The Emergency Bankruptcy Petition

The bankruptcy code allows for special emergency circumstances and permits debtors to file an emergency bankruptcy petition when all of the documents which are normally required or not immediately available.

A bankruptcy petition is normally somewhere between 40 and 80 pages of information. Sometimes all of this information is not readily available when a bankruptcy must be filed. An example would be a bankruptcy that needs to be filed in order to stop an imminent sheriff sale or foreclosure. If a debtor waits too long to get to a bankruptcy attorney, there may not be enough time to put together the full petition. Luckily, under the Bankruptcy Code less than the full petition can be filed in order to stop the sheriff sale or foreclosure by applying the automatic stay of bankruptcy.

The automatic stay stops all creditor actions including collections and any legal actions, such as sheriff sales and foreclosures. Therefore, there are times when filing is absolutely necessary. But, what is required to file an emergency petition?

The debtor and his or her attorney must file three things. First, the cover sheet of the voluntary petition must be filed. This includes basic information such as the debtor’s full name, address, and Social Security number. Second, a full creditor matrix must be filed. This means the debtor must submit a full list of all of their creditors. Finally, the first bankruptcy course must be completed and uploaded to the court. This course usually takes about an hour-and-a-half to file, so you must get it done immediately. Once these three documents are filed, the bankruptcy is considered to be started, and the automatic stay will protect you from any creditor actions.

However, it is important to note that the bankruptcy must be completed in full within 14 days, or the bankruptcy will be dismissed. At that point, the automatic stay would be terminated as well, and any legal action against the debtor could continue. So, there will be no time to waste.

If you think you may need to file bankruptcy soon, do not wait to speak with a bankruptcy attorney. Even though the emergency petition can provide bankruptcy relief on short notice, you should not count on an attorney being available immediately before your case needs to be filed. Call us at 412-414-9366 to discuss your current situation and see if bankruptcy is a good option for you.

Protecting Your Vehicle in Bankruptcy

One of the most frequent concerns I hear when someone reaches out to me with questions about bankruptcy is whether or not they will be able to protect their vehicle. Obviously, being able to keep your vehicle is an important issue when you’re considering whether or not to file. Without a vehicle you cannot get to work, pick up your children from school, or even run basic errands.

The good news is that the exemptions in bankruptcy law generally allow you to keep your vehicle when filing. Under the federal exemptions, which can be used in Pennsylvania, $4000 in equity can be protected for your vehicle. “Equity” in the vehicle basically means the Kelley Blue Book value minus the remaining balance of what you owe. If, like most people, you have a monthly payment on a relatively new vehicle, you should not have much equity in your vehicle. That being said, the used car shortage during the past several months of COVID has led to Kelley Blue Book values increasing much more than normal.

If you own your vehicle outright, there could be an issue as to whether or not there is more than $4000 in equity. The good news is that you may also use the “wildcard exemption” which could add up to another $13,900 to protect your vehicle. It will be important to discuss this with your bankruptcy attorney to make sure there will not be an issue.

A couple other notes. The exemption for cars doubles if you are filing jointly with a spouse. If you have motorcycles, boats, RVs, or ATVs, they will need to be exempted separately. Regardless, in the vast majority of cases individuals are able to protect their vehicles in Chapter 7 bankruptcy. Call me at 412-414-9366 if you have any questions or want to set up a free consultation..

The Bankruptcy Estate

The bankruptcy estate is a term that you may hear referenced when you do research about bankruptcy. It could be a bit confusing to understand because the idea of a “bankruptcy estate” is not very intuitive. Why would the bankruptcy have an estate? What property is it referring to? Whose property is it?

Well, the bankruptcy estate actually refers to your property at the time of filing bankruptcy. Your property, at the time of filing, becomes property of the bankruptcy estate. This does not mean that you lose your property or access to it. It just means that all of your property has to be accounted for in the bankruptcy. Luckily, there are exemptions under federal and state law that allow you to protect your property and keep it away from your creditors. However, you still must disclose everything you own so that the Bankruptcy Court can determine whether or not any of that property can be used to satisfy the debts of your creditors. Hence, it becomes part of the bankruptcy estate.

So, what property must be disclosed? Pretty much everything. This includes any real estate that you own, such as your home or even a campground. It would include your cars, motorcycles, and ATVs. It includes personal items such as furniture, clothes, and jewelry. It also includes cash, savings, and investments. The bankruptcy estate even includes intangible things such as the right to a lawsuit, intellectual property, and inheritances. Your bankruptcy attorney will review schedules A and B of the bankruptcy petition with you in order to list everything of relevance.

Once again, luckily, also have exemptions to protect this property. Therefore, in the vast majority of bankruptcy filings, the debtor does not lose any of his or her property. It must be disclosed so that it should be protected.

