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6151 Lakeside Dr.,  Suite 2100
Reno, NV  89511

Reno Bankruptcy Attorney

Stephen R. Harris, Esq.

Providing Financial Protection

for 46 Years

There is nothing easy about making the decision to file for bankruptcy. I welcome the opportunity to speak with you personally and confidentially to help you find the ideal solution to your financial challenges.

3 Types of Asset Transfers and Their Inherent Risks

3 Types of Asset Transfers and Their Inherent Risks

Don’t Try to Outsmart the System

Asset transfers can pose a problem if not handled with knowledge and guidance from your bankruptcy attorney. As the saying goes, “This is not their first time at the dance”. Bankruptcy courts do cases all day long. They have seen it all. You are not going to be able to outsmart them, so please don’t even try. Because the consequences are serious. It is absolutely necessary to be truthful and accurate in the filing of documents. When listing assets and debts, you are signing, under oath, that the statements are true. If they are not you are committing perjury, a crime, punishable by fine or jail time. This is also true for the answers you give at the 341 meeting.

It is imperative, to begin with accurately listing all your assets and debts. Remember, debts that are not listed are not discharged and unlisted assets or potential assets can cause your bankruptcy to be reopened even years after it is closed.

1. Fraudulent Asset Transfers

Fraudulent property transfers are where you transfer or conceal property with the intent to deceive the court.

Transferring property before bankruptcy can lead to big trouble. Transfers include giving away, selling, and concealing assets. You need to discuss any transfers with your attorney before you file for bankruptcy. There are numerous filing and technical details that can run afoul of the bankruptcy court. They are covered in section 544, 547, and 549 of the bankruptcy codes.

The key point here is that the bankruptcy trustee has the power to overturn, void and reverse many property transfers. Worst still, fraudulent transfers can lead to denial of your bankruptcy petition and even jail. If the court denies your bankruptcy, none of your debts are dismissed, all your nonexempt assets are surrendered, and the bankruptcy is on your record.

2. Constructively Fraudulent Asset Transfers

Constructively fraudulent property transfers are those that are not necessarily intentionally fraudulent but can be so close as to still be cheating. The typical example is giving away assets to friends and family.

3. Preferential Asset Transfers

Creditors have the right to receive as much is legally possible. So, when you pay a favored creditor, the others will receive less. That is unfair and the trustee has a right to get those assets back for the benefit of all creditors. General those are transfers done with 90 days of the bankruptcy filing. The time limit may be extended to one year if made to “insiders” like family.

Payments that are not considered preferential are:

  • Small payments of less than $600 to a single creditor.
  • Payments on secured debts, like payments for car and mortgage that are just to continue to keep them current.
  • Payments for current expenses, like rent, utilities, and food.
  • Payments for back or current alimony or child support.

In conclusion please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.

7 Ways Divorce Impacts Your Bankruptcy

7 Ways Divorce Impacts Your Bankruptcy

When a divorce is entangled with your Chapter 7 or Chapter 13 personal bankruptcy filing, thorough planning and timing are an integral component to legally keeping your assets protected from the bankruptcy trustee and creditors.

Obtaining the best outcome for both spouse partners is of paramount importance throughout the entire process. Since every divorce case is unique, it is difficult to give generalized advice in any concrete manner regarding the best course of action without a detailed evaluation of the circumstances in your individual case. This is another reason why hiring an experienced bankruptcy attorney is a must first step in any case, particularly those involving a divorce petition.

As with most of the legal aspects regarding divorce and bankruptcy it becomes imperative that both parties make a concerted effort to avoid the emotional entanglements that can so easily accompany a divorce specifically, and focus on how best your bankruptcy can benefit both parties.

