Answers to Questions on Bankruptcy and Social Security Disability
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Are there any type of resitrictions on the use of my credit cards or incurring other debt prior to my filing bankruptcy?
A debtor who has incurred consumer debts in excess of $675.00 owed to a single creditor for luxury goods or services within 90 days prior to filing bankruptcy or has taken out a cash advance on an open ended credit plan that totals more than $950.00 within 70 days prior to filing bankruptcy, then such debts are presumed to be nondischargeable. This means that those debts are presumed to have been incurred through false pretenses, false representation or actual fraud. Otherwords, it is presumed that the debtor had no intent to repay those debts at the time they were incurred. However, this is simply a presumption and the debtor may rebut the presumption by showing evidence that there was in fact an honest intent to repay the debt at the time it was incurred or that the debt was not for luxury goods or services, as defined by the statute or that the cash advance that was taken out does not fall within the covered definition. This presumption can also be overcome if the debtor can show that there has been a change in circumstances from the time the debt was incurred. Also, the presumption would be rebutted if the debtor can show that the credit card was used without is knowledge or permission. Many courts have held that such a presumption can be implied, as opposed to simply being expressed. This is basically to prevent the debtor from going on a spending spree shortly before filing bankruptcy. Once the debtor rebuts the presumption, the burden of proof shifts to the creditor to prove fraudulent intent. It is not sufficient to simply show that a debt was incurred and not paid because this is true of all debts. Usually, unless the debtor makes an admission, it is very difficult to produce any evidence that would be able to prove a fraudulent intent. Keep in mind, that unless the creditor files a timely objection to the dischargeability of the debt, then the presumption does not even come about. If you are facing such a factual situation where the presumption could arise, then you might want to delay the filing of the bankruptcy in order to get past the relevant time periods. It is important to keep in mind that the time periods are only relevant with respect to the automatic presumption. Any debts that are incurred prior to those time periods can still be found to be nondischargeable if fraud or false pretenses can be proven.
The discussion of credit card use would not be complete without a more thorough definition of luxury goods or services. Just what are luxury goods or services depends on the particular facts and circumstances of each case. Such items that constitute luxury goods or services include expensive jewelry, Christmas gifts, expensive floral arrangements, high-end clothing, expensive cosmetics, but such list is not exclusive and can include many more items. Luxury goods or services do not include items that were reasonable acquired for the support or maintenance of the debtor or the debtor's dependents. Items that would be excluded would be moderately priced clothing, Barbie dolls and accessories and even a new Chevrolet Lumina.
Taking out a cash advance of more than $950.00 within 70 days prior to filing bankuptcy can cause problems. A cash advance must be an extension of consumer credit under an open end credit plan. This basically means that the cash advance must be under a plan where the creditor expects repeated tranactions and the terms of the transaction have been spelled out and there is a finance charge on the unpaid balance.
Can my employer discriminate against me if I file for bankruptcy?
The Bankruptcy Code prohibits conduct by a governmental or private employer that would discriminate against a person solely because they have filed bankruptcy, has been insolvent before the commencement of the case or has discharged a debt in bankruptcy. It is first necessary to determine whether an employment relationship does in fact exist. This generally means that you were in an employment position at the time the bankruptcy petition was filed. The prohibition does not extend to hiring or other types of decisions where the debtor was not yet an employee of the employer on the date the bankruptcy petition was filed. The definition of an employment relationship is quite broad and may include situations generally not thought to be included.
