In most cases, the purpose for filing bankruptcy is to obtain a "discharge." A discharge is a document issued by a bankruptcy judge that serves as legal proof that you have satisfied your obligation to affected creditors. Should a creditor attempt to come after you for a discharged debt, your discharge order will serve as proof that the creditor's claim has no merit.
Similarly, a discharge can be used to clean up your credit reports. If your credit files show an unpaid balance on a debt that was discharged, you can use your discharge order to force the credit reporting agency to change its records.
What happens if your file for bankruptcy - either Chapter or Chapter 13 - but circumstances lead you back into financial crisis and you have to file again. Are you allowed to file more than one bankruptcy in your life?
Fortunately, the answer is "yes" - you can file multiple bankruptcy cases if you need to do so. However, there are some very specific rules that limit these subsequent filings.
A decision this week out of the Eastern District of North Carolina should be music to the ears of Chapter 13 debtors with recent car loans. Judge Small ruled in the Telephius Price case, 06-00957-5 that the infamous "hanging paragraph" inserted in the Bankruptcy Code does not prohibit the cram down of the car loan if the purchase loan financed charges other than the price of the car.
The background of the issue is found in efforts of car lenders to lobby Congress to prevent Chapter 13 debtors from stripping down the lien to the value of the car at filing: the claim was treated as a secured claim, and paid with interest, to the extent that there was value in the car and the balance of the debt was treated as unsecured.
In the overwhelming majority of cases, the Meeting of Creditors (also called the "341 Meeting," because it is authorized by Section 341 of the Bankruptcy Code) is about 5 minutes long, no creditors appear, and the Meeting consists of Trustee going through a series of standard questions. Why, then, do most of my clients hear the words "Meeting of Creditors" and get a mental image of being seated in a straight-backed chair in a large, darkened room, with a spotlight in their face, and their creditors in hooded robes chanting around them?
A Chapter 13 bankruptcy is a bankruptcy case filed under Chapter 13 of the U.S. Bankruptcy Code. The Bankruptcy Code is part of Title 11 of the United States Code. Chapter 7 is titled "Liquidation". Some other sections of Title 11 apply to Chapter 13 Debtors even though the rules are in different chapters. For example: Chapter 1 defines who can be a debtor. Chapter 3 deals with how the cases (under any chapter) are handled by the courts, trustees, and others. Chapter 5 talks about creditors, debtors and the estate of the debtor. The whole law has to be read to understand what applies and what doesn't apply. An attorney can help guide you through the maze known as 11 USC and help you find the relief that is sometimes hidden in the Code. A chapter 13 bankruptcy is available only to a real life person, no corporations or limited liability companies allowed. (Those would file either Chapter 7 or Chapter 11 bankruptcies). A Chapter 13 bankruptcy is sometimes referred to as "reorganization". The US Bankruptcy Code still imposes a "stay" so that creditors must not try to collect debts.
If any of your debts have been guaranteed or co-signed by a friend or relative, your bankruptcy filing could damage your friend or relative's credit.
Lenders, whether automobile finance companies, credit card lenders, mortgage lenders or any other type of credit grantor, are in the business of evaluating and managing risk. If your credit profile has been poor for a while, you may have been asked by the credit grantor to find a guarantor or co-signer.
You filed a Chapter 13 bankruptcy to save your home and your car, but now you and your spouse are separated and have filed for divorce. What happens to your case? (See also, What If My Spouse Dies During Our Bankruptcy?).
Every bankruptcy attorney who files Chapter 13 bankruptcies has this issue arise from time to time. When you approach your attorney about your divorce issues, you must remember that your attorney represents both of you, and cannot help you in any way that could be detrimental to your spouse.