The following 7 principles are important to understand before entering into divorce or bankruptcy proceedings, and may affect your bankruptcy timing and planning decisions:

  1. Generally speaking, if you don’t have any assets to divide, or joint credit card debt to allocate, and there isn’t child support or alimony issues, you need to file bankruptcy before your divorce.
  2. Bankruptcy proceedings only deal with debts and assets on the date you file for bankruptcy. If financial obligations are created by a divorce decree after the petition date, they will not be included in the bankruptcy.
  3. If you receive property in the divorce within 180 days, (6 months) of the bankruptcy you might lose it to the trustee.
  4. If you are to receive support obligations, such as child support or alimony when you file bankruptcy, all that money will be off-limits to creditors. But property division will probably not be exempt and therefore be subject to creditors.
  5. A bankruptcy court can overrule a divorce court decision regarding what is property division and which are support obligations.
  6. There is an inherent process that can create future debt accrued to either spouse partner.
  7. Property divisions completed prior to bankruptcy are debts that you can avoid. For example, if a divorce court orders a transfer of assets to one of you, insurers when your ex files bankruptcy. However, if a divorce court orders your extra transfer, the property and he hasn’t done so prior to bankruptcy he may be up to escape this kind of debt through bankruptcy.

The 2 Categories of Future Debt Creation Resulting From Divorce

1. Future Support Obligations

A divorce may create support obligations, usually referring to a commitment to provide for the necessary care, support, and maintenance of a dependent child or another person as required by law. Support obligations usually cannot be discharged in Chapter 7 or 11. Even though your individual situation is unique, generally you should plan on being held responsible for the following:

  • Child support
  • Alimony
  • Health and life insurance coverage, medical expenses, birth costs, and child care or special child-rearing expenses.
  • Attorney’s fees for your ex-spouse
  • Some of the debts that your ex doesn’t have to pay

One positive aspect pertaining to the above obligations is that you may be able to better afford them because other debt will probably be wiped out in your bankruptcy.

As a side note, when filing for Chapter 13 bankruptcy, you can make up any amount overdue or delinquent that you may have accumulated before bankruptcy pertaining to support debts. However, if you don’t fulfill your Chapter 13 repayment plan as agreed upon, the court may dismiss your bankruptcy in total. Then all of your past liabilities and debts will come due, none are wiped out and all your creditors and your ex-spouse can come after you with the full force of law.

2. Future Property-Division Obligations

This type of debt is usually created to pay for part of jointly-owned property that the court may award your ex-spouse. The property may be real estate or something like part of your retirement plan. In either case, these may become long term liabilities or require liquidation, the selling of the property, family residence, etc. to satisfy the court’s instructions. In addition, the court may place a lien on your property to secure the payment.

A property settlement obligation can be erased with a Chapter 13, but not a Chapter 7 bankruptcy. Also, with the Chapter 7 filing, your personal debts may be wiped out, but you will likely still have to deal with any liens that were put on your property by the divorce court. This kind of lien may be avoided to the extent it impairs your homestead exemption and should be discussed with your personal bankruptcy attorney.

Careful due diligence should be exercised when dividing up a property before filing for bankruptcy. The trustee will probably look at the property settlement to be sure it was fair and equitable. If a property was divided in a way as to be grossly disproportional and unfair to creditors, the lien-holder or mortgage lender for example will then have the power to recover the property from your ex-spouse to satisfy the debt.

In conclusion please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.

5 Categories of Debt-Relief That CANNOT Be Wiped-Out By Bankruptcy

5 Categories of Debt-Relief That CANNOT Be Wiped-Out By Bankruptcy

When considering debt-relief with a bankruptcy filing there are a number of obligations that cannot be wiped out. There are generally 5 categories that I will discuss in detail within this article. Some debts cannot be discharged because of specific statutes or prohibitions in the law, and will not be dis-chargeable just because of inexperience or plain sloppiness or timing of filing.

1. Debt-Relief Cannot Occur After Your Bankruptcy Filing

Debts are created by the event, not when you get the bill. If you buy a car with a loan, the debt is created at that moment, not when you get your first bill for payment. If you’re considering or must have substantial medical treatment that is uninsured, the resulting debt will not be covered by bankruptcy if you file before the treatment. If possible, delay the bankruptcy filing until after the medical treatment, and then include the debt in the bankruptcy filing.

