telephone 401-253-2500.

We are experienced in representing individuals and married couples in consumer bankruptcy cases. There are a number of options available to you and we will help you to understand debt consolidation and the payment plans that may help you to avoid bankruptcy. If bankruptcy is right for you, we can assist you in filing and ensuring that your rights are protected throughout the process.

Chapter 7 and 13 allows consumers to:

Stops foreclosures on homes
Keep car from being repossessed
Reduce or eliminate credit card debt
Reduce or eliminates high medical bills
Stop creditor harassment

Chapter 7 Bankruptcy:

Chapter 7 is available to remove all unsecured debt including medical expenses and credit card debt. You must qualify for Chapter 7 using a means test, which compares a family income compared on an annualized basis to the family income average. In the event that you do not qualify for a Chapter 7, you may be able to file for Chapter 13 bankruptcy.

Chapter 13 Bankruptcy:

Chapter 13 is usually used by individuals or families that do not qualify for Chapter 7 or they have a home or other secured assets they are interested in protecting against bankruptcy. A Chapter 13 allows you debt relief though repayment plans and consolidation.

Free telephone consultation call 401-253-2500 • Credit cards accepted • Located at 443 Hope Street, Bristol, Rhode Island • Ample on-site parking • For more information visit www.regolaw-bankruptcy.com

Should I File For Bankruptcy?

2011-07-12T15:19:00.000-07:00

Rego & Rego Attorneys At Law

443 Hope Street, Bristol, RI 02809

401 253-2500 Fax 254-0235

www.regolaw.net

Alternatives?

What assets can I keep?

What cannot be discharged?

Life After Bankruptcy?

Making the decision to file (or not to file) bankruptcy could possibly be one of the biggest financial decisions you will make in your life. It is imperative that you thoroughly research the bankruptcy process, including alternatives to filing for bankruptcy, before making this decision. If you do decide to file for bankruptcy it could be the first step on the road to financial recovery. Financial recovery is the ultimate goal of everyone who files for bankruptcy. By spending time researching bankruptcy thoroughly prior to filing you have ensured that this path to financial recovery will be a smooth one.

There are many feelings that individuals considering a bankruptcy petition may go through; ranging from anxiety to depression. These are all normal but it is important to know that the bankruptcy protection is there for a reason. Life is full of unexpected events from unplanned medical bills to sudden loss of employment and the bankruptcy code is there to assist individuals who have a genuine need for help with regards to their financial situation.

There are a few things you should research prior to deciding to file for bankruptcy. The first thing to look at is the many alternatives to filing for bankruptcy. Some long-time homeowners who have substantial equity in their homes choose to take out a low interest-rate home equity loan to consolidate all of their debt. Since the repayment term is typically 10 or more years on a home equity loan, and the interest rates are usually considerably lower than unsecured debt, the monthly payment on a home equity loan could be significantly less than the combined monthly payments on all of your debt prior to consolidation. This is only one alternative to bankruptcy, there are others and all should be researched to see if they would be more beneficial to you than filing for bankruptcy.

Another important thing to research prior to filing for bankruptcy is how the bankruptcy is going to affect your life. Naturally the bankruptcy will have an impact on your credit score but typically the higher your credit rating is going into a bankruptcy, the higher it is at the culmination of the bankruptcy process. Many things in life rely on your credit rating from housing (both home ownership and renting) to insurance (automobile and home/renter’s insurance use your credit rating to determine insurability and rates). Considering your future, life after bankruptcy, will help you decide if filing for bankruptcy is the best choice given your circumstances.

Once you have decided that filing for bankruptcy is the best option for you then you will need to determine whether you qualify to file for a Chapter 7 Bankruptcy (complete discharge of debts) or a Chapter 13 Bankruptcy in which you repay a portion of your debts on a fixed payment plan. The bankruptcy laws were rewritten in 2005 to ensure that only those individuals truly needing a complete discharge of their debts are able to file for Chapter 7 Bankruptcy. For those individuals who cannot completely meet all of their debt obligations but do have the financial means to meet a part of them there is the Chapter 13 Bankruptcy. There are many differences between the two and it would be wise to read up on both chapters of bankruptcy before deciding which one to file. A good starting step is to determine whether you qualify for Chapter 7 Bankruptcy. If you do then you can research the Chapter 7 Bankruptcy and the Chapter 13 Bankruptcy to determine which would be most beneficial given your specific financial situation.

Bankruptcy Alternatives

Part of the process for deciding whether or not to file for bankruptcy includes looking at your alternatives. Depending on the state of your finances you may be able to avoid bankruptcy by pursuing one of the following alternatives.

Home Equity Loan

Homeowners who have adequate equity in their home may choose to apply for a home-equity loan to consolidate all of their debt into one monthly payment. Home equity loans typically have lower interest rates than unsecured debt and a repayment period that can vary from 10 to 30 years. This means that your home equity loan payment is lower than the sum of all of your previous debt payments combined.