A governmental or private employer are clearly prohibited from discriminating against a debtor with regard to their employment. This prohibition extends to discrimination regarding any aspect of a debtor's employment. The debtor must prove the offense or act committed by the employer was due soley because of the debtor's bankruptcy filing, being insolvent before the commencement of the case or the non-payment of a dischargeable debt. If the employer can show that there were other reasons for its' conduct toward the employee, then there is no violation. If a debt is of the type that is nondischargeable, then any discrimination is not prohibited. A debtor can encounter problems in proving the actual motivation of the employer if the employer provides other reasons for its' actions. Even when the employer provides its' other reasons for the discrimination, the Court can still disregard those other reasons if they appear to be frivolous and deem that a violation has in fact taken place. If it is determined that a violation has taken place, then the debtor is entitled to injunctive and declaratory relief. Such relief could be in the nature of the actual reinstatement of the employment position, if the debtor had already been terminated or even the promotin of the debtor to a new position, if such promotion had been previously denied. Not only can the debtor be awarded injunctive or declaratory relief, but an award of monetary damages for lost wages is a possibility, excluding any punitive award. The Court generally will not award attorney fees either. The Bankruptcy Code gives the Court considerable leeway in fashioning remedies to allow the debtor to reap the benefits of a fresh start that the filing of bankruptcy is intended to provide. It should be pointed out that these awards are generally for actions that occur after the bankruptcy case is filed and are not property of the bankruptcy estate. This means that a debtor in a Chapter 7 Bankruptcy can keep any award since it is not property of the estate. However, since the duration of a Chapter 13 is normally for five years, any award may become property of the estate and require a payment to unsecured creditors.
Will filing bankruptcy allow my driver's license to be restored if it has already been suspended?
Chapter 7 Can Prevent Your Drivers License From Being Suspended
The main objective behind allowing a person to file for bankruptcy is to provide that individual with a fresh start in life. The Bankruptcy Code clearly prevents the government from discriminating against a debtor by suspending, denying or revoking their driver's license soley because they failed to pay a motor vehicle related judgment that would be dischargeable in their bankruptcy. Otherwords, if the debt is dischargeable in bankruptcy, then the license cannot be denied. Likewise, the State is prohibited from creating any licensing or other type of requirements simply because a person filed for bankruptcy. The whole idea behind the prohibtion against discrimination is that a person with a discharged debt should be treated the same way as a person who never had any type of debt.
However, it should be pointed out that if other reasons exists for the government's action, then such action may be permissable and not be a violation. An example of such a sitiation would be where a license has been suspensed or revoked due to a certain number of points being assessed after various traffic violations. If the law that is being applied to you is not designed to coerce the payment of a debt that would be dischargeable in bankruptcy and requires the same actions from debtors and non-debtors alike, then there is no violation.
In order to have your license restored there are certain documents that will need to be provided to the Pennsylvania Department of Transportation:
- Proof that the Bankruptcy was filed (a certfied copy of the cover sheet to the bankruptcy petition),
- Copy of the bankruptcy schedule that list the motor vehicle judgment to be discharged,
- Affidavit stating that the judgment is not for personal injuries or death caused by the debtor's operation of a motor vehicle while intoxicated, and
- Proof of current financial responsibility for any vehicle titled in the debtor's name, or an affidavit stating that the debtor does not have any vehicles titled in his or her name.
Once all of this documentation has been provided to the State, then your license will be restored. The Pennsylvania Department of Transportation will not mail your license to you. It will still be necessary to go to your local license branch to reapply and have the license reissued. Sometimes a person fails to provide this information to the State while their bankruptcy is still active. Even if you provide all of the above-mentioned documentation after your bankruptcy has been discharged and closed out your license can still be restored.
Chapter 13 Is Your Best Alternative, If the Debt Is Of The Type That Is Non-Dischargeable In A Chapter 7
The typical type of debt that causes a person's driving priviledges to be suspended is where a money judgment has been entered against them due to a motor vehicle accident. Upon filing a chapter 7 bankruptcy that type of debt can be discharged and you can have your license restored. However, there are times where an individual's driver's license is suspended due to the non-payment of traffic fines. Traffic fines are generally not dischargeable in a chapter 7. The filing of a chapter 13 bankruptcy may allow you to disharge certain debts that would not be dischargeable in a chapter 7 bankruptcy. For instance, traffic fines are generally dischargeable in a chapter 13. If the debt is of the type that will be discharged upon the successful completion of the chapter 13, then the debtor is entitled to have their license renewed during the pendency of the chapter 13. Should the debtor's chapter 13 bankruptcy get dismissed or it becomes necessary to convert their case to a chapter 7 bankruptcy, then the State would be able to again suspend or revoke their driver's license. Criminal fines are clearly not dischargeable in either a chapter 7 bankruptcy or a chapter 13 bankruptcy. However, a debtor may provide for these debts in their chapter 13. The automatic stay would prohibit any collection efforts, which could include the revocation of your driver's license.