2. Debts That Aren’t Listed in Your Bankruptcy Filing

Many times you may forget to list a creditor in your bankruptcy filing. Occasionally you might not even know you have a debt because the creditor stopped sending you a bill. Prior to filing bankruptcy be sure to go to all three credit unions to get a list of all the creditors you may own. Even if you are not sure of the amount you may owe list the debt and the creditors address. If this amount is wrong it puts the creditor in the position to have to file a proof of claim to establish the amount that actually owed. The point is you have listed the debt to discharge.

For example in Chapter 13 cases, debts are dischargeable unless you amend your filing to include those creditors who you may have forgotten on the original application. You have 90 days from the 341 meeting to make the amendment.  Creditors then have 60 days to file a proof of claim.

In Chapter 7 cases, the unlisted debt is not technically discharged. In over 95% of non-asset Chapter 7 cases, the creditor would not have received any money even when the debt was listed. In this case, most courts, but not all, allow the debt to be discharged.

Comparison of Non-Dis-chargeable Debt: Chapter 7 Versus Chapter 13

  • Marital and domestic support obligations are not dischargeable under Chapter 7 and dischargeable if paid under Chapter 13 plan.
  • Marital property divisions are not dischargeable in Chapter 7 and are dischargeable under Chapter 13 plans.
  • Student loans are not dischargeable under either Chapter 7 or 13 unless undue hardship can be proved.
  • Claims made for investment or theft are not dischargeable in either Chapter 7 or 13.
  • Criminal fines and restitution are not dischargeable under either chapter.
  • Non-criminal restitution is dischargeable under Chapter 7 and Chapter 13 unless there was willful conduct causing personal injury, fraud, or embezzlement.
  • Personal injury claims from drunk driving are not dischargeable in Chapter 7 nor dischargeable in Chapter 13 and must be fully paid in Chapter 13.
  • Motor vehicle fines and tickets are not dischargeable under Chapter 7 but are dischargeable if a minor infraction. They are not dischargeable if the conduct was criminal.
  • Claims for willful or malicious contacts are not dischargeable in Chapter 7 but may be under Chapter 13 unless assessed by the court.
  • Pension loans are not dischargeable under Chapter 7 but are dischargeable in Chapter 13, but the debt amount can still be detected from the pension account.
  • Welfare and unemployment benefits that were wrongly received are not dischargeable under Chapter 7 or 13.
  • Debts resulting from fraud are not dischargeable in either Chapter 7 or 13. This would include debts created immediately before filing, like credit card charges and other debts where the debtor had no intension to pay.
  • Real estate and personal property taxes that were incurred less than one year before bankruptcy are not dischargeable in Chapter 7, and in Chapter 13 plans, must be fully paid.
  • Trust fund taxes are not dischargeable. Trust fund taxes are those taxes that were withheld from employee paychecks there were supposed to be paid. So if a business is shaky be sure to pay these employment taxes before anything else, because they will never go away.
  • Loans that were made to pay non-dischargeable taxes are not dischargeable in Chapter 7. They are dischargeable in Chapter 13 unless borrowed fraudulently. For example, if you used a credit card to pay taxes while planning bankruptcy.

3. Reaffirmation of Debts in Your Bankruptcy

Other than taxes, which we will look at in a separate chapter, the only other debt that is not dischargeable are those that are reaffirmed.  Reaffirmation is the process in which you agree to pay all or part of the debt.  It gives all the rights back to the creditor. Why would one reaffirm?

The major reason is that a debtor wants to keep the debt is he want to keep the collateral that secures the debt.

