You Can Keep Your Car In Bankruptcy!

One of the most common fears expressed to me by potential bankruptcy clients is, "but I don't want to lose my car!" The good news... as long as you can afford to make the payment and keep it current, you can always keep your car in bankruptcy.

In Chapter 7 bankruptcy, you can keep your car as long as you are current at the time of filing. You are not required to return your car or lose your right to continue to make payments. Bankruptcy law allows you to retain the vehicle and continue to make payments. In most Chapter 7 bankruptcies it is simply a matter of continuing to make current car payments as normal. Nothing changes (though, you must be aware sometimes finance companies will stop sending you payment books while you are in bankruptcy so as to not violate the Automatic Stay).

If you are one or two payments behind, it is often advisable to catch-up with the payments before filing the Chapter 7 bankruptcy. This is not always easy to do, but it is worth waiting to file if you protect your car.

Bankruptcy exemption laws allow you to protect the equity you have in your car. Equity is just the value of the car minus what you owe. So, a car is like the rest of your property that can be protected from creditors. You creditors cannot take away your vehicle to satisfy their debt.

What if you are further behind on a car payment, perhaps three or four months? You can always file a Chapter 13 bankruptcy, which allows you to catch up arrears spread out over 36-to-60 months. Chapter 13 bankruptcy can even be used to get back a car that has been repossessed! (As long as the vehicle has not been sold at auction yet). I have used this option numerous times to save cars for my clients, sometimes for cars where payments that haven't been made for almost a year. The arrears owed on the vehicle are paid at 0% interest, so repaying what you owe in this way is a very realistic option.

Whether you should catch-up a few payments and file a Chapter 7, or file a Chapter 13 and catch-up through a bankruptcy reorganization, will depend on the circumstances. If other circumstances point to Chapter 7 bankruptcy or Chapter 13 bankruptcy, those circumstances will often dictate. If you are only a single payment behind and otherwise qualify for Chapter 7, it is usually advisable to catch-up before filing, as Chapter 7 has significantly less legal fees. Regardless, as long as you can afford it, you can keep it.

Contact us if you are having issues with you car payment and want to seek advice on making the payment.

Electronic Filing of Bankruptcy Petitions

When I file a Pittsburgh bankruptcy in the Western District of Pennsylvania, I file it electronically, over the internet, as required by the Bankruptcy Court. This greatly simplifies the filing process, as attorneys no longer need to hand-deliver petitions and filings downtown. It creates an electronic record and history that is easy to follow and eliminates disputes as to the timing of filing. It also greatly simplifies things on the Court's end, which reduces inefficiency and costs, which in turn limits court fees.

However, electronic filing does raise a couple issues worth examining. While it is clearly preferable on the whole, certain precautions must be taken.

Clients must give me permission to file online. This is done with the "Declaration of Electronic Filing". The Declaration of Electronic Filing is a form which must be signed by both the debtor and the attorney, and it must be filed with the Court within 14 days of filing. This document is usually signed by the client at the time of filing, and forwarded immediately. If it is not filed with the Court on time, your case can be dismissed. So, it is safest and best practice to mail it out quickly.

In the Declaration of Electronic Filing, the debtor attests that all information in the filings are "true and correct." It also grants the attorney permission to file online. Finally, it declares that the Social Security number listed is true and correct. In summary, the debtor is attesting that he or she is familiar with the information being filed, and that it is honest and accurate.

The bankruptcy attorney also signs the document (also known as PAWB Local Form 1A), further attesting that the information is "complete and correct". In my office, we will review your petition closely before filing to assure we meet the requirements of the law. All the information must be correct when the "send" button is hit!

All documents, motions, orders, etc., will be filed electronically throughout the bankruptcy case. Once again, this is the only way filing is permitted. Privacy standards are followed, as personal information such as Social Security numbers must be redacted by the attorney if provided in online filings. The process has proven secure, and as long as potentially sensitive information is redacted, there should be no issues with cyber safety. Making sure the system remains secure is an important responsibility of the Court and bankruptcy attorneys.

Electronic filing reduces costs and inefficiencies, and makes the practice of bankruptcy law more simple in general. If you have any questions about the process, contact us. 

Updated Address for Chapter 13 Payments

There is a new address for making payments to the Chapter 13 trustee in the Western District of Pennsylvania. The address is effective immediately:

Ronda J. Winnecour

Chapter 13 Trustee W.D.P.A.