How are my utilities treated upon the filing of my bankruptcy?
THE BANKRUPTCY CODE PROVIDES PROTECTION TO THE DEBTOR FROM BEING DISCRIMINATED AGAINST BY THE UTILITY COMPANY
Having utility service is considered of utmost importance in society. If the service was ever terminated it could make a person's life somewhat miserable. In order to prevent a situation like this from occurring, the Bankruptcy Code tries to strike a middle ground between the person filing bankruptcy and the utility provider. Most people feel that a utility provider includes simply public providers of electric, gas, telephone, water and sewage services. The definition is much broader and includes suppliers of utilities such as landlords, condominium associations and other entities that may be responsible for having utilities supplied to debtors.
THE DEBTOR IS FULLY PROTECTED DURING THE FIRST 20 DAYS AND MAY EXTEND SUCH PROTECTION
A utility provider is prohibited from discontinuing or refusing services simply because a person has filed bankruptcy and has not paid a debt that existed prior to the bankruptcy filing. During the first 20 days a debtor is protected from their service being terminated. The utility company, however, can require a deposit or an adequate assurance of future payments. The amount of the deposit is based on a person's prior usage and varies. A good estimate is about two monthly budget payments. There are normally only two utility providers in this district that require a deposit, the electric and the gas. Upon receiving the deposit, any pre-bankruptcy debts would be wiped and a new account would be opened with a zero balance. During the 20 day period, the debtor may file an action in court seeking to have the amount of the deposit modified or allowing it to be paid in installments. The utility providers are not without options if a person does not pay the deposit within the 20 day period nor have the time period extended. The utility company may terminate or refuse service after the 20 day period.
YOUR UTILITY SERVICE MAY HAVE ALREADY BEEN TERMINATED BUT RESTORATION OF SUCH SERVICE IS REQUIRED
Sometimes a person's utility service has already been terminated prior to their filing for bankruptcy. The Bankruptcy Code requies that the utility provider restore service upon the filing of the bankruptcy case. The utility company can require a deposit or some form of adequate assurance of future payments, within the 20 day period from the filing of the bankruptcy. The adequate assurance requirements may be somewhat different from a person who already has service, since restoring service basically makes a person a new customer and the adequate assuance requirments for this type pf person could be different.
WAIVER OF THE REQUIREMENT OF THE DEPOSIT MAY BE A REAL POSSIBILITY
There are situations where a person has always paid their utilities. Even under these type of circumstances the utility company still expects that a person pay a deposit. However, if the debtor has a past payment history showing that payments have always been made on a timely basis, then it is possible that the utility company will waive this requirement. The payment history should serve as a type of adequate assurance. Debtor's counsel should contact the attorney for the utility company and bring to his or her attention the debtor's past payment history to see whether the waiver requirements are met.
Are alimony, maintenance and support and property settlement agreements dischargeable in bankruptcy?
In a Chapter 7 bankruptcy, the Bankruptcy Code excepts from discharge domestic support obligations. This definition includes any debt that is owed to a spouse, former spouse, child of the debtor, such child's parent, legal guardian or governmental unit that is for alimony, maintenance or support or is in the nature of alimony, maintenance or support. For instance, if the paying spouse agreed to pay certain expenses of the other spouse for a lower support obligation, then this would be in the nature of support and not dischargeable. The definition also includes both pre-petition and post-petition obligations, as well as any interest on those debts. A rare instance instance in which support is dischargeable is when it has been assigned to another entity for other than collection purposes. The obligation to pay alimony, maintenance and support has always been considered of utmost importance, and the obligations under a marital property settlement agreement has evolved into becoming a top priority in a chapter 7 bankruptcy and also is not dischargeable.