Check out our list of lenders that offer great rates on home loans for people with less than perfect credit

Debt Consolidation

Consumers may choose to use one of the many credit counseling services out there. These agencies typically have agreements in place with most of the nation’s major creditors allowing you to pay a reduced interest-rate and reduced monthly payments for a fixed period of time. You will make one payment per month to the credit counseling/consolidation company and the company is responsible for disbursing your payments to your creditors. If you choose this option make sure you research the companies thoroughly as some have a better track record than others.

Debt Negotiation

Sometimes referred to as debt settlement, debt negotiation is often-times used for individuals who cannot maintain a debt consolidation/credit counseling program. Typically a debt negotiation involves paying a certain percentage of your overall debt and the company will then consider the debt as having been paid in full. This may impact your credit score nearly as much as filing for bankruptcy so take the time to research this option before you pursue it.

Bankruptcy Exemptions - What Do I Keep When I File For Bankruptcy?

Part of your research in deciding whether filing for bankruptcy is the best option for you is determining what you get to keep. That is usually everyone’s first question – “What do I get to keep?” You’ll want to know if you can keep your house, your automobile, pension and retirement funds, personal belongings, etc. The things you will be able to keep are considered exempt items. Some exemptions are governed on a Federal level and some exemptions are State-specific. However even with cases filed within the same state the exemptions may vary on a case to case basis. This page will provide you with more information regarding these exemptions.

Information About Bankruptcy

Sometimes referred to as a “fresh start,” bankruptcy allows people with overwhelming debt to start over without being harassed by creditors. Bankruptcy originated in Italy and was designed to favor the creditor. Early bankruptcies forced debtors to sell their property to pay creditors and the debtor still owed the balance of the debts or were thrown in prison if they could not pay.

Fortunately, bankruptcy in the United States was not based on the Italian system. Throughout the 1800s, various forms of bankruptcy laws were passed, but each one only lasted a few years. The Bankruptcy Act of 1898 was the first bankruptcy law passed in the United States that was not quickly repealed. It was also the first to focus on getting help for the debtor.

Article I, Section 8 of the United States Constitution authorizes Congress to enact uniform laws on the subject of bankruptcies and in 1978, congress enacted the “Bankruptcy Code.” The code is title 11 of the United States Code and has been amended several times since its enactment. None of these amendments were as major as the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that went into effect in 2005. It was introduced by credt card companies and banks who thought that the old law was too lenient for debtors. The BAPCPA assumed that many filers could actually afford to pay back some of their debts and was promoted as a method to cut down on chapter 7 bankruptcy. As you can imagine, cutting down on chapter 7 and making debtors pay some of their debts doesn’t really protect consumers as much as it protects creditors. So far, the BAPCPA has mostly meant nothing more than additional paperwork and hassle for bankruptcy lawyers and those filing bankruptcy. Those who have wanted to file chapter 7 under the BAPCPA have usually been able to.

Bankruptcy Chapters

There are five basic types of bankruptcy cases provided for under the Bankruptcy Code. The cases are traditionally given the names of the chapters that describe them. Below is a brief description of three basic types of Bankruptcy Chapters.

Chapter 7 Bankruptcy, entitled liquidation, contemplates an orderly, court-supervised procedure by which a trustee collects the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed.

Chapter 13 Bankruptcy, entitled Adjustment of Debts of an Individual With Regular Income, is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep a valuable asset, such as a house. It is also favored because it allows the debtor to propose a “plan” to repay creditors over time—usually three to five years. At a confirmation hearing, the court either approves or disapproves the plan, depending on whether the plan meets the Bankruptcy Code’s requirements for confirmation. Chapter 13 is very different from chapter 7, since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect. The discharge is also considerably broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Chapter 11 Bankruptcy, entitled Reorganization, ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. The chapter 11 debtor has the exclusive right to file a plan of reorganization for the first 120 days after the order for relief and must provide creditors with a disclosure statement containing information adequate to enable creditors to evaluate the plan. The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. Under chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.

Changes to the Bankruptcy Law

Like an uninvited guest that has taken up residency on your couch, the new bankruptcy law is here to stay, and it sure hasn’t won itself over many friends. With good reason too, because now, more than ever before filing for bankruptcy, is going to be difficult and trying at best. Take for example this change: you are now required to receive credit counseling at least six months before you file for bankruptcy. You can be counseled over the phone or on the internet, but you first must get approval from the court on the organization you use and it must be nonprofit. If for some reason you are unable to complete the counseling prior to filing, you might be able to get the court to let you receive counseling thirty days after filing, but you must provide proof for the reason of your extension.

Get ready for miles and miles of paperwork, because you’re going to be digging up some old documents before your bankruptcy hearing is through. Under the new law, you have seven days before your hearing to locate your last tax return. Don’t take this new provision lightly, because unless the court receives a copy of it within the allotted time, your case will be tossed out without exception. The fun doesn’t stop there: you just might be asked to come up with tax returns from the last four year as well and you will have to produce an itemized statement that covers your monthly income. Don’t forget about your pay stubs, because the court will be asking for copies of those, starting sixty days prior to filing.

