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After filing a bankruptcy case, some debtors experience “cold feet.” Some have difficulty facing the trustee at the 341 meeting. Others cannot meet their Chapter 13 plan payment obligations. Still others are tempted by the promises of a non-bankruptcy resolution, like debt consolidation. Before you back out of your bankruptcy case, make sure that your decision will be in your best interest.

Once you abandon your bankruptcy case, the federal legal protections that prevent your creditors from collecting will expire. Your bankruptcy case prohibits creditors from filing lawsuits, garnishing wages, and calling or otherwise harassing you over your debt. The minute your case is dismissed you become fair game to your creditors.

Failing to complete your bankruptcy case means you will not receive the benefits of a bankruptcy discharge. Once your bankruptcy case is completed, the court issues a bankruptcy discharge which acts as a legal injunction forever prohibiting creditors from collecting from you personally. This protection is extremely powerful and never expires. On the other hand, when your case is dismissed, the creditor may charge you with interest and/or penalties that you did not anticipate.

If you dismiss your case and later re-file, you will have two bankruptcy cases on your credit file. Dismissing a bankruptcy case does not erase the first case from your record and does not lessen its impact on your credit score.

If circumstances change after you file your bankruptcy case, discuss the matter with your attorney. Most problems can be resolved without dismissing the case. For instance, a Chapter 13 debtor who suffers a loss of income may be able to convert the case to a Chapter 7 and receive a discharge without further repayment. In another example, if a Chapter 7 debtor incurs unexpected medical debt, the debtor can convert the case to Chapter 13 and include the new, post-petition medical bills in the Chapter 13 case.

The general rule in bankruptcy is, “Once filed, follow through.” However, every case is different and presents its own challenges. Speak with your attorney and discuss your legal options. You and your attorney can formulate a plan that will benefit you and your family. The Law Office of Michael J. Heath at (757) 431-866, a Virginia Beach bankruptcy attorney, can explain your legal rights and bankruptcy options.

For over a year some national banks have been offering "checking advances" to their cash-strapped customers. A Checking advance is a short term loan between $100 and $500 which must be repaid within 30 days. Typically the bank will take all direct deposits made into the borrower's bank account until the loan is paid.

Critics have described this practice as a thinly disguised “payday loan,” since the loan is intended to provide cash to the borrower until his or her next payday and direct deposit. With fees of 20% per $20.00 borrowed, the effective annual percentage rate is 130% when the loan is repaid on the thirtieth day.

The checking advance repayment terms can have unexpected consequences for the borrower. For instance, taking a checking advance two days before your direct deposit payday means that you have paid the bank between $10 and $50 for a two day loan. The loan period is simply until the next direct deposit, or the expiration of thirty days. At the end of thirty days the bank will withdraw the funds from your account, usually without notice. This withdrawal may cause an overdraft of your account and additional fees. Unlike payday loans, checking advance customers are unable to control and post-pone payment of the loan until the end of the loan period. Some banking customers find themselves forced to take a series of advances until they are able to afford to repay the loan.

Bankruptcy may discharge checking advance loans as well as payday loans. These short term loans can cause significant damage to a families’ budget and cost hundreds of dollars in fees. It is usually advisable for clients who wish to discharge a bank’s checking advance to open up another account at a different bank. This will avoid any complications if the bank attempts to take money out of your account to repay the loan.

If you need to get out from under checking advance loans, payday loans, or other high interest loans, speak with an experienced bankruptcy attorney and discover how the federal bankruptcy laws can provide you with relief. Your bankruptcy attorney can explain the best way to discharge these loans and set you on a course for a better financial future.The Law Office of Michael J. Heath at (757) 431-866, a Virginia Beach bankruptcy attorney, can explain your legal rights and the available bankruptcy options.

Certain debts have been given special status by the Bankruptcy Code and are generally excluded from the debtor’s bankruptcy discharge. Child support obligations, student loans, and income tax debts are three of the most common types of debts that are not dischargeable. However, each of these debts may be eligible for discharge in bankruptcy under certain circumstances.

 The rules for discharging an income tax debt can be complicated, and a Virginia bankruptcy debtor’s ability to discharge all or a portion of the tax debt or penalties may depend on whether the case is filed under Chapter 7 or Chapter 13 of the Bankruptcy Code.  An income tax debt arises from a tax return for a particular tax year.  In general, an income tax debt for a particular tax year may be discharged if the following criteria are met:

1. The due date for filing the tax return was at least three years prior to the bankruptcy filing date. This due date includes any extensions.
2. The tax return was filed at least two years prior to the bankruptcy filing. This date is the time the return was actually filed with the IRS.
3. A tax assessment was made at least 240 days prior to the bankruptcy filing. The tax assessment is usually measured from the IRS proposed assessment sent to the taxpayer. 
4. The tax return was not fraudulent, and the taxpayer has not attempted to evade the tax laws. Dishonest taxpayers do not receive the benefits of the bankruptcy laws.

 Taxes that do not meet the above criteria are not included in the bankruptcy discharge. This includes income tax debts from unfilled tax returns. Even if the IRS assessed a tax many years ago, if the taxpayer failed to file a return, the debt is not dischargeable.