As in Chapter 7, domestic support obligations are excepted from discharge in a Chapter 13 bankruptcy. Otherwords, debts for alimony, maintenace or support or that are in the nature of alimony, maintenace or support will survive bankruptcy. However, one of the benefits of a Chapter 13 is that you are permitted to pay back your delinquent support obligations over the life of the Chapter 13 Plan, which can be up to five years. Assuming that you make all of your plan payments, upon the completion of the plan all of your delinquent support payments will now be paid off. In order to receive a discharge, it also necessary that you continued making all of your ongoing support payments. In fact, upon the completion of your case, you must certify that all ongoing support payments, as well as any support payments paid through your plan have been paid.
Another benefit to a Chapter 13 is that you can discharge a marital property settlement agreement. Confusion sometimes arises in determining the definition of a property settlement agreement. The main factors that courts consider in determining whether the debt is in the nature of support or a property settlement agreement are: 1) whether the payments terminate upon the death or remarriage of the spouse who receives the payments; 2) whether the payments are paid over a period of time, as opposed to some type of lump-sum payment; 3) whether the payments are based on the receiving spouse's future earning capacity; and 4) whether the payments are for such items as medical care, mortgage or other basic necessities of life of the receiving spouse. If these factors were contemplated in determining the payment, then the payment will most likely be considered to be in the nature of support rather than a property settlement agreement and therefore not dischargeable. However, debts that you owe to a former spouse that were agreed to in a divorce or separation agreement and are not in the nature of support are dischargeable in a Chapter 13 bankruptcy. In a Chapter 13, it is necessary that you list all of the creditors that you are wanting to discharge. That list would include your former spouse. Also, in order to get a discharge you must complete the terms of your Chapter 13 Plan that was previously confirmed.
What happens if my Bankruptcy is over with and I forgot to list a debt
When a person files bankruptcy it is very important that they list all of their debts. It is not only a good idea to gather all of your bills, but also to supplement those bills with a credit report. You can get a free credit report through www.annualcreditreport.com. In fact, this link can be found on my website. Oftentimes after a case has been filed, but before it is finished, a debtor may decide that they have a debt that they failed to list on their Bankruptcy Petition. As long as the debt was one that was owed at the time of the filing of the Bankruptcy Petition, it can be added to the list of creditors. An amendment of schedules should be filed adding this additional creditor to the Petition. This will provide that particular creditor with notice of the bankruptcy filing and avoid any claims by the creditor alleging failure of service. This creditor has been added to the Petition and the bankruptcy has proceeded forward and is now closed. Ocasionally, a debtor will find another creditor that was inadvertently omitted from the Bankruptcy Petition or even one that they were completely unaware of. The Bankruptcy Code addresses two categories of unscheduled debts. The first type of debts are those that arise from intentional torts, such as debts incurred by false pretenses, fraud or willful and malicious injury. These type of debts clearly are not dischargeable. The other type of unlisted debt that is not dischargeable is where the particular creditor by not being listed was not provided with a sufficient amount of time to file a proof of claim. This is what a creditor would file in an asset case itemizing the amount owed on its' claim. Most Chapter 7 Bankruptcies are considered no-asset cases. That means that all of the assets that have been listed on the petition have been fully exempted, so the trustee will not be able to take any of the property and sale it in order to distribute the proceeds to creditors. These unlisted or unscheduled debts are considered to be discharged just the same as if they had been originally listed on your Petition. The reason is that these creditors are not being prejudiced because they would not have received anything even had they been listed. This goes in keeping with the notion of allowing the debtor to have a fresh start on the road to financial recovery.