Before the new bankruptcy law went into effect, many debts were dischargeable when you filed Chapter 7 or Chapter 13, even debts incurred during a divorce. Now, you will find that most debts due to a divorce will be nondischargeable and will still need to be paid back. This includes child support and spousal maintenance.

If you have to file bankruptcy, make sure you learn your lesson the first time, because it’s not going to be as easy to file the second time around. The new bankruptcy law has issued waiting periods before one can file for a second time. With Chapter 7, you now have to ride out eight years before you are able to start the bankruptcy proceedings rolling again, while Chapter 13 is two years.

Filing bankruptcy can still provide you with a fresh start, but it’s not going to be as easy as it once was. Debts, including student loans have been redefined under the new law and they might not be dischargeable anymore. This includes any debts over $500 that you incurred within ninety days before filing.

Ever heard the saying, “a good bankruptcy attorney is hard to find?” Well, if you haven’t, you just might find yourself saying that very thing, because of some provisions within the new law. Your attorney is now going to be held liable for the information you provide them with. In example, if you were to “accidentally” forget to tell your attorney about another source of income or withhold some crucial piece of information that is later brought to light, they, not you, will be fined.

It’s true that the new bankruptcy law has complicated things and made it harder for anyone looking to file Chapter 7 or Chapter 13, but the best way to fight back is to educate yourself on the changes. Finding a lawyer to help you might be tougher than it would have been last year, but when you do find someone to help you, you can feel reassured that they will know the new law inside and out and that fresh start you wanted will be closer than ever.

Bankruptcy Lawyers

Once you have made the decision to file for bankruptcy you must then decide whether to file independently or use the services of a bankruptcy attorney. Obviously there are additional costs associated with using an attorney but when making such major financial decisions as those made while filing for bankruptcy it is usually a good idea to have an experienced bankruptcy attorney on your side. It is important that you take the time to research the attorneys in your area and in fact interview them. You will be hiring the attorney to work for you and it is wise to interview several and hire the one you feel is the best.

A good place to start finding attorneys to interview is your state’s Bar association. You can usually find a lawyer referral service and find attorneys in your area that specialize in bankruptcy. Many attorneys will also give a free or reduced-rate consultation. During this consultation you can ask important questions regarding their experience: how many bankruptcy cases do they take in a year, how many of these cases have had problems and how they were addressed, and naturally ask their fees. Some fees are standard as they are set by the state but most fees will vary from attorney to attorney depending on their level of experience, among other things.

Another place to find attorneys to interview is via word-of-mouth. Ask your coworkers, friends, etc if they have any recommendation. If you know someone who has had good experience with an attorney before you can usually be more confident in them. Again it is still suggested that you interview any attorneys that have been recommended to you. It is important to make sure that your personalities do not conflict as you will be spending many hours working on your petition and ultimately in bankruptcy court.

Bankruptcy Pre-Filing Checklist

Making sure things are in order before you file bankruptcy will make the process much easier. Below are a few tips:

Schedule your filing date as soon AFTER you get your paycheck as you can, making sure you have time to use any excess cash for exempt purchases.
In the ten-day period before you are scheduled to file your bankruptcy, keep receipts for everything you buy with cash, and use money orders or certified checks instead of checks from your checking account to pay your bills.
Be sure you have copies of the title of all vehicles.
Be sure you have copies of your last two tax returns.
If you need to file tax returns for prior years, get all the paperwork ready before you file your bankruptcy.
Make certain you understand your bank’s policies about setoffs against your checking or savings accounts if you fail to pay for a credit card issued by that bank.
Be sure you understand what is or is not exempt property for your state.
To get an idea of the fair market value of your property, check the prices for similar items in your newspaper’s classified section, at on-line auctions and in your local classified ad publications.
You can get fair market value information on vehicles from your local library or from an on line source such as Kelly Blue Book or auto Trader.
Make certain you can account for all large checks you have written in the 90 days before you file your bankruptcy because your trustee may want to know what they were for.
Pull a copy of your credit report to make sure you don’t miss anything: there’s nothing worse than filing bankruptcy and still having to pay a missed creditor afterwards.

Bankruptcy Discharge

From an individual debtor’s standpoint, one of the primary goals of filing a bankruptcy case is to obtain relief from burdensome debt. Relief is attained through the bankruptcy discharge, the purpose of which is to provide a “fresh start” to the honest debtor. The bankruptcy discharge varies depending on the type of case a debtor files: chapter 7, 11, 12, or 13. This article describes the Discharge in Bankruptcy discussing the timing of the discharge, the scope of the discharge (what debts are discharged and what debts are not discharged), objections to discharge, and revocation of the discharge. It also describes what a debtor can do if a creditor attempts to collect a discharged debt after the bankruptcy case is concluded. Click on the questions below to go to that section of this page:

WHAT IS A DISCHARGE IN BANKRUPTCY? Under the federal bankruptcy statute, a discharge is a release of the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay any debts that are discharged. The discharge operates as a permanent order directed to the creditors of the debtor that they refrain from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Although a debtor is relieved of personal liability for all debts that are discharged, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

WHEN DOES THE DISCHARGE OCCUR? The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 (liquidation) case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting). Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court. In chapter 11 (reorganization) cases, the discharge occurs upon confirmation of a chapter 11 plan. In cases under chapter 12 (adjustment of debts of a family farmer) and 13 (adjustment of debts of an individual with regular income), the court grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a chapter 12 or chapter 13 plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing.