4. Your Bankruptcy Petition Can be Thrown Out – Revoked

Speaking of discharges, your bankruptcy petition can be revoked altogether. If that happens your filing is thrown out and you will not receive any relief from your debts. There are several reasons a bankruptcy may be denied:

Grounds For Revocation of Your Chapter 7 Bankruptcy Filing

  • Purposely fail to list an asset on your bankruptcy schedules.
  • Intentionally give false information in your bankruptcy schedules.
  • Lie or mislead trustee at the 341 meeting.
  • Fraudulently transfer property within one year before bankruptcy.
  • Fail to complete a financial management course after bankruptcy (required under BARF).
  • Refuse to cooperate with the trustee.
  • Disobey an order of the bankruptcy court.
  • Fail to file all federal tax returns that should be filed with the court.
  • Aggressively convert non-exempt assets into exempt assets.
  • Previously received a Chapter 7 discharge in a case filed within eight years of the current filing, or within six years if a Chapter 13 case
  • Failure to report or surrender property to the bankruptcy estate.

Grounds For Revocation of Your Chapter 13 Bankruptcy Filing

  • Failure to complete a financial management course while your bankruptcy was pending.
  • Failure to file all your federal tax returns that should be filed with the court.
  • Have not kept current with your post-petition support payments.
  • Received a discharge in a prior Chapter 7, 11, or 12 cases within four years of your present filing or in a previous chapter 13 case filed within two years.
  • Failure to cooperate with an audit after the discharge or you don’t satisfactorily explain mistakes in your paperwork.

5. How Income Taxes Are Handled in Your Bankruptcy

Income taxes fall into a special category, so we need to look at them in detail. Taxes due within three years are also priority items, which means they get paid before other items. Income taxes can be wiped out in bankruptcy under certain specific circumstances. To file bankruptcy, you will need to prepare the last four years’ income tax returns and have them available for the bankruptcy trustee. As a general rule, taxes that are less than three years old, you’re going to have to pay through a Chapter 13 plan or make arrangements with the IRS for payment.

Taxes that have not been paid that are more than three years old and were assessed more than 240 days prior to the filing date are dischargeable. Simple right? As with all things IRS there are a number of possible caveats:

  1. First, the taxes must be true, and you can’t have engaged in tax evasion. Your only excepted failure is not paying in a timely manner.
  2. Be careful of timing. The start of the 3-year period normally is April 15 of the following year of the period, but if you file an extension, it starts after the extension expires.

There are three possible reasons that the 3-year period can be extended:

  • If the IRS was prevented from collecting taxes because of a due process hearing, that time does not count, and an additional 90 days is added.
  • Similar to the above any amount of time that a taxpayer assistance order was in effect, also does not count, and an additional 90 days is added.
  • If you had a prior bankruptcy, the time the case is open does not count and 90 days are added to the three years.

If you never filed a tax return you will NOT be able to avoid paying them. There is no statute of limitations on non-filed returns.

How The Timing of Tax Payments Affects Your Bankruptcy

There are several timing decisions when dealing with tax payments that can affect the amount of taxes you may ultimately owe. When the IRS files a notice of tax lien with your county before you file bankruptcy it makes it even more difficult to discharge taxes. The lien gives the IRS a prior claim on all your assets, even retirement plans. So, they still encumber pre-petition assets.

When you file a Chapter 7, you may have the trustee use liquidate assets to pay your current taxes, but you must make an election to do so shortly after filing bankruptcy.

In Chapter 13, is critically important that you factor into your repayment plan the taxes the amount you do owe and that you expect to owe. If you don’t fulfill your plan agreement the entire bankruptcy can be revoked or denied.

Before filing bankruptcy, sometimes you want to consider paying non-dischargeable taxes by selling nonexempt property and paying off the tax debt. Always consult your bankruptcy attorney before taking this step.

State Income Taxes

Generally, the same rules apply to state income taxes that are covered by the IRS. If any of your federal tax liabilities change, be sure to file an amended state tax return also. You want to take advantage of any federal discharges that might apply to the state also. In Nevada, since there is no state income tax, this is one less thing to worry about.

Other Types of Taxes

Generally, non-income taxes are dis-chargeable in Chapter 7 or Chapter 13. The event that causes the tax liability must be more than three years before the filing date.

Property taxes are assessed against the property and land and only become an issue if you want to keep the real estate. You need to include provisions to pay these property taxes in any Chapter 13 plan.