P.O. Box 84051

Chicago, IL 60689-4002

As always, the payments should only be made with certified checks or money orders. If you have any questions about your Chapter 13 payment (assuming you don't have a wage attachment in place) contact us immediately.

Summertime Budgeting

With most recent days reaching the mid-90s (with humidity!) most of us are preoccupied with staying cool right now. Debt and related issues are far from our minds. My main concern right now involves not melting away in a three-piece suit when I am downtown. Bankruptcy filings often drop during the summer, and it is not surprising. However, just because these thoughts are being put off for a hopefully cooler day doesn't mean that you can't do some planning and budgeting in the meantime.

First off... take a vacation! This is usually the only time of year that a family with school-aged children will have the opportunity. Now, given circumstances, this vacation may need to be modest, but there are a lot of fun, nearby, affordable activities for a family to enjoy. Vacations don't need to be in the French Riviera. Even a "stay-cation" or a simple weekend trip in the car is feasible under a budget. Staying with friends and relatives out of town can keep down the expenses. At the very least, the city is crawling with fun and interesting things to do (take a day to go to Kennywood, or any of our great museums). Just because a bankruptcy may be in the offing doesn't mean family life needs to shut down.

A second budgeting issue for families is back to school expenses. August is generally the month of back to school spending for clothes, shoes, and school supplies. Put aside the necessary money know it is absolutely needed. If bankruptcy needs to be put off in the meantime, so be it.

As summer winds down, fall is a good time to put aside some money, including money needed to file a bankruptcy. Utility bills drop, as heat and electric bills (God bless air conditioning) go down, school is paid for, and Christmas shopping is still months away. It will be a great time to get things in order.

Of course, some debt issues and bankruptcies can not be put off. A lawsuit or home foreclosure needs to be addressed immediately. And in some cases, the stress of a large debt burden is best addressed now. However, in less extreme cases, summer can still be enjoyed with friends and family.

If you want to speak about your debt issues, contact us to set up a free bankruptcy consultation. If it is 95 degrees with 100% humidity, I will probably be wearing shorts and a light shirt!

Reviewing Your Credit Report for Bankruptcy

The primary reason to file a bankruptcy is to eliminate, or at least restructure, your debts. The best way to find out about these debts in detail is to run a three-source credit report (which I can do in my office). So, it follows that you need to review your credit report closely to make sure it includes all of your debts (which you want to discharge).

A good credit report contains a wealth of information about your credit and finances. It will list creditors, creditor addresses, amounts owed, and debt limits. It will include old debts, debts closed out, and debts transferred. It will include information about your mortgage and your car payment. And, of course, it will include the number that Americans often obsess over... their credit score.

So, what to make of it all? If you are applying for a mortgage or a loan, you should focus on the credit score. It is determined by an algorithm meant to determine your credit-worthiness. Credit score is best left for discussion in another post. My focus today is reviewing your credit score for bankruptcy purposes.

The most important information, from a bankruptcy perspective, on your credit report is the creditor addresses. These address help your attorney serve the proper creditor departments so that your bankruptcy is recognized. The address on most correspondence with creditors is often just a correspondence or collections address. A good credit report includes addresses for legal and bankruptcy departments. This helps assure that your bankruptcy is properly processed by your creditor.

The amount owed is also important information on your credit report, especially when filing a Chapter 13 bankruptcy reorganization. This information helps your attorney estimate how much a repayment will be. The amount my clients believe they owe is often much less than the amount listed on the credit score, as they often do not take interest and penalties into account.

What to look for beyond the addresses and amounts? Medical bills.

Medical bills are often NOT reported to the credit agencies, and therefore do not show up on your credit report. You will want to review the report closely, and if these bills do not appear, gather up statements showing how much you owe towards these medical debts so that your attorney can include them in your petition. Remember... if they're not included, they're not discharged. It's especially worth tracking down these medical bills (all of them) in a Chapter 7. I have seen clients literally finds thousands of dollars in medical bills when I insisted they keep looking. It's worth the time, because if you do not include them, they can attempt to collect after the bankruptcy is discharged.

Also, you will need to inform your attorney of any personal debts, or debts owed to anyone that isn't a finance company, such as attorney fees. These debts will obviously not show up on a credit report. When in doubt... find the bill!

In review... read your credit report by focusing to make sure you have listed all of your creditors, especially medical bills. Second, make sure the amounts look correct, but don't worry too much about this, as your creditors will need to file exact claims if they wish to collect from you anyways.

Review that credit report closely! Make sure everyone is included!