HOW DOES THE DEBTOR GET A DISCHARGE? Unless there is litigation involving objections to the discharge, the debtor will automatically receive a discharge. The Federal Rules of Bankruptcy Procedure provide for the clerk of the bankruptcy court to mail a copy of the order of discharge to all creditors, the United States trustee, the trustee in the case, and the trustee’s attorney, if any. The debtor and the debtor’s attorney also receive copies of the discharge order. The notice, which is simply a copy of the final order of discharge, is not specific as to those debts determined by the court to be non-dischargeable, i.e., not covered by the discharge. The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt. Any inadvertent failure on the part of the clerk to send the debtor or any creditor a copy of the discharge order promptly within the time required by the rules does not affect the validity of the order granting the discharge. Under the federal bankruptcy statute, a discharge is a release of the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay any debts that are discharged.

ARE ALL OF THE DEBTOR’S DEBTS DISCHARGED OR ONLY SOME? Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor, such as the debtor’s drunken driving). There are 18 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13. Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of non-dischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, and debts for certain condominium or cooperative housing fees. The types of debts described in sections 523(a)(2), (4), (6), and (15) (obligations affected by fraud or maliciousness or certain debts incurred in connection with property settlements arising out of a separation agreement or divorce decree) are not automatically excepted from discharge. Creditors must ask the court to determine that these debts are excepted from discharge. In the absence of an affirmative request by the creditor and subsequent granting of the request by the court, the types of debts set out in sections 523(a)(2), (4), (6), and (15) will be discharged. A broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. As a general rule, the chapter 13 debtor is discharged from all debts provided for by the plan except certain long-term obligations (such as a home mortgage), debts for alimony or child support, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., “confirmed”) repayment plan, there are some limited circumstances under which the debtor may request the court to grant a “hardship discharge” even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor’s control. The scope of a chapter 13 “hardship discharge” is similar to that in a chapter 7 case with regard to the types of debts that are excepted from the discharge. A hardship discharge also is available in chapter 12 if the failure to complete plan payments is due to “circumstances for which the debtor should not justly be held accountable.”

DOES THE DEBTOR HAVE THE RIGHT TO A DISCHARGE OR CAN CREDITORS OBJECT TO THE DISCHARGE? In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the United States trustee. Creditors receive a notice shortly after the case is filed that sets forth much important information, including the deadline for objecting to the discharge. A creditor who desires to object to the debtor’s discharge must do so by filing a complaint in the bankruptcy court before the deadline set out in the notice. Filing of a complaint starts a lawsuit referred to in bankruptcy as an “adversary proceeding.” A chapter 7 discharge may be denied for any of the reasons described in section 727(a) of the Bankruptcy Code, including the transfer or concealment of property with intent to hinder, delay, or defraud creditors; destruction or concealment of books or records; perjury and other fraudulent acts; failure to account for the loss of assets; violation of a court order; or an earlier discharge in a chapter 7 or 11 case commenced within six years before the date the petition was filed. If the issue of the debtor’s right to a discharge goes to trial, the objecting party has the burden of proving all the facts essential to the objection. In chapter 12 and chapter 13 cases, the debtor is entitled to a discharge upon completion of all payments under the plan. The Bankruptcy Code does not provide grounds for objecting to the discharge of a chapter 12 or chapter 13 debtor. Creditors can object to confirmation of the repayment plan, but cannot object to the discharge if the debtor has completed making plan payments.

CAN A DEBTOR RECEIVE A SECOND DISCHARGE IN A LATER CHAPTER 7 CASE? A discharge will be denied in a later chapter 7 case if the debtor has been granted a discharge under chapter 7 or chapter 11 in a case filed within six years before the second petition is filed. The debtor will also be denied a chapter 7 discharge if he or she previously was granted a discharge in a chapter 12 or chapter 13 case filed within six years before the date of the filing of the second case unless (1) all the “allowed unsecured” claims in the earlier case were paid in full, or (2) payments under the plan in the earlier case totaled at least 70 percent of the allowed unsecured claims and the debtor’s plan was proposed in good faith and the payments represented the debtor’s best effort.

