Getting Your Repossessed Vehicle Back In Bankruptcy

If your car has been repossessed, and you want to retain it, it is not necessarily too late in Chapter 13 bankruptcy. However, you won't want to wait too long to file, as you can only recover the vehicle if it has not been auctioned off.

When your car is repossessed, you can file a Chapter 13 bankruptcy to catch up all the arrears on the vehicle. The arrears will be paid at 0% interest, which will make the repayment significantly easier. However, you will be required to pay any fees and costs related to the repossession. The finance company will be compelled to return the vehicle to you if you file in time. As mentioned above, you won't want to wait too long, as the vehicle will be lost if it is actually auctioned before filing. Chapter 13 bankruptcy is a great way to keep the vehicle in these situations.

A repossessed vehicle cannot be retained in Chapter 7 bankruptcy, unless you can pay all of the arrears on the vehicle at the time of filing. Chapter 7 bankruptcy works differently than Chapter 13 bankruptcy... while it has many advantages, the ability to catch up on arrears on a vehicle is not one. In most Chapter 7 bankruptcies where a vehicle has been repossessed, it is surrendered though the bankruptcy, with the debtor's obligation and liability being wiped out. If you can't afford to retain the vehicle (or don't want to) Chapter 7 bankruptcy is the way to go.

Contact us to set up a free consultation to determine if it feasible to file a Chapter 13 bankruptcy to save you repossessed vehicle (or whether it is best to walk away in a Chapter 7 bankruptcy). I have helped numerous clients in this situation, and I will be more than happy to discuss it with you.

Credit Card Debt and Married Couples

Marital credit card debt is a frequent cause of strife in marriages and a major cause of bankruptcy filings. Marital credit card debt may include debts solely incurred during the time of the marriage. It may also include some debts from before the marriage. Either way, it can burden married couples to the point of destroying the relationship.

Fortunately, most marital credit card debts can be discharged in bankruptcy, including  both joint and individual credit cards. Therefore, a joint card opened before (or after) the marriage is dischargeable in bankruptcy. At the same time, an individual card opened by one of the spouses, opened years before the marriage, is also dischargeable in bankruptcy. Any and all such combinations will be dischargeable, IF the couple files jointly.

This raises a scenario that sometimes occurs... what if one spouse does not want to file bankruptcy? What will happen to the marital credit card debts? In these cases, it will be important to know who is legally obligated on the debt. If only one spouse files, debts solely in his or her name will be discharged in the bankruptcy. Simple enough. This is often sufficient in cases where one spouse entered the marriage with significant credit card debt of their own. But, what about the joint debts?

Joint debtors are "joint and severally" liable. This means their creditors can go after one or both debtors for part (or all) of the debt. This may seem unfair in situations where one joint debtor has numerous attachable assets, while the other has nothing. In any case, this is the law. The creditor can go after whoever it wants, which will almost always be the person with something to take.

So, if one spouse files a bankruptcy on a joint credit card, his or her liability on the debt is wiped out. However, due to joint and several liability, the creditor can go after the non-filing spouse for the full amount. Due to this reality, it is almost always advisable for married couples with significant joint debt to file jointly. It reduces cost (the filing fee is the same for joint bankruptcy filers) and saves time. Not filing a joint bankruptcy will do no good for the household if the creditor can still collect on and possibly sue the non-filing spouse.

In many situations, the debt is in various forms, both joint and individual between the spouses. Contact us for a free bankruptcy consultation to determine if filing bankruptcy jointly, or individually, is the best option for your family. There may be situations where the individual debt of one spouse greatly exceeds any joint debts. I will be happy to walk you through the situation and give you the best options available. 

Wage Attachments in Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is funded by the income of the debtor. Income can take many forms, including Social Security, unemployment, or worker's compensation payments. Income can even be a contribution towards the household expenses from a third-party such as a parent. But, income is generally in the form of paychecks from steady employment.

The Western District of Pennsylvania trustee's office requires all regular pay to be "wage attached". This means it is required that your Chapter 13 payment comes directly from your paycheck as a deduction, much like taxes or deductions for insurance or retirement. Each paycheck, your Chapter 13 payment is sent from your payroll department directly to the Trustee.

This is sometimes initially off-putting for bankruptcy filers. However, it is actually quite beneficial and convenient. First, it makes things simple. All payments must be made for a Chapter 13 plan to succeed. This being the case, it's easier if these payments are done for you. There is no requirement to mail in money orders every month. There is no forgetting to make a payment.

A second advantage is it removes the possibility of error or lost payment. The Chapter 13 Trustee office is the administrative wing of the Federal Bankruptcy Court system. They don't screw up, and they don't lose payments. If there are any issues with a payment, it is professional office dedicated to fixing the problem.

How does the wage attachment work? Your attorney will file a motion with the Bankruptcy Court to attach your wages, which is then signed by a bankruptcy judge, and served on your employer's payroll department. As soon as the payroll department processes the Court order, the wage attachment begins. It's that simple. The whole process sometimes takes less than a week.

