Final BAPCPA Anniversary Reminder

Tomorrow is the 8 year anniversary of BAPCPA.  At this time, everyone who filed a Chapter 7 bankruptcy case right before the law changed in 2005 is eligible to re-file a Chapter 7 bankruptcy case (assuming no other bankruptcy case has been filed since then, and assuming that you meet the income requirements – if you do not qualify, Chapter 13 may still be a viable option of relief for you).
I know this may seem a little corny, but we are nothing if not that, here at Holbus Law Office!  To commemorate this milestone, we will have a birthday cake – and any clients or prospective clients who stop in tomorrow can have a piece for free.

BAPCPA Anniversary Reminder #4

This is just a reminder to those of you who filed bankruptcy before BAPCPA went into effect and intend to file again when their 8 years is up, please call us to schedule an appointment today, instead of waiting until October.
As you may remember from my previous post, a lot of people felt compelled to file bankruptcy during the 2005 hysteria, erroneously believing that they would be unable to file for bankruptcy once BAPCPA went into effect.  In many cases, the October 17 deadline induced people to file prematurely – before it would have been in their best interest to file.
Without the imminent nature of another round of changes to the bankruptcy law, people are able to approach bankruptcy more level-headed, better educated, and able to make more informed decisions.  Nevertheless, there will be some who are waiting for October 17, 2013, when they will once again be eligible for another Chapter 7 discharge, and intend to do so quickly because of an imminent threat of wage garnishment or other invasive debt collection actions.
If you believe that you may be facing such an imminent threat, don’t wait until the last minute to meet with an attorney.  The bankruptcy laws have indeed changed, and while it is certainly possible to file, the requirements that one must fulfill before they can be eligible are substantial.  In other words, bankruptcy is more complex nowadays than it was 8 years ago, and it takes a little longer to get a case ready to file than it did 8 years ago.  By speaking to us now, you can use the time between now and your eligibility date to prepare yourself for your next bankruptcy case, and hopefully be able to approach bankruptcy this time around in such a way that you won’t have to undergo something like this again in the future.
I expect to have additional information regarding the new “modernized” bankruptcy forms, which will go into effect December 1, 2013 – shortly, and that will be shared with you.
At Holbus Law Office, we know we’ve done our job if you only need our services once.

BAPCPA Anniversary Reminder #3

This is just a reminder to those of you who filed bankruptcy before BAPCPA went into effect and intend to file again when their 8 years is up, please call us to schedule an appointment today, instead of waiting until October.
As you may remember from my previous post, a lot of people felt compelled to file bankruptcy during the 2005 hysteria, erroneously believing that they would be unable to file for bankruptcy once BAPCPA went into effect.  In many cases, the October 17 deadline induced people to file prematurely – before it would have been in their best interest to file.
Without the imminent nature of another round of changes to the bankruptcy law, people are able to approach bankruptcy more level-headed, better educated, and able to make more informed decisions.  Nevertheless, there will be some who are waiting for October 17, 2013, when they will once again be eligible for another Chapter 7 discharge, and intend to do so quickly because of an imminent threat of wage garnishment or other invasive debt collection actions.
If you believe that you may be facing such an imminent threat, don’t wait until the last minute to meet with an attorney.  The bankruptcy laws have indeed changed, and while it is certainly possible to file, the requirements that one must fulfill before they can be eligible are substantial.  In other words, bankruptcy is more complex nowadays than it was 8 years ago, and it takes a little longer to get a case ready to file than it did 8 years ago.  By speaking to us now, you can use the time between now and your eligibility date to prepare yourself for your next bankruptcy case, and hopefully be able to approach bankruptcy this time around in such a way that you won’t have to undergo something like this again in the future.
Remember that the 8 year time between discharges only applies if you filed a Chapter 7 in 2005 and intend to re-file under Chapter 7 now.  People who filed under Chapter 13 previously, or intend to file under Chapter 13 now have shorter windows and are already eligible for discharge.
At Holbus Law Office, we know we’ve done our job if you only need our services once.