CAN THE DISCHARGE BE REVOKED? A discharge can be revoked under certain circumstances. For instance, a trustee, creditor, or the United States trustee may request that the court revoke the debtor’s discharge in a chapter 7 case based on allegations that the debtor obtained the discharge fraudulently; the debtor failed to disclose the fact that he or she acquired or became entitled to acquire property that would constitute property of the bankruptcy estate; or the debtor committed one of several acts of impropriety described in section 727(a)(6) of the Bankruptcy Code. Typically, a request to revoke the debtor’s discharge must be filed within one year after the granting of the discharge or, in some cases, before the date that the case is closed. It is up to the court to determine whether such allegations are true and, if so, to revoke the discharge. In a chapter 13 case, if confirmation of a plan or the discharge is obtained through fraud, the court can revoke the order of confirmation or discharge.

MAY THE DEBTOR PAY A DISCHARGED DEBT AFTER THE BANKRUPTCY CASE HAS BEEN CONCLUDED? A debtor who has received a discharge may voluntarily repay any discharged debt. A debtor may repay a discharged debt even though it can no longer be legally enforced. Sometimes a debtor agrees to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtor’s reputation is important, such as a family doctor.

WHAT CAN THE DEBTOR DO IF A CREDITOR ATTEMPTS TO COLLECT A DISCHARGED DEBT AFTER THE CASE IS CONCLUDED? If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit, designed to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine.

CAN AN EMPLOYER TERMINATE A DEBTOR’S EMPLOYMENT SOLELY BECAUSE THE PERSON WAS A DEBTOR OR FAILED TO REPAY A DISCHARGED DEBT? The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case. The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring; or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.

Bankruptcy Means Test

Part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is the introduction of a “means test” as a way to determine eligibility for filing chapter 7 bankruptcy. This new test looks at the debtor’s average income for the 6 months before filing and compares the income with the median income for the state the debtor is filing in. Many filers will fall below the median income for their state and will have no problem filing for chapter 7 bankruptcy. If the debtor has income that exceeds the median, they may still be able to file chapter 7, but must meet other requirements.

Those who have income above the median will have to calculate their excess income, which is considered money that is available for debt repayment. The debtor’s monthly expenses are determined and multiplied by 60 to figure out the debtor’s expected expenses over a 5 year period. If over that 5 year period, expected income exceeds the debtor’s expenses by more than $10,000, the debtor cannot file for chapter 7 and will be forced to file chapter 13. If the excess income is below an average of $100/month they are eligible.

The final factor in determining eligibility for those who have an excess of over $100, but less than $166 is based on what percentage the excess is in relation to the total debt. If the excess amount over 60 months is less than 25% of the total debt, chapter 7 is still possible.

Note that the methods to determine monthly expenses are not based on true living expenses. They are based on calculations from the IRS that are not very friendly and some of your expenses may be disallowed. If rent or house payments in your area are higher than what is allowable by the IRS, you may not be able to count the entire cost toward monthly expense calculations.

If you are filing with your spouse, make sure to calculate both of your incomes toward comparing with the median and excess income tests.

Debts That Cannot Be Discharged in a Bankruptcy

When filing for bankruptcy, the following debts cannot be discharged. If you file for Chapter 7 Bankruptcy, you will still be responsible for repaying these debts after your discharge. If you file for Chapter 13 Bankruptcy, these debts will have to be paid in full in your plan. If they are not, the balance will remain at the end of your case:

Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case
Alimony
Debts for personal injury or death caused by driving while intoxicated
Student loans, unless it would be an undue hardship for you to repay
Fines and penalties for violating the law, including traffic tickets and criminal restitution
Recent income tax debts and all other tax debts.

The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 Bankruptcy if the creditor challenges your request to discharge them:

Debts you incurred on the basis of fraud
Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing
Loans or cash advances of $1,150 or more taken within 60 days of filing
Debts from willful or malicious injury to another person or another person’s property
Debts from embezzlement, larceny or breach of trust
Debts you owe under a divorce decree or settlement unless after bankruptcy you would still not be able to afford to pay them or the benefit you’d receive by the discharge outweighs any detriment to your ex-spouse (who would have to pay them if you discharge them in bankruptcy).

Life After Bankruptcy

If you’ve filed bankruptcy and are dealing with the aftermath, don’t worry! Your financial future doesn’t have to be bleak and hopeless! There is life after bankruptcy and there are steps you can take, starting today, to get yourself back on track and in good standing with the credit bureaus. Instead of looking at bankruptcy as something negative, consider it to be a fresh start, a time to change your spending habits and become the financially stable person you’ve always wanted to be.

First of all, obtain a copy of your credit report but don’t spend too much of your valuable time focusing on your credit score. It most likely took a pretty big hit after you filed bankruptcy and it’s only understandable that it’s going to take some time to repair it as well. Use this period in your life to center your attention on your financial present…you might be surprised at how making a few changes in your lifestyle could be a big help in the long run.

Take a long, hard look at your spending habits. Are you going out to dinner a few times per week? How about lunch? Are you running up to the local sandwich shop on your break Monday through Friday with coworkers? Bringing your lunch every day and cutting back on fast food and restaurants could potentially save you more than $50 per week. You’ll also want to analyze how much money you spend per month on new clothes and entertainment.