When an income tax debt is discharged in bankruptcy, any tax penalty is also discharged. However, in some cases the tax penalty may be discharged, even when the tax debt itself is not discharged. For instance, in a Chapter 7 case tax penalties are discharged if the penalty is associated with a tax debt more than three years old. In a Chapter 13 case all unsecured tax penalties are dischargeable, and receive the same treatment as all other unsecured debts during the term of the bankruptcy repayment plan. If the debtor is repaying a tax debt through the Chapter 13 bankruptcy case, no new tax penalties will accrue.

 The federal bankruptcy laws contain specific provisions for discharging income tax debt. Bankruptcy can provide you with time to repay your obligation, without the threat of IRS seizure or garnishment; or, in some circumstances, can permanently discharge your tax debt. The Law Office of Michael J. Heath at (757) 431-866, a Virginia Beach bankruptcy attorney, can explain your legal rights and the available opportunities to free yourself from your income tax burden.

Individuals struggling with financial difficulty experience many forms of debt-related stress. Harassing phone calls, embarrassing collection letters, lawsuits, garnishments, foreclosure, repossession . . . financial distress can become a personal nightmare! Fortunately, there are federal laws that can help. A bankruptcy debtor receives several powerful legal protections during the course of a bankruptcy case that provide instant relief.  

When an individual hires a bankruptcy attorney, the federal Fair Debtor Collection Practices Act (FDCPA) prohibits third party collectors from contacting the individual directly and must direct all communications to the attorney. The FDCPA provides immediate relief from collector harassment while preparing to file a bankruptcy case. This law applies to all third party collectors, such as collection agencies or attorneys, but does not prevent an original creditor from attempting to collect. While the FDCPA does not prevent a lawsuit, repossession, or foreclosure, the involvement of a bankruptcy attorney may delay these processes. 

Virginia bankruptcy debtors receive additional relief once the bankruptcy case is filed. The bankruptcy “automatic stay” becomes effective as soon as the case is filed. This stay is a temporary injunction automatically issued by the federal bankruptcy judge and prohibits all collection activity (with a few very narrow exceptions). The automatic stay is effective throughout the duration of the bankruptcy case, but can be modified or terminated by the court after a hearing. This powerful protection stops all creditors and collectors dead in their tracks, and stays court processes such as a lawsuit, garnishment, repossession, or foreclosure. 

At the conclusion of nearly all consumer cases the Virginia bankruptcy court will issue a permanent injunction prohibiting creditors from collecting on pre-bankruptcy debts. This injunction is known as the “bankruptcy discharge” and relieves the debtor’s legal obligation to pay the creditor. The discharged creditor may not take any collection action against the debtor, which includes contact by phone or mail. 

If you are experiencing creditor harassment, speak with an experienced Virginia Beach bankruptcy attorney and learn how the federal bankruptcy laws can provide immediate relief. Your attorney can help restructure your finances to shape a better financial future. Call the Law Office of Michael J. Heath at (757) 431-866 and get the help you need.

Disclaimers: The materials on this web site and articles are for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.  "Bankruptcy Ghost Blogging Service" contributed to the writing of this article

Modern bankruptcy laws permit debtors to keep certain property necessary to maintain a modest standard of living. These laws, called exemptions, protect property from collectors so that the debtor has a reasonable chance at a fresh financial start after bankruptcy. However, while these protections afford the honest debtor a fresh start, some individuals try to get a head start by transferring property in an attempt to hide it from the bankruptcy process. As you can guess, concealing assets from the federal bankruptcy court in Virginia is a bad idea.

Section 548 of the Bankruptcy Code endows the bankruptcy court trustee with the power to undo a fraudulent transfer made within two years of the bankruptcy filing. Fraudulent transfers include any transfer made with the intent to hinder, delay, or defraud creditors; or transfers made while the debtor is insolvent which do not involve a fair value exchange. While the lookback period is set at two years by section 548, another section of the Bankruptcy Code (section 544) permits the trustee to apply state law to undo a fraudulent transfer. In many cases the state law lookback period is longer than two years.

There is generally no issue if you have sold property and received a fair price. However, if you have transferred property in a less than honest fashion, the transfer may be undone. For instance, if you sell your car worth $5,000 to your brother for $500, and then file bankruptcy two months later, the trustee may seize the car from your brother and sell it to pay your creditors. Likewise, deeding jointly owned real estate to a non-filing spouse prior to filing bankruptcy can create a thorny legal dilemma.

Every individual bankruptcy case must include a Statement of Financial Affairs which asks the debtor to list all property transferred within two years before the bankruptcy filing. It is important to answer this question honestly, and to discuss any recent property transfer with your Virginia bankruptcy attorney.

If you are considering bankruptcy, call the Law Office of Michael J. Heath at (757) 431-8665 and learn about your legal exemptions. In many cases Virginia bankruptcy debtors can legally protect property without the need to sell or transfer. Obtain your Free Consultation from a Virginia Beach bankruptcy attorney and discover the best way to protect your property and restructure your financial obligations.

Disclaimers: The materials on this web site and articles are for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.  "Bankruptcy Ghost Blogging Service" contributed to the writing of this article