BAPCPA Anniversary Reminder #2

This is just a reminder to those of you who filed bankruptcy before BAPCPA went into effect and intend to file again when their 8 years is up, please call us to schedule an appointment today, instead of waiting until October.
As you may remember from my previous post, a lot of people felt compelled to file bankruptcy during the 2005 hysteria, erroneously believing that they would be unable to file for bankruptcy once BAPCPA went into effect.  In many cases, the October 17 deadline induced people to file prematurely – before it would have been in their best interest to file.
Without the imminent nature of another round of changes to the bankruptcy law, people are able to approach bankruptcy more level-headed, better educated, and able to make more informed decisions.  Nevertheless, there will be some who are waiting for October 17, 2013, when they will once again be eligible for another Chapter 7 discharge, and intend to do so quickly because of an imminent threat of wage garnishment or other invasive debt collection actions.
If you believe that you may be facing such an imminent threat, don’t wait until the last minute to meet with an attorney.  The bankruptcy laws have indeed changed, and while it is certainly possible to file, the requirements that one must fulfill before they can be eligible are substantial.  In other words, bankruptcy is more complex nowadays than it was 8 years ago, and it takes a little longer to get a case ready to file than it did 8 years ago.  By speaking to us now, you can use the time between now and your eligibility date to prepare yourself for your next bankruptcy case, and hopefully be able to approach bankruptcy this time around in such a way that you won’t have to undergo something like this again in the future.
At Holbus Law Office, we know we’ve done our job if you only need our services once.

BAPCPA Anniversary

BAPCPA – the Bankruptcy Abuse Prevention and Consumer Protection Act – went into effect for cases filed on or after October 17, 2005.  At the time – most people didn’t know what BAPCPA meant, or how it would affect bankruptcy.  Most believed – erroneously – that they would not be allowed to file bankruptcy once BAPCPA went into effect.
The result being a massive spike in bankruptcy filings in the month prior to BAPCPA went into effect.
This October 17, 2013, will be the eight year anniversary of BAPCPA.  This anniversary is significant because there are hundreds of thousands of people who filed just before BAPCPA went into effect who – because of the limitations on multiple discharges – are going to become re-eligible to file this autumn.
Many people filed for bankruptcy in 2005 out of fear, with little or no regard to their long-term finances.  It is generally agreed that when possible, it is best to wait to file for bankruptcy after one reasonably expects any financial hardship has ended.  People who filed in 2005 may have been in the middle of receiving substantial health care, for example, and because they filed before they were finished with their medical care, they continued to accrue massive medical debt after their case was filed, and therefore were unable to fully benefit from their discharge.
This is just one way in which the 2005 hysteria would have caused people to file bankruptcy prematurely.  We anticipate there will be a number of people needing to re-file after October 2013 when they become re-eligible for a Chapter 7 discharge.
Here at Holbus Law Office, we encourage our clients to contemplate bankruptcy with great care.  Bankruptcy is a serious process, and while it may not be the financial crippler that it once was (yes, people can recover financially after bankruptcy), it does still have consequences.
I personally do not believe that people should rush into bankruptcy.  So, for those of you who are waiting for October 17, 2013 to roll around…  For those of you who are getting ready to file bankruptcy again to stop a pressing problem – such as wage garnishment, utility shut-off, repossession, or foreclosure – I urge you to talk to an attorney now.
We offer free, no-obligation consultations so we can evaluate what options (including non-bankruptcy options) are best for you.  By meeting with an attorney now, you can afford yourself plenty of time to decide if bankruptcy is right for you.  For those who need to file soon after October 17, meeting with an attorney now can also help make sure that you are ready to file as soon as you become eligible, and that you are doing all the right things financially so that there are no problems with your next bankruptcy case.

A side-by-side comparison of Chapter 7 and Chapter 13 Bankruptcy.