Another smart move for you to make is to open a new line of credit, but only one. A secured card might be the lone option at this point, but it will only take about six months to a year to be able to upgrade to an unsecured card. Use your new card sparingly and make sure to always pay on time and in full.

You might also want to think about using the services of a credit repair company after your bankruptcy has been filed. They can often put you on the fast track toward better credit and if you follow the few steps above as well, you’ll rebound from your bankruptcy as quickly as possible. Remember, it’s up to you to turn your financial future around, you can’t just sit back and wait for it to happen on its own. There is life after bankruptcy, but it’s only what you make of it. You’ve been given a second chance - don’t let this opportunity pass you by. Reclaim your financial future today!

Rebuilding Your Credit After Bankruptcy

The final step in the bankruptcy process is to rebuild and repair your credit. Repairing your credit begins with obtaining a copy of your credit report, examining it for errors, and contacting the appropriate reporting agency to have the error removed. Under a new Federal law, you may have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to www.annualcreditreport.com.

Once you’ve eliminated errors on your credit report, it’s time to start applying for credit cards, auto loans, and mortgages. By obtaining new lines of credit and keeping current on your payments, you will begin rebuilding good credit and improving your credit score. Below is a listing of available credit cards and loan products that may meet your needs:

You Don’t Need Perfect Credit to Refinance & Save. Compare Quotes from up to 4 lenders at LowerMyBills.com - Fill out one short application and sit back while the bids come to you.

Getting a new credit card can help to build credit. By using your new credit card and paying it off on time each month, you will begin to re-establish good credit within just a few months.

United States Bankruptcy Code

The US Constitution allows Congress to enact “uniform laws on the subject of bankruptcies throughout the united states.” These uniform laws are referred to as the bankruptcy code. The code has been changed several times over the history of the US, with many new changes as recent as 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act. These changes were made to the Bankruptcy Reform Act of 1978, which is codified as Title 11 of the United States Code. Title 11 contains rules pertaining to how bankruptcies are handled in the US, but some aspects of a bankruptcy may fall into other Titles of the United States Code, such as Title 26 for rules on taxes. Even though the code is supposed to create uniform laws, there are variations between each state depending on the laws of the state.

There are many different chapters within the United States Code. These chapters are typically referenced as types of bankruptcy. The most popular of these chapters are 7 and 13.

We have found that the best online reference for the US Bankruptcy Code is Cornell University Law School.

Real Estate Closing Process - What you should know!

2011-07-12T11:41:00.000-07:00

REGO & REGO
443 Hope Street
Bristol, RI 02809
401 253-2500
Fax 254-0235
www.regolaw.net

CLOSING ATTORNEYS AND THE CLOSING PROCESS - WHAT YOU SHOULD KNOW

The acceptance of your “Offer to Purchase” should lead you inevitably to the attorney’s office. You undoubtedly have questions as to what the role of the attorney is, what tasks the attorney will perform and what will take place during the closing process. If you are obtaining a mortgage to help finance your purchase, you actually need two different attorney functions -one function is to act as your personal representative and the other is to act as closing agent for your lender. These two functions actually compliment one another - because of this, it is logistically easier and more cost efficient if Rego & Rego performs both functions…in which event, we also reduce the personal representation fee. One way to look at it is that your personal attorney representation focuses on you and the lender’s closing agent attorney focuses on the property you are buying. It is rare that your lender would not allow us to act as the closing agent for your loan, as we are on the Approved Closing Agent list of the vast majority of lenders doing business in Rhode Island and southeastern Massachusetts.

A) Personal Representation Tasks:

Your personal representative’s primary function is to oversee the transaction, answer your questions and to make sure that your goals and objectives are met accurately and in a timely manner. Your personal representative reviews and negotiates documentation to effectuate the transaction, and maintains a consistent stream of communication with you so that you are aware of each step in the transaction. The personal representative addresses disputes between yourself and the Seller, and works with your realtor and all parties towards a smooth closing.

The quoted fee for your personal representation is comprised of various and more detailed obligations and responsibilities that include the following:

-.Review the accepted Offer to Purchase. The Offer will set forth the basic terms of the transaction, including, the parties to the transaction (Buyer and Seller), property to be purchased, purchase price, closing date and may contain other aspects of the transaction such as financing or inspection contingencies or the obligation of Seller to include or remove various items of personal property at the premises. Although the Offer seems to be somewhat brief, it is a legally binding agreement and is the framework from which the entire transaction will progress.

-.Review the Purchase and Sale Agreement. The Offer contemplates that the parties will enter into a much more detailed and comprehensive contract known as the Purchase and Sale Agreement (or P&S). The P&S is the embodiment of all terms and conditions of the transaction. It sets forth, in detail, the rights and obligations of the parties to the transaction, and the time frame in which each event must take place. Further, the P&S sets forth the parties’ obligations in the event that one, or both, of the parties fail to fulfill their obligations under the P&S. The terms of this Agreement are often heavily negotiated between the attorneys for the Buyer and Seller.