Personal property taxes are not dis-chargeable if they are assessed against the owner and are less than one-year-old.

Please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.

The Chapter 13 Bankruptcy Process

The Chapter 13 Bankruptcy Process

The steps for working your way through a Chapter 13 bankruptcy are pretty much the same in steps one through eight explained in a previous post. A Chapter 13 filing requires that you propose a plan to repay creditors over a period of 3 to 5 years. The trustee will oversee compliance with that plan. You must have a plan in place within 15 days after you file your petition and your first plan payment is due within 30 days of the petition filing.

The 341 Meeting

The 341 meeting for a Chapter 13 is very similar as in the case of the chapter 7, but the standing trustee will be more concerned with your income and expenses to see if your plan can reasonably be expected to succeed. The trustee and creditors may raise any questions, concerns or objections after submitting your plan to the court.

You and your lawyer may attempt to justify your plan and satisfy the questions. If you cannot satisfy the standing trustee or your creditors, you will have the opportunity to modify your plan and to schedule another hearing to have it approved. Occasionally, problems will be so severe or cannot be negotiated away that the court may consider the problem so serious they could dismiss your Chapter 13 bankruptcy case altogether. This is rare.

One of the places that tend to be stumbling blocks is the valuation that you place on assets that might be different from your creditor’s estimates. One of the issues that usually come up has to do with real property and the liens against it. Your attorney will probably attempt to strip off liens, depending upon the valuations of your real properties.   

Lien Stripping

Lien stripping and lien strip downs are an important component of the Chapter 13 process.  Many Chapter 13 debtors have a residence or a rental house that they are attempting to strip off any junior liens, and in the case of a rental house, strip down the value of the lien to the value of the collateral rental house.  Lien stripping would be as follows:

The debtor has a homestead residence which they own and reside in.  The residence is worth $100,000.00, but it has a first trust deed obligation of $125,000.00 and the second trust deed obligation of $75,000.00.  In this instance, the Debtor has the potential for filing a Chapter 13 Plan for 5 years where the second trust deed obligation would be stripped off the debtor’s residence, assuming the debtor completes its 5 year Plan of Reorganization and timely makes the payments. 

Again, assuming the debtor’s homesteaded residence is worth $100,000.00, if the Debtor has a first trust deed obligation of $95,000.00, and second trust deed of $75,000.00, in this instance, the Debtor would not be able strip off the second trust deed, since there is potentially $5,000.00 equity that inures to the benefit of the second trust deed holder.  Translated, any equity in a residence that the second trust deed holder may possess would prevent that lien from being stripped off by the debtor in a Chapter 13 Plan.  In the case of rental houses, not only can the debtor do a lien stripping, but it can also do a lien strip down. 

An example of this would be a debtor owns a rental house worth a $100,000.00, with a first trust deed obligation of $50,000.00 and a second trust deed obligation of $150,000.00.  In this example, the debtor can propose upon a Chapter 13 Plan where the second trust deed obligation is reduced from $150,000.00 to $50,000.00, which reflects that amount of equity after the first trust deed obligation is subtracted from the valuation of the house that inures to the benefit of the second trust deed obligation.  Therefore, after the debtor successfully completes the 5 year plan payment period, the second trust deed holder would be mandated to reduce its lien and would have a $50,000.00 of the lien paid off, and the remaining $100,000.00 would be discharged.

              2.           An example of lien stripping or lien strip downs are as follows: debtor resides in his homesteaded house that he owns, which house has a first trust deed against it for $100,000 and a second trust deed against it for a $200,000.  If the house is worth $90,000, then the debtor  is able to strip off the $200,000 second because there is no equity in favor of the second, thereby allowing the debtor in a Chapter 11 or Chapter 13 to strip off the entire amount owing on the second.  

If you are using the same debtor in the same homesteaded house that the debtor resides in, the house is worth $125,000, the debtor owes a first trust deed of $100,000 and the second trust deed of the $200,000, then the debtor would not be able to strip off any of the $200,000 second trust deed, because of reported $25,000 equity above and beyond what is owed to the first.   An important thing to remember in this situation is that the debtor is residing in the house and claims it as a homestead.  

