A “conversion” is when you change the bankruptcy chapter type after you file your original bankruptcy petition. For example, at the time you file your case, you are over the median threshold to file for a Chapter 7 bankruptcy, so you file a Chapter 13 case. Months or even years later, your income declines and you now meet the income threshold to file a Chapter 7. In that situation, you can convert your Chapter 13 case to a Chapter 7 case. It’s a moving target so if your situation changes, there are solutions to change your situation so you are not stuck staying in a Chapter 13 or being forced to have your case dismissed if you can no longer afford the Chapter 13 payment.
Its uncommon to convert a Chapter 7 case to a Chapter 13 . That would be a rare instance if the trustee believes you did not file your Chapter 7 case in “good faith”. In order words, if the trustee’s office believes you have ability to repay your creditors by not reporting your income or expenses correctly. If you cannot pay the amount of your non-exempt assets in a Chapter 7, then you might need to convert to a Chapter 13 to have extended time to pay the trustee. That is why it is so important to have an attorney prepare your bankruptcy petition to ensure you don’t have an unexpected issue about not qualifying for the Chapter type your filing.
When you file a bankruptcy case, there is a hearing called a “341 meeting of creditors”.
The meeting of creditors takes place whether you file a Chapter 7 or a Chapter 13. It occurs thirty days after your bankruptcy petition is filed. The meeting lasts about 10 minutes, and it is telephonic not over zoom.
There is a conference bridge so when you call in, everyone (you, your attorney, and the trustee) will be on the phone line. You will be prepared for the hearing because we thoroughly review all the documents the trustee will ask you about when we prepare the petition. Since everything is disclosed on the bankruptcy petition and your documents are provided to the trustee in advance of the meeting, your attendance at the hearing should really be a formality to getting your discharge.
If there is anything special about your case, such as being over the exemption amount you would know that in advance of filing your case so there should be no surprises. Many people ask if all their creditors show up for the meeting. It’s a bit misleading that it’s’ called a meeting of creditors because it is extremely rare that any creditors appear for the meeting.
Creditors appear in probably in less than 1% of cases. There would likely have to be a special issue such as a lender asking where the debtor’s car might be located if they are surrendering it or a creditor that the debtor personally knows. Typically, the meetings run very smoothly and on time.
This issue comes up frequently when the person who files for bankruptcy (otherwise known as the debtor) is on the title to a vehicle that someone else drives and makes the payments on.
This happens oftentimes when a parent keeps the vehicle in titled in their name instead of their child’s name but the child drives it. It also happens when the debtor puts the vehicle and loan in their name for a family member who does not have good credit. If there is equity in the vehicle (the value of the vehicle exceeds what you own on it) and that amount is over the allowed bankruptcy exemptions you would need to pay the trustee the difference.
However, if you have not paid anything towards the vehicle or any gas or paid for any maintenance then there is an exception you might qualify for called bare legal title which allows you not to have to pay anything to the trustee under those circumstances.
You may have to provide proof that the other person has been the one making the payments. Bare legal title applies to personal property and cars. However, you cannot have bare legal title to real property.
If you are on the deed of any real estate, whether you live there or not, or whether you have paid for it or not, that cannot be considered bare legal title. At that point, we would need to evaluate if the property can be exempt as your homestead or not.
Many borrowers are surprised to learn that SBA loans are a dischargeable debt in a bankruptcy even though they are government backed loans unlike a lot of tax debt or federally backed student loans which are not. During the course of the pandemic many businesses took out SBA loans to help keep their businesses afloat.
Others took out loans just before the pandemic and despite efforts to sustain their businesses have been unable to do so. Billions of dollars in loans have been taken out by small business owners. Many type of businesses from gyms to restaurants have suffered decreased business due to COVID, increased costs and supply shortages resulting in the closure of those businesses.
The good news is, you do have the ability to start over again either by finding other employment or starting a new business without having to be saddled with the SBA loan for the rest of your life.
Essentially the government has the same right as any other unsecured creditor. Your business account and most likely your personal bank accounts can be garnished. Most business loans are also personally guaranteed which means you are personally responsible for the debt in addition to your business.
If the loan is secured by collateral, that collateral could potentially be taken if the loan is not paid. Depending on the terms of the loan, there might be a lien on your home. Filing for bankruptcy can be your solution to wipe the slate clean.
For more information and a “Free Initial Phone Consultation” about SBA loans and bankruptcy concerns such as chapter 7, chapter 13, debt settlement and more… Please contact our office today! 813-463-8000
Many people ask whether they will be able to rent a home or apartment after filing for bankruptcy. The answer to that question is yes. It’s a common requirement to fill out an application with the property manager and have them run your credit history.
Within a short period of time after receiving your discharge your credit score should continue to improve if you are making timely payments to your obligations such as your car payment. You also have more disposable income after filing your bankruptcy case because you will be debt free. Landlords are more likely to have an issue with prior evictions than a bankruptcy filing.
A few things can help you during the application process to help assure the landlord you would not be at risk for default. If you have lived in your existing rental and have paid on time for at least a year that’s helpful. Even better if you can use your current landlord as reference. Additionally, if you have had a consistent job history with the same employer that is also helpful with no gaps of unemployment.
If you have a lower credit score you may be required to pay a higher security deposit or have a co-signor on the lease. Typically, rent does increase each year so keep that in mind when you begin to rent to make sure it’s affordable long term. Ask what items are included in the rent such as water, cable or trash or if that and additional cost. Having a roommate at least temporarily could help defray some of the cost as well.