- Draft language relative to any contingencies and/or monitor said deadlines. Inspection Contingency: If your Offer contains a contingency for your inspection, the inspection will happen after the Offer is accepted and before the P&S is signed. During the inspection period you will conduct the inspection of the property and structure or condominium unit, whichever is applicable. Your inspector will be evaluating the physical attributes of the property and the systems that serve it, such as heating, electrical, and plumbing. Your inspection may also include analysis of the water quality of the property (if the premises are served by well water), it may include inspection and evaluation of the septic system (if the premises are not served by municipal sewer) and it may include the presence or absence of radon gas. Once your inspection is complete you will have until a specific date as set forth in your Offer by which you must notify the Seller of any deficiencies in the property or its systems. At this point you may engage in further negotiations regarding the property, if necessary. Your Realtor will help you facilitate this step in the transaction.

- Financing Contingency: you will need to monitor the mortgage application process and to remind the lender of the mortgage contingency deadline. To facilitate the process, and to fulfill your obligations under the P&S, be sure to respond to all of the Lender's requests in a timely manner. The contingency sets forth the date by which you will need to have a mortgage commitment in hand or your deposit funds could be at risk if an extension is not requested in a timely manner…or alternatively, notice is not properly given to Seller that the mortgage application was denied and Buyer is requesting the deposit to be returned.

- Review of Condominium or Home Owner’s Association Documents. Condominiums are comprised of areas that you own and are within your exclusive control, and areas that you own “in common” with the other Unit owners. When purchasing a Condominium Unit it is imperative to review the Condominium Documents (consisting usually of a Master Deed, Plans, Declaration of Condominium, Bylaws, Rules and Regulations as well as a Budget for the Condominium Association) that set forth what aspects of the property are considered part of your Unit that you own, versus components of the property that you own “in common” with the other Unit owners. Typically, Boards govern Condominiums and act on behalf of the Association (made up of the Unit owners). These groups run the operations of the Association. It also sets forth the rules for living in the Unit, examples are whether the Unit can be rented, whether pets are allowed, or whether business can be conducted out of the Unit, etc. Rights to use parking spaces, yards, roof rights and/or storage areas outside the walls of the Unit will be set forth in these documents as well. Lastly, the budget should be reviewed to assess the financial strength of the Association.

- Answering questions. The purchase of a new property can be an emotionally charged and a complex transaction. Your personal representative is available to work with you throughout, and answer any questions and provide guidance throughout the process…from the Offer stage through Closing.

- The Closing. Your personal representative will review the final Settlement Statement with you for accuracy and to determine whether it is complete, will assist in the explanation of the lender’s mortgage loan documents and will assist you with any issues or concerns that may have arisen at the close of the transaction.

B) Closing Agent Tasks:

The Closing Agent performs many tasks for the lender in connection with the mortgage loan transaction process. The Closing Agent’s primary function, is to take care of all arrangements necessary to close the lender’s mortgage transaction. The Closing Agent coordinates all of the efforts outside of the loan approval process that allows the closing to take place. For example, sometimes issues arise regarding the record title to the property. If there are indeed title issues, problems in a sale transaction, or issues involving inaccuracies, the Closing Agent keeps the seller and the borrower/buyer informed and is available to answer basic questions. When possible and appropriate, the Closing Agent tries to resolve these title issues and disputes. This insures that the mortgage transaction and/or the sale of the property proceeds forward to close with the borrowers being satisfied with the result. Closing Agents offer one-stop processing of the closing.

The closing costs quoted to you by the lender include a variety of items and services. One of the line items of those closing costs reflects the fee for those services which are performed directly by the Closing Agent’s office for the benefit of the buyer/borrower, seller, lender and real estate agent. They include the following.

1. Closing Agent Fee includes:

a. a title examination at the various Registries of Deeds and Probate throughout Rhode Island and southeastern Massachusetts;

b. the review of the abstract of the title examination;

c. obtaining municipal lien and tax information from the city or town in which the property lies;

d. if the property is a condominium unit, ordering, obtaining and reviewing a certificate as to any unpaid common charges which may be owed to the Condominium Association (known as a resale certificate), if any;

e. if the property is a single or multi family dwelling, ordering, obtaining and reviewing a survey/plot plan of the property;

f. obtaining and reviewing mortgage and lien payoff information requested from lenders and others that hold mortgages and liens on the property;

g. preparation of the loan documents, including the settlement statement;

h. preparation and issuance of title insurance policies certifying that the Buyer has good title to the property and that the records of the Registries of Deeds and Probate have been searched;

i. communication and coordination with Buyers, Sellers, real estate agents and lender;

j. receipt of the proceeds of the transaction and maintaining them in a safe and separate IOLTA account;

k. conducting the closing, final rundown of title at the Registry of Deeds;

l. recording of documents;

m. preparing and delivering proceeds to payoff all outstanding mortgages and liens that affect the property;

n. disbursement of the transaction proceeds;

o. copying and delivery of the loan documents to the lender and Buyer;

p. sundry other matters relating to the loan closing.