A Chapter 13 Bankruptcy is somewhat different as it is considered an asset case. Each creditor listed on the Bankruptcy Petition is provided with a notice of the bankruptcy filing and a bar date in which to file a proof of claim. A creditor can be added during the bankruptcy and is provided with the oppurtunity to file a proof of claim. Once the case is closed, the debtor's bankruptcy is not considered effective against any unlisted or unscheduled debt. That particular creditor is considered to have been denied the right to participate in any assets of that particular bankruptcy estate. As you can see, it is very important to make sure that you file a complete list of your creditors at the time of the bankruptcy filing.
If you find yourself overwhelmed with debt, then give Attorney Rodney Shepherd a call at 412 471-9670 to schedule an appointment. Attorney Shepherd will help you obtain that fresh start in life, so that you will no longer be a slave to your creditors.
Will I eliminate all of my debts when I file bankruptcy?
Generally, yes. Bankruptcy is a court process that can wipe out your debt and put you on the path to financial freedom. However, bankruptcy only discharges a debtor’s personal liability on the debt. Bankruptcy does not eliminate liens—notices that a creditor can attach to your property to proclaim to the world that you owe them money. These liens can be a real headache because they will prevent you from selling the property without paying the debt.
There are different types of liens, but a judicial lien is the kind that we are primarily concerned with in bankruptcy. A judicial lien occurs when a creditor files suit against you and obtains a judgment. The lien is then indexed in the court docket.
Avoiding Liens Is a Crucial Step in the Bankruptcy Process
As part of the bankruptcy process, an experienced bankruptcy attorney will help you take additional steps to avoid liens. Following are two conditions under which you can avoid liens in bankruptcy court:
- If you have a house, the lien may be avoided based on a calculation that takes into consideration the value of the property, the amount of any secured loans, the amount of the available exemptions, and the lien attached to the property.
- If a judgment is obtained against you within 90 days prior to the filing date of your bankruptcy, then the lien can be avoided.
Lien avoidance can be the key to any fresh start, and it is important to tell your bankruptcy attorney about any outstanding judicial liens that you know of so that he can assess the impact on your specific situation.
Hiring a Bankruptcy Attorney May Be the Smartest Money You Ever Spent
Are you looking for help with your bankruptcy case? Attorney Rodney Shepherd has helped countless people eliminate debt and avoid liens. Contact him today at the number at the top of this page or fill out his handy contact form to learn how he can help you.
How long is the process and is anything else required of me?
The whole process takes about 4 1/2 months from the date that you filed your petition. You first have your meeting of creditors usually within 30 days. Creditors are provided with a 60 day time line to review your case from the first date set for your meeting of creditors. After that deadline has paseed, then the case is normally closed out in about a month to a month and a half. There are ocassions where your case may fall through the cracks and it will be necessary for me to call the clerk's office to have it closed out. You will receive a discharge order and final decree in the mail officially discharging your debts and closing out your case.
During the 60 day time period that creditors have to review your case, it is necessary that you obtain a debtor education certificate. This is the second course that you are required to take and is oftentimes called a pre-discharge course. It is basically a budget class. You must be certain to obtain it before that 60 day deadline or your case will be closed out without discahrge. That means that it will be necessary for you to refile. You can oftentimes obtain your ceritificate from the same place that you obtained your certificate of credit counseling from. Here are just a few of the places that you can contact: www.summitfe.org , www.beadviser.com , www.PreBK.com , www.advantageccs.com , www.bothcourses.com , www.AccessBK.org . If you do not have a computer, then you can call Advantage Credit Counseling at 1-866-409-2227, which is the only local office that is located at 2403 Sidney Street, Pittsburgh, PA 15203 and do it in person or over the telephone.
Will I have to go to Court?
Upon filing a Chapter 7 Bankruptcy, the entire process takes approximately 4 to 4 1/2 months.
Once the petition is filed, the court will send out a notice informing your creditors that you have filed bankruptcy and appointining a trustee. This notice will also schedule a meeting of creditors, which is held approximately 30 days after you file. You are required to attend the meeting. These meetings are held on the hour between 9:00 a.m. and 4:00 p.m. They are quite brief and last only about 5 to 10 minutes. There are about 8 to 10 cases per hour, so you generally will not be there more than an hour.