Using the same lien values of $100,000 for the first trust deed and $200,000 for the second trust deed, and a house valued $125,000, if the debtor is not residing in the house and rents the house to third parties, then the debtor could strip down the value of the second lien from $200,000 to $25,000, by reason of the $25,000 equity in the rental above, beyond $100,000 owed on the first lien.  

In an extreme situation using a rental house, a debtor could have a house worth $125,000, owe $100,000 on the first, $200,000 on the second and $100,000 on the third.  In this factual situation, the debtor could reaffirm the $100,000  first lien, strip down the $200,000 second lien to $25,000, conditioned on paying that $25,000 residence value for a five-year period  in equally amortized monthly payments, unless the secured creditor consents otherwise, and to strip off the entire $100,000 third lien  obligation.  

If your lawyer is unable to negotiate the differences, then the bankruptcy judge will decide.

Repayment to Creditors

The other major difference between Chapter 13 and Chapter 7 cases is that Chapter 13 cases involve repayment to creditors, and the standing trustee may want to keep tabs on how you are doing. Each year you must file a statement with the court regarding your income and expenses for the past year. These reports will continue until the plan is fulfilled. You and your lawyer should set up the process for completing those reports annually. Also, you must file a copy of all tax returns that become due while your bankruptcy case is open.  Potentially if your annual income significantly increases, then your plan payments may increase.

Since several creditors may be receiving payments from your Chapter 13 plan, you want to be sure that the money you pay will go toward satisfying those debts. The document called a proof of claim should be filed by the creditors up to 90 days after the 341 meeting. This ensures that they will receive the money that you are paying toward your plan. If the creditor does not file the proof of claim, you should file same on their behalf, with one exception.

That one exception is government agencies. They have up 280 days to file a proof of claim which are called priority debts. These debts would not normally be discharged in Chapter 13, but if they fail to file a proof of claim they could be discharged. Hopefully, their claim may fall through the cracks and you might be lucky indeed

Summary

I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.

The Chapter 7 Bankruptcy Processes You Should Know . . . Continued

The Chapter 7 Bankruptcy Processes You Should Know . . . Continued

This article will primarily deal with the processes involved with the filing of chapter 7 bankruptcy, sometimes called ‘consumer,’ or ‘personal’ bankruptcy and is a continuation from the article of the same name.

Step 7 – Notification of Creditors

About 7 days after the court receives your chapter 7 bankruptcy petition, it will notify all those creditors that you have listed on your filed pleadings that you have filed bankruptcy. The court will announce the case trustee and the date and time for the section 341 first meeting of creditors.

Step 8 – Supplying Copies of Your Federal Tax Returns

At least one week before the 341 meeting, you must supply copies of your most recent federal tax returns to the trustee and certain financial documentation, such as three months bank statements incurred prior to filing.

In chapter 13 cases, you must supply the standing trustee the last four years of your tax returns. If you fail to supply these tax returns, your case may be dismissed.

Therefore, it is important to file your tax returns prior to filing the bankruptcy.

Step 9 – Chapter 7 Bankruptcy 341 Meeting; First meeting of Creditors

Most petitioners dread the 341 meeting because they do not know what to expect. This fear is usually way overblown. Since these meetings are open to the public, we suggest that you attend a meeting for other positioners prior to attending your own. Since 341 meetings are little different between Chapter 7 and Chapter 13, be sure to attend the correct kind of filing meeting. This will give you a complete and accurate picture of what actually goes on at a 341 meeting and enables you to be thoroughly prepared for your own.

In Chapter 7 cases, seldom do any creditors show up at the meeting, although one or two might. They do have the right to ask questions, but this does not frequently happen. The 341 meetings are not emotional affairs. There are conducted to gather, clarify and affirm the statements that you made in your bankruptcy filing documents, with respect to assets and liabilities.

The 341 meeting usually takes place 30 to 40 days after you file. The trustee conducts the meeting, and you and your attorney must attend. Also bring proof of your Social Security number and a photo identification document, like a driver’s license.