2. Title Abstract: The statement that outlines the physical review of the title to the property prepared from the records of the Registries of Deeds and Probate, including bankruptcy and tax matters where available. This work is most often performed by title abstractors and their work is reviewed and certified by the Closing Agent.

3. Mortgage Survey Plan: (If requested by the Lender) Sometimes referred to as a plot plan, this is a tape measure survey of the land and any improvements (ex. The house, garage, driveway, sheds, swimming pool etc) to be mortgaged in order to determine that it was not in violation of zoning when constructed and that no buildings or improvements are over the lot lines…and conversely, that no buildings or improvements on adjoining lots, encroach upon the property being purchased. This work is performed by a registered land surveyor and is reviewed by the Closing Agent. On rare occasion, lenders do not require this survey and in those instances it may be that none is performed. In a Condominium transaction no such survey is typically required.

4. Municipal Lien Certificate: Prepared by the tax collector in the city or town where the property lies, this document shows all outstanding tax and other municipal service/utility amounts which are charged and owed (ex. water/sewer fees, and some cities/towns collect refuse fees, electric service etc.), and this certificate is reviewed by the Closing Agent in order to assist in preparation of the Settlement Statement and to collect/adjust the proper amount owed by each party.

5. Resale Certificate: (condos only): is a notarized statement from the duly authorized board of managers of the Condominium Association certifying that all outstanding condominium fees and charges assessed against the Unit have been paid through the closing date or through the entire month in which the closing occurs.

6. Title Insurance: The lender requires a loan policy of title insurance for the loan amount in order to protect their interests from issues relating to the title to the property that could not be determined from an examination of the record of the title. In a purchase transaction the Buyer an owners policy can be purchased at the same time at substantial savings over the rate if not issued simultaneously with the loan policy. Real estate title insurance very simply is an insured statement of the conditions of one's title or ownership rights to a certain piece of real estate. The policy guarantees that the property being purchased and/or mortgaged is free from undisclosed liens or rights and it guarantees additionally that any confusion as to rights of ownership will be resolved in favor of the party buying the real estate, or the title insurance company will be liable for loss in value to the policyholder up to the policy limits.

When a party purchases a home or condo in Rhode Island or Massachusetts and is obtaining a mortgage from a lender to help finance that purchase, without exception, that lending institution will require an examination of the title to the property and will also require the Closing Agent, to issue to them a Lender's Policy of Title Insurance insuring only the lender, that the property is or will be owned by the Buyer, that there are no defects, liens or encumbrances on the property which would adversely affect the marketability of Buyer’s title and that the mortgage to the lender is recorded properly and secures the property for the repayment of the loan. Since the Closing Agent is already issuing a Lender's Policy of Title Insurance, you as the Buyer have the opportunity at the time of closing to obtain an Owner's Policy of Title Insurance at a cost substantially less than you would pay if the policy was not written simultaneously with the Lender's Policy at the time of closing.

The Owner's Policy of Title Insurance insures you, the owner, that you have good marketable title to the property free of any encumbrances or liens that would adversely affect the property, except those made known to you, and insures to you, the owner, that if any such liens, encumbrances, defects or other title problems become known, the title insurer will defend your title to the property.

In many instances we are asked whether or not title insurance is necessary or advisable for the owner to purchase. We highly recommend the purchase of the Owner's Policy of Title Insurance for some very simple reasons: (1) first, the premium for purchase of the title insurance policy is a one time charge, (2) secondly, since the Buyer is usually borrowing money to finance the purchase, a substantial amount of the cost, sometimes the majority of the cost, of the title insurance policy that the owner would receive has already been paid through the premiums for the Lender's Policy (which again, is required by the lender); for the relatively little extra cost, the Buyer can, for the benefit of themselves, insure against a variety of problems which could surface in the future. Just a few examples of these items include forged documents in the chain of title, signatures of mentally incompetent persons or minors which are unknown to the party reviewing the title, mistakes or inaccuracies in recording of legal documents of title at the appropriate place or recording or registration of title, fraud in the execution or in the handling of the recording or indexing of recorded documents, undisclosed or missing heirs, fraud in the execution or in the handling of a transaction in the prior chain of title, invalid divorces or misrepresentation of marital status of the parties signing the documents, and most importantly clerical errors in the public records and claims of parties unknown because their claims have not been filed in any indices of public record. Even though the Buyer is required to pay for the lender's title insurance protection, the Lender's Policy of Title Insurance does not protect the Buyer, and a claim can only be made if the lender suffers a financial loss because of a title defect that adversely affects a foreclosure of the Buyer's mortgage. There have been many defects in titles which could not be revealed by an examination of the public records. These defects usually arise at a time after the transaction has taken place and Buyers can suffer significant losses as a result of them. That is why Owner's Title Insurance makes a great deal of sense.

7. Recording of documents/Courier and Certified Copy Fees:
These include the cost to courier the mortgage payoff and loan documentation for safe and timely delivery, to record the mortgage and other transactional documents and obtaining Registry certified copies that may be required in certain transactions as well as returning the original loan documents back to the lender.