However, in some cases the value of the property of the bankruptcy estate exceeds the exemptions available to protect it. In these cases you may be required to file a chapter 13 bankruptcy and repay some of your debts to your creditors. In some of these cases you may still file a chapter 7 bankruptcy if you surrender some property to the bankruptcy trustee.

Discussing these situations with your attorney will be very important to determine whether or not bankruptcy is the best option for you. Bankruptcy has many advantages and many protections for debtors in distress. However, you must abide by the court’s rules and regulations in order to enjoy those protections. Determining your bankruptcy estate is one of these requirements.

Call us at 412-461-4837 if you have any questions about bankruptcy, specifically whether or not all of your assets will be protected.

Investments and Bankruptcy

Daytrading and investment accounts are becoming increasingly popular as technology makes them easier and easier to use. It is possible to set up an entire portfolio on your laptop or even your cell phone, and you do not need a personal broker. While investing money is a prudent long-term decision, it sometimes leads to large losses and debt. Bankruptcy can help in these situations.

Over the long run, stocks and bonds trend upwards and generally increase in value. While it is not a guarantee, diversified portfolios will generally increase at a steady rate over the period of years and decades. However, in the short term, investments can decrease in value. Sometimes by large amounts.

Also, more complex investment instruments have the potential to lose large amounts of money in a short period of time. This includes flash trading (or daytrading) and also shorting stocks. When a stock is “shorted” an investor is gambling that the value of the stock will drop, not increase. However, if that stock goes up in value they can be stuck with massive losses to cover that increase in value. Sometimes these losses are greater than their ability to cover them.

In these cases bankruptcy may be an option. Bankruptcy can oftentimes wipe out balances in investment accounts or discharge debts related to such accounts, which may include credit cards and personal loans used to fund the investment accounts.

This does not mean bankruptcy will discharge all investment debts. Creditors may object if they believe the bankruptcy filer committed fraud or deliberately took unnecessary risks. Large investment that may be scrutinized by the court and the United States trustees office. The circumstances of your investment history will be important.

It is important to speak to an experienced bankruptcy attorney to see if your investment debts can be discharged. I am happy to speak with you and give you a free consultation regarding your investment debts. Call us at 412-414-9366.

A bad run of investing should not ruin the rest of your financial wife. Call me to see if these debts can be eliminated.

My office is happy to provide a completely free consultation to discuss your debt issues. To best be prepared for this discussion, here is a list of things that you should have ready either in notes or document form.

Paystubs- I will need to review six months of pay stubs for you and your spouse (if you are married). Bankruptcy has a “means test” which looks back at all forms of income for the six months previous to filing. If you are above the threshold, you may be required to file a chapter 13 bankruptcy. If you receive non-work income, such as Social Security, you will want to have ready so that your exact income can be determined. Be prepared to show all income.

A summary of your debts- It is important to discuss all of your debts with your bankruptcy attorney. Your bankruptcy attorney will be able to tell you whether or not all (or any) of your debts are dischargeable in bankruptcy. It will be best to determine at least a rough idea of how much (and to whom) you owe money. Types of debt may include credit cards, medical bills, mortgages, taxes, alimony or child support, leases, car payments, and secured loans.

Any lawsuits or credit your actions taken against you- You should make sure that your bankruptcy attorney is aware of all actions taken against you by creditors. This may include lawsuits in the Court of Common Pleas or the magistrate court, or simply collection letters sent by creditors. This will be important for your attorney to know in case there are imminent response dates. Also, your attorney will need to list these lawsuits to make sure that they are stayed (or stopped) by the bankruptcy filing.

The value of your important assets- All assets must be disclosed in bankruptcy. Your bankruptcy attorney will be able to exempt these assets from your creditors in most cases. It will be important to discuss the value of your assets because the exemptions are not unlimited. For instance, there is an exemption for your home. You will need to be prepared to tell your bankruptcy attorney how much equity you have in your home. Equity is the value of the home minus what you owe. Therefore you should know these numbers when you meet with your bankruptcy attorney. It will also be important to know how much money you have in savings, a summary of your retirement accounts, and the year, make, and model of any vehicles you own.

A list of questions- While your bankruptcy attorney will need to get a lot of information from you, you should also get a lot of information from your bankruptcy attorney. A good free consultation should answer any questions you have about the process. It’s a good idea to write these questions down and ask your bankruptcy attorney directly. Searches for information about bankruptcy on the Internet often provide information that is either inaccurate or not relevant to the individual. It’s best to ask your bankruptcy attorney before hiring him or her.

Feel free to contact us directly to set up a free consultation. I will be happy to discuss all of this and more and to make sure bankruptcy is an option for you. You can reach us at 412-414-9366.