Typically, the trustee will ask you if you have any nonexempt property that can be sold to pay off creditors. They may also ask about any payments or transfers you made in the two years preceding the bankruptcy. They will probably also ask about the value of your home, value of your car, any retirement plans, and other questions that meet the requirements of the state you live in.

They may also ask about nonexempt assets that you may want to keep, and if so, arrange for you to pay for them. If you do not want to keep nonexempt property, the trustee arranges to have those assets evaluated and picked up. They will then be sold for the benefit of creditors.

Your attorney will review 341 meeting questions with you before the meeting. An experienced attorney can usually anticipate any areas of uncertainty and will usually deal with those before the 341 meeting. In most chapter 7 cases there will be little or no nonexempt assets. Usually this is the end of 341 meetings. In about 60 to 90 days after the 341 meeting, the bankruptcy debts are discharged, assuming the debtor passed and file their post condition credit counseling certificate.

There are a few milestones and chapter 7 bankruptcy processes that you want to keep in mind:

  1. The trustee has 10 days after the 341 meeting to decide whether you passed or failed the Means test. If you fail, the trustee will ask the court to dismiss your case.
  2. The trustee and creditors have 30 days after the 341 meeting to object to any of your claims of exempt property. If you have amended exemption claims, the 30 day clock starts from the time of any amendments.
  3. Creditors have 60 days to object to the discharge of certain kinds of debt. If they don’t file objections, it’s too late for them to do it later, and you are over the last bankruptcy hurdle.

All these deadlines assume you have supplied accurate information and have answered questions accurately.

Section 341 first meeting of creditors are important for the debtor filing the petition,  in that they will have the opportunity to answer questions the bankruptcy trustee for their case might have with respect to the extent location and availability of assets to pay creditors’ claims, as well as information regarding the liabilities of the petitioner.  For creditors, some opportunity to ask questions of the petitioner with respect to his available assets and liabilities in the case as well as asking questions about inconsistencies found in the schedules of assets and liabilities, and statement of financial affairs filed by the debtor.  

Additionally, this section 341 first meeting of creditors date triggers the time for filing complaints objecting to discharge then go 90 days after the time first set the 341 meeting, as well as time for the debt of the bankruptcy trustee to object to the debtor’s claim of exemptions – 35 days from the date last set for the section 341 meeting.  Extended 341  first meeting of creditors are not encouraged  by the bankruptcy trustee and the debtor’s attorneys, especially if the question becomes too intense at the 341 meetings specific to a creditor’s particular issue  concerning the debtor.

After 15 to 60 minutes of questioning the chapter 7 bankruptcy trustee will more than likely suggest and/or recommend to the creditor or the creditor’s attorney asking the questions to notice  a rule 2004 examination in order to ask the debtor questions in a formal atmosphere with no time constraints.  Normally there are time constraints at a section 341 first meeting creditors because there are other scheduled debtors to give testimony and to answer questions to the bankruptcy trustee, normally anywhere from 3 to 8 cases every half hour.  

 Assets in Chapter 7 cases 

In a few Chapter 7 cases that have assets that need to be liquidated or distributed for creditors, the case will remain open until all those assets are dealt with. Sometimes, depending on the kind of assets, their disposal can take quite a long time, sometimes years. Once your case is filed the non-exempt assets are turned over to the trustee and those assets become property of the bankruptcy estate, and no longer yours to do what you want.

You must, of course, cooperate with the trustees to dispose of those non-exempt properties and assist with collecting any monies or properties that might be owed to you. You may have tax refunds that are outstanding at the close of bankruptcy, or outstanding real estate or personal notes that needs to be collected or sold to pay your creditors.

Those are the steps that you must go through to finalize your Chapter 7 bankruptcy case. Barring any foreseen complications, you should be done with your bankruptcy case in about 120 to 180 days after the 341 meeting.

I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.

Bankruptcy for the Elderly: Beware of This Horrific Fact; 1 in 8 Filers Were Over 65 Years of Age.