Chapter 7
Chapter 13
Generally
Liquidation of non-exempt assets, discharge of general unsecured debts.
Reorganization and repayment plan.  Debts split into categories. Some paid in full, others paid a percentage based on income and other factors.
Duration
Time between filing and discharge is approximately 4 months.
Time between filing and discharge is approximately 3-5 years.
Cost
Cheaper
More Expensive
Income
Must be below median or be able to “beat” the Means Test.
Surplus disposable income on either the Means Test or the budget.
Prior Bankruptcy
Ineligible to file if filed a prior Chapter 7 in the last 8 years or a prior Chapter 13 in the last 6 years.
Eligible to file even if not eligible for a discharge. Eligible for discharge 4 years after prior Chapter 7 or 2 years after prior Chapter 13.
Assets
If equity exceeds allowable exemptions, trustee can sell for benefit of unsecured creditors.
Assets are not liquidated, but repayment plan may require a minimum threshold paid to unsecured creditors to make them as whole as they would have been under Chapter 7.
Stay Protections
Both chapters stop collection efforts, lawsuits, wage garnishments, and utility disconnection.
Repossession & Foreclosure
Automatic stay suspends pending actions temporarily, but no adequate protection for arrears.
Arrears are cured. Foreclosure and repossession fully stayed pending successful completion of repayment plan.
Codebtor Stay
No
Yes
Other Issues
Preference payments, insider payments, transfers of assets, excessive gambling losses, and fraudulently incurred debt all pose the risk of adversary proceedings or denials of discharge.
Chapter 13 is sort of a fix-all remedy to anything that might be a problem in Chapter 7. Many issues become non-issues, or are mitigated with a floor amount paid to unsecured creditors spread out over the life of the repayment plan.
Discharge
Non-dischargeable debts simply survive the bankruptcy.
Certain non-dischargeable debts (priority debts, such as taxes and child support) are paid in full.  Other non-dischargeable debts (such as student loans) can be paid down concurrently with unsecured creditors.
Credit
Most people have improved credit scores about 12 months after bankruptcy is filed, assuming they have made payments on surviving debts (e.g. mortgages, car loans, or student loans).
Credit rebuilds a little faster in Chapter 13 than in Chapter 7.

  

Cases of Note: Fair v. GMAC Mortgage

In re Fair, 450 B.R. 853 (E.D. Wis. 2011)
This case involves a rapid-succession bankruptcy cases – a Chapter 7 immediately followed by a Chapter 13 – coined as a “Chapter 20” scenario.
First of all, why would someone file back-to-back bankruptcy cases like this?  Simple.  By having unsecured debts discharged in a Chapter 7, a debtor can use a Chapter 13 case to do things that the Chapter 7 cannot, and do so without having to pay anything to unsecured creditors.  In this particular case, the Chapter 13 case was filed to strip off a wholly-unsecured junior mortgage.
Procedurally, the bankruptcy court dismissed the adversary proceeding to strip the mortgage because the debtor – as a result of her prior Chapter 7 discharge – was ineligible for a Chapter 13 discharge.  The case was appealed to the district court, which held that there was nothing in the bankruptcy code that required the debtor to be eligible for a discharge in order to strip off a mortgage.  However, the district court remanded the case back to the bankruptcy court to determine whether the filing was made in good faith.  On remand, the Judge Pepper opted not to dismiss the case, because the debtor had not filed Chapter 13 solely for the purpose of stripping the second mortgage, but also in order to cure arrears on the first mortgage.
In this case, the court had determined that despite the short time between the Chapter 7 discharge and Chapter 13 filing (approx. 30 days) that there was a legitimate change in circumstances which explained why a Chapter 13 was not initially filed.  The court also noted that whether the case was dismissed or continued with the lien strip, GMAC (the second mortgage holder) would not be getting paid either way (as they were discharged in the first bankruptcy).  Finding that the Chapter 13 was filed for more than just the reason of stripping off the second mortgage, and based on instruction from the District Court that a lien could be stripped off without a discharge, the court permitted the Chapter 13 to continue.
On remand, considerable emphasis was placed on whether it appeared at the onset as to whether the Chapter 20 was “planned all along”.  Given all of the facts of this case, the court determined that the only two things that made it seem this way was the short time before the second case was filed and lack of any other debts besides mortgage debts.  Everything else pointed to an aggregation of events that made a Chapter 13 a bad initial filing, but a feasible second filing.
Lesson learned: don’t PLAN on doing a Chapter 20.
There’s really no reason to plan on a Chapter 20 anyway.  If you qualify for the Chapter 7, then you qualify for what is known as a “pot plan” in Chapter 13, which essentially means that none of your unsecured debts get paid – just like in the Chapter 7.
Of course, there are some catches to what I just said.  For one thing, below median debtors in Chapter 13 are required to forfeit one half of their tax refunds to unsecured creditors – which wouldn’t be an issue in the Chapter 20 scenario since the unsecured debts are discharged in the Chapter 7 and have no claim to refunds in the Chapter 13.  Further, by reducing the amount of debt required to be paid in the Chapter 13, the debtor saves money on the trustee’s fee.
That being said, the savings are relatively minor in the majority of cases.  So, if you think you’re going to need to file Chapter 13, I do not recommend filing Chapter 7 first.  Just do the pot plan in Chapter 13.