Chapter 7

How is the value of what I own determined in bankruptcy?

Published on: December 14, 2012 | Frank Coxwell

Bankruptcy Courts use “replacement value” when determining the value of your assets. Replacement value is defined in the Bankruptcy Code as the price that a retail merchant would charge for property of the same kind, considering the age and condition of the property at the time its value is determined.

This is not the cost to replace the item with a new one or what you could sell the item for; it is the cost that a retailer would sell the used item for in the condition it’s in now.

In cases such as used clothing, furniture, computers, TV, etc. it would be the value of the items if you had a yard sale or placed them on eBay.

If I file bankruptcy, will I lose everything?

Published on: December 13, 2012 | Frank Coxwell

No. Just because you are filing for bankruptcy, it does not mean you will automatically lose everything you own. You are entitled to claim “exemptions”, which are things that creditors cannot take from you. You must be honest with the Court and include a list of all your assets. To keep your assets, you must list them.

You can expect problems with your case and can lose your property if you do not list it or you are not completely honest about what you own. You must list everything you own, have in your possession, will own in the future, or might have an interest in now or in the future. For example, property you would inherit from a parent in the future, the $5 in your wallet, the car or house that is “owned by the bank”, and your baseball card collection. Everything means everything.

It includes things that you are making payments on (cars, real estate, furniture); things you own with someone else (including your spouse); things that have your name on the title or deed as the legal owner (even if you do not have possession of it); things that you are holding for someone else (college account for your child); things that you may not think have a lot of value (household goods and clothing); and claims you might have against someone else such as a claim for injuries in an auto accident.

How many times can you file bankruptcy?

Published on: November 29, 2012 | Frank Coxwell

Although there is not a limit on the number of bankruptcy cases you can file and no limit to the amount of time in between filings, there are limits to when you are eligible to receive a proper “discharge”. So why would you want to file a bankruptcy case if you know you cannot receive a discharge? There are several reasons why this strategy may be utilized. For example, say that you recently filed a chapter 7 bankruptcy and wiped out your unsecured debt but you have student loan or tax debt that is non-dischargeable. You could turn around and file a chapter 13 bankruptcy in order to be protected from garnishments, lawsuits, levies, etc relating to the student loans or tax debts for up to 5 yrs even though you would not receive a discharge.

Here are the time frames that must occur between filings for discharge eligibility (Note: the time is counted from date filed to date filed):

8 years between Chapter 7’s. -727(a)(8)

Does my spouse have to file bankrutpcy with me?

Published on: November 28, 2012 | Frank Coxwell

No. There may be reasons why it would benefit you both to file together, but the choice is yours individually to make. You cannot be forced to file with your spouse and likewise, you cannot force your spouse to file with you. When you file alone, you are filing “individually”. When you file together, you are filing “jointly”. Everyone’s situation is unique and depends on the type of debt you have and whether or not you both are responsible for the debt, etc. It is important to review the possibilities of filing individually vs jointly to see which way would benefit you both the most.

Do I have to report my spouse’s income if I’m filing alone?

Published on: November 28, 2012 | Frank Coxwell

If you are filing bankruptcy as an individual (not jointly with your spouse), yes, you must still report your spouse’s income. However, this in no way includes your spouse in the filing. The court simply looks at your total household income for calculating eligibility (Means Test) and for your post-bankruptcy household budget (schedule I and J). Even though your spouse is not filing with you, it is highly recommended that you both participate in the consultation so that both of you understand the process and requirements. And as mentioned before – have decided that the best strategy for addressing your financial situation is to file individually.

There is an exception to this though if you are married but separated. If you and your spouse are separated, your total household income is your income. If your spouse is paying domestic support, you will need to include that in your totals.

Offering 2 Classes in 2012 Fall Millsaps Community Enrichment Series

Published on: August 11, 2012 | Frank Coxwell

I will be teaching in the Millsaps College Community Enrichment program – 2012 Fall Series that is open to the public. I will be hosting 2 sessions under the section “Money & Business”. Click here to register.

“Who Owns your Home? Mortgage Securitization in Mississippi” will be a 2 class session

Oct 4 & Oct 11 from 6:00pm – 8:00pm. Millsaps Tuition Cost: $40.00 per person.

Have You Been Sued By A Debt Collector?

Published on: May 29, 2012 | Frank Coxwell

Most of my clients come to me after a garnishment has been sent to their job. A few come to see me as soon as they are served with the lawsuit. I wish they would come to see me on the day they get sued, but that is not always practical.

If you get sued or served with papers trying to collect a debt there are several things you can do.

1) Ignore everything and hope it goes away.

Who Is Eligible To File For A Chapter 7?

Published on: May 29, 2012 | Frank Coxwell

Most individuals will qualify to file for Chapter 7 regardless of the amount of debt. However, income must also be considered when filing for Chapter 7 bankruptcy. For example, if disposable income is sufficient to fund a Chapter 13 repayment plan — which is determined by your attorney completing what is called a “Means Test” which subtracts certain allowed expenses and monthly payments for certain debts from your gross income — you will not be allowed to use Chapter 7 bankruptcy but rather qualify for a Chapter 13 bankruptcy.

This is an area where it is important to consult with an experienced bankruptcy attorney. Your attorney will review your situation in depth through the “Means Test” process and advise you accordingly based upon the results.

So to sum it all up – an individual, a partnership, a corporation or other business entity may qualify to file for Chapter 7 so long as:

What is a “substantial or undue hardship” when it comes to student loans?

Published on: May 23, 2012 | Frank Coxwell

A debtor must establish a substantial or undue hardship in order to receive a discharge (debt wiped out) of student loan debt in a Chapter 7 or Chapter 13 bankruptcy. Undue hardship typically means that you cannot maintain a minimally adequate standard of living and repay the loan. The rule, found in a New York bankruptcy case called Brunner vs New York Higher Education Services Corp., sets out a 3 part road map for discharging student loans in Chapter 7 bankruptcy.

You must prove that you cannot maintain, based upon current income and expenses, a minimal standard of living for yourself and your dependents if forced to repay the loan.
Additional circumstances must exist indicating that the state of affairs is likely to persist for a significant portion of the repayment period; and
You must have made a good faith effort at repayment.

The definition of student loans now includes private student loans as well as the federally-guaranteed ones and most bankruptcy courts take a hard line on this test, making it extremely difficult to discharge a student loan in bankruptcy, but, in rare cases, possible.

Can filing for bankruptcy wipe out a payday loan?

Published on: April 21, 2012 | Frank Coxwell

Yes. Payday loans are classified as unsecured debt. If you cannot repay your payday loans, consult with an experienced bankruptcy attorney immediately to discuss your legal options.