Some filers worry that their employer will be angry or potentially even fire them for filing bankruptcy, and they fear the wage attachment will tip the employer off. This is just not the case. Employers have no reason to care... you are not filing bankruptcy on them! My clients have had no issues with employers and wage attachments. It is just not a problem.

If you have questions about Chapter 13 bankruptcy, or wage attachments, contact us to set up a free consultation.

What is a "Liability" in Bankruptcy

The terms "asset" and "liability" are raised constantly in bankruptcy. The bankruptcy trustee reviewing your petition will ask if you have listed "all of your assets and liabilities" during your Meeting of Creditors. But, it is not always clear what they do (and do NOT) refer to.

I already discussed what an asset is for bankruptcy purposes, so now I want to take a little time to talk about liabilities, which are listed in Schedules D,E, and F of the voluntary bankruptcy petition.

A liability is a debt you owe, or an obligation you have incurred. This probably sounds more complicated than the simple question "what is a liability?"... and it probably is! But, for the purpose of bankruptcy, knowing what you owe and what constitutes an obligation can be very important.

The clearest examples of a liability are credit card debts, student loans, medical bills, and personal loans. You have received goods or services, consumed them, and now you have a bill. You'll want to find and disclose all of these liabilities in your bankruptcy to make they are included and discharged. These liabilities are listed on Schedule F of the bankruptcy petition as "unsecured, non-priority debts".

Taxes, child support, and alimony are also liabilities, though they are considered "priority", and therefore must be paid back in bankruptcy, or they are not discharged. These liabilities are listed in Schedule E of the bankruptcy petition. 

It is sometimes less clear to a potential bankruptcy filer that a mortgage or car payment is a liability. You certainly get to enjoy the car and live in the home. But, mortgage and car payments are ongoing debt obligations. Fortunately, bankruptcy law allows you to continuing paying on these liabilities and keep the property. Not all liabilities are discharged, nor are they required to be. So, you listed the secured car payment or mortgage (on Schedule D of the bankruptcy petition) and keep making the payment.

Leases are also liabilities. Like car payments and mortgages in bankruptcy, you have the option of continuing on the payment and obligation, or rejecting it and returning the property. Make sure to discuss your options with your bankruptcy attorney.

As an experienced Pittsburgh bankruptcy lawyer, I will help you organize, disclose, and manage your liabilities. I will run a bankruptcy-specific credit report and review it so you understand your liabilities. And I will make sure you know what liabilities are discharged (and which are NOT).

Assets and liabilities are the "stuff" of bankruptcy, make sure you are familiar with yours before meeting with your bankruptcy attorney.

Eliminating Joint Debt in Bankruptcy, Part 2

In my previous post, I discussed how joint debts can make two individuals liable, even when only one enjoyed the benefits of the loan. In this post, I will discuss when joint debts can (and cannot) be eliminated through Chapter 7 bankruptcy and Chapter 13 bankruptcy.

The easiest way to dispose of joint debts in a bankruptcy is to file a joint bankruptcy. Joint bankruptcies allow two debtors to file at the same time with one petition, adding convenience and reducing costs. Joint bankruptcy is only allowed, however, with legally married couples. Boyfriend-girlfriend, bother-sister, parent-child, BFF-BFF... none of these can file a joint bankruptcy. Only a legally married couple can file (NOTE: recent case law and practice allows this to include same-sex couples). Engaged doesn't count, you need to be married at the time of filing.

So, if you are a married couple, with joint marital debts, you can file a bankruptcy to discharge these joint debts in one filing. If this is an option, the process will be pretty simple and it is a great, efficient way to deal with your financial problems.

Where things get murky is when only one co-debtor wants to file bankruptcy, or only one co-debtor is able to file. If you have a co-signed loan on which you are liable, and you file an individual bankruptcy, your personal obligation on that debt will be discharged and eliminated. However, your co-signer will become completely liable on the loan. The debt is only wiped out as it relates to you, it is not completely eliminated. The creditor can still pursue your co-debtor.

This will sometimes lead to a situation where a non-filing parent or spouse is left on the hook with the debt. If they are unable or unwilling to file their own individual bankruptcy, this debt will lead to collections and lawsuits. In these cases, after your discharge you can voluntarily help pay back your joint debtor, though you are under no legal obligation to do so. It is up to you.

There is one scenario where a joint debt may NOT be dischargeable in bankruptcy when you file on your own. If you have agreed to assume a joint marital debt (or any marital debt) as part of a formal property settlement agreement in a divorce, you cannot eliminate this debt in a Chapter 7 bankruptcy. This marital debt can only be eliminated in a Chapter 13 bankruptcy (which may require you to repay some money to your creditors). This policy of bankruptcy law protects divorced spouses who have negotiated in a divorce from being made liable on joint debts they rightfully negotiated away as part of the settlement.

This one example aside, if you file bankruptcy on a joint debt, your obligation will be cleared away. You can also be on the other side of this scenario... if someone you share a joint debt with files without you, YOU will become wholly liable. This is important to understand, us you may in turn need to file a bankruptcy.

If you are dealing with joint debts, contact us to set up a free consultation to see if bankruptcy is an option for eliminating the debt.