Bankruptcy for the Elderly: Beware of This Horrific Fact; 1 in 8 Filers Were Over 65 Years of Age.

Senior-citizen bankruptcies are on the rise, driven by socioeconomic factors such as insufficient Social Security payments, higher health-care costs, and increased individual responsibility for retirement savings.

Between 2013 and 2016, 1 in 8 filers in the U.S. was age 65 or older; during the same time period, 21% were age 55 to 64, according to Robert Lawless, law professor at the University of Illinois’ College of Law who has co-authored research on the subject. There’s been an overall trend toward older filers since the study was first conducted in 1991, he says.

While some of the stigma of declaring bankruptcy has dissipated, there can still be negative consequences such as losing property and long-lasting effects on credit. Before filing, make sure you weigh your options and avoid these potentially costly mistakes:

  • Not sufficiently exploring self-help options
  • Haphazardly liquidating assets
  • Taking on additional financial obligations to pay the bills
  • Not seeking legal help

If you’re feeling in over your head, it’s advisable to consult an attorney. The Eldercare Locator connects older Americans and their caregivers with trustworthy local support resources, including legal help, based on their location. Seniors can also use the Legal Services Corp. website to locate nonprofit legal aid organizations in their state that may be able to help them navigate debt and bankruptcy-related issues.

The website of the National Association of Consumer Bankruptcy Attorneys is another resource seniors can use to locate an attorney in their area. For seniors who don’t qualify for legal aid, but are concerned about fees, there are a number of firms that will do pro-bono work and sometimes firms will offer reasonable and discounted payment plans.

Why Many Older Americans Are Going Into Debt?

Experts have observed a rapid surge of retirees getting into insurmountable debt. The skyrocketing figures are due to the following reasons:

  • Credit card debt
  • Medical expenses
  • Job loss
  • Reduced income
  • Expensive insurance co-pays

Many seniors also experience a lack of support, lack of access to necessities, and isolation. Filing in Nevada for bankruptcy offers a way to ease the burden of debt and get peace of mind in their golden years.

What Kind of Bankruptcy Can Seniors Qualify For?

Most older adults filing for bankruptcy will qualify for either Chapter 7 or Chapter 13 bankruptcy:

Chapter 7 Bankruptcy

This type of filing will allow seniors to discharge most or all their debts. Chapter 7 is usually granted to filers who make less than their state’s median income.

The court may also order a means test to determine if an elderly filer can pay a Chapter 13 plan. Under Chapter 7, the court trustee may ask the debtor to turn over any non-exempt assets. These assets will be sold to help pay the petitioner’s creditors.

Chapter 13 Bankruptcy

This type of filing involves a three-to-five-year repayment plan. Successful filers generally get to keep their property and assets.

Older adults who still have steady income may prefer this repayment plan, especially for those who do not pass the means test or make more than the state’s median income. The success of filing may depend on selecting the right type of bankruptcy to file for. Therefore, it is best for petitioners to seek the help of a bankruptcy lawyer in Raleigh for expert assistance on the next steps.

Seniors May Be Able to Keep Their Homes After Filing for Bankruptcy.

There is something called a homestead exemption when it comes to bankruptcy laws. It is a certain amount of home equity that’s protected under bankruptcy. However, some seniors may risk losing their homes, especially if they have large amounts of equity or unpaid mortgage.

It is critical to learn how much equity the debtor’s state protects under bankruptcy. Some cover the full value of the petitioner’s home under Chapter 7 in Nevada. On the other hand, older adults may keep their home under Chapter 13, provided they are able to continue paying the mortgage. The repayment plan can also help debtors pay mortgage arrears.

Learn More About Bankruptcy for the Elderly in Reno.

Bankruptcy can pave the way for a more secure retirement for debt-ridden older adults. It is natural to have many questions about the decision to file, especially when it involves factors like your social security income and retirement accounts. Call the Harris Law office today at 775-786-7600 for a free consultation, also visit our new Facebook Page for more information.