As I previously stated, a Chapter 7 Bankruptcy Trustee is appointed to your case. At least 7 days prior to your meeting of creditors, there are certain types of documentation that you are to submit to the trustee. Such items include copies of your tax returns for the past two years and paystubs for the past 3 months or current income information. At the meeting, the trustee will examine the information on the bankruptcy petition that you filed by asking you various questions. The questions are rather routine, but include the following:
* Please show me your social security number
(you will need your original social security card or some other original type of document that shows your social security number)
* Please show me your picutre I.D.
* When signing this petition, did you review its contents and assure that all the information contained in the petition was true and correct.
* Are all of your assets identified in the schedules?
* Are all tax returns that are due been filed?
* Do you expect to receive anything of value within the next six months?
* Have you made a transfer of any real or personal property?
* Have you read the Bankruptcy Information Sheet?
* What was the reason for you filing bankruptcy?
These are just a few of the questions that might be asked. The examination is similar to the information that was gathered to prepare your bankruptcy petition, but it is simply not as detailed. I will be there with you to assist you in answering any questions.
The trustee is normally the only person to question you during the meeting. However, any one of your creditors are free to show up and examine you. This rarely occurs. If anyone shows, it is usually some "mom and pop" that you have been renting off of or some similar situation. All they can do is ask you some questions. In order for them to do anything some action has to be filed in court. This is seldom done, so it is not likely that you will be required to appear in court.
Upon the conclusion of the meeting of creditors, the trustee can either close out the meeting or continue it to another date. Most of the time the meetings are closed out and no further proceedings are required. On occasion, the trustee may continue the meeting to another date to allow you sufficient time to provide addtional doumentation. As long as this documetation is produced prior to the meeting, then it will not be necessary for you to attend.
The scheduling and the rules regarding the meeting of creditors are about the same for a Chapter 13 Bankruptcy. These meeting are also on the hour and may last 10 to 15 minutes. Unlike Chapter 7, these meeting are usually held in a closed room, with just you and your attorney present. On occasion, a representative from your mortgage company, car lender or taxing authority may also be present. The Trustee will examine you to determine whether the Chapter 13 Plan that you have proposed is feasible and you have the ability to make plan payments and whether there are any grounds to obect to the plan. Upon the conclusion of the meeting, the trustee will normally enter an interim distribution order, so that your creditors can start getting paid. A date for a conciliation is provided that may be 4 months later. It is not necessary for you to attend this conciliation. At this meeting, your attorney will normally get your Chapter 13 Plan confirmed on a final basis.
What are the income limitations on filing a bankruptcy?
Previously I spoke of exempting your property so creditors would not be allowed to attach your property. The other requirement is that your monthly net income and monthly living expenses have to be about the same. Otherwords, you can not have much income after expenses left over each month. However, the Bankruptcy Code does allow you to have a little over $100.00 left over each month. There are basically two income tests. The first is the means test. What is looked at is your gross income over the past 6 months. So you need to provide your pay information for the past 6 months prior to the date that you file. The IRS provides various types of deductions that you can take from your gross income to arrive at a monthly disposable income. This income is then annualized and compared to a medium state income for the number of people that live in your household. Where you come down on that scale determines whether you can file a Chapter 7 or Chapter 13 Bankruptcy. The means test looks at your past income. There is another income test and that is Schedule I & J. Here your income moving forward is looked at. Your monthly pay information minus such mandatory deductions as taxes, etc. are used to arrive at your monthly net income. Then your monthly living expenses are deducted from your net income. These can be broader and include more of your actual living expenses than just those allowed on the means test. Again, the two figures need to pretty much offset each other. Income is considered to be about anything derived from any source. However, there are some items that are excluded from these caculations. For instance, social security is not considered in making these calculations. If you are able to pass these tests, then you can file a Chapter 7 Bankruptcy. If not, you will need to file a Chapter 13 Bankruptcy that may have many benefits of its own.