Situations come up frequently where a potential client is on the deed to their parent’s or another relative’s house to make it easier when that person passes away for it to already be in the debtor’s name.
The client often is not living in the property, has not paid a dollar towards the property, the property may be paid off, or the property has equity. The client has their own debt and now wants to file for bankruptcy. Unfortunately, this presents a problem. If you are not living on the property, it is not protected by the homestead exemption.
If you are renting, certainly you can move back in with your parents once your lease expires to get the homestead exemption on the property when you file for bankruptcy. You will have a problem if you already own a house. You can only declare homestead and be living on property. In that case if there is equity in the property (which is not exempt), you would need to pay that back to the trustee.
Let’s say there is 100K in equity in the property, you would need to pay the trustee 100K. If you had 100K in liquid cash, you probably wouldn’t be considering bankruptcy.
That would make a Chapter 7 not feasible. You other option is to file a Chapter 13 and pay your debts over 60 months and keep the property. There are significant benefits of doing a Chapter 13. You stop incurring interest on your debts. You might be able to pay it off early. You would need enough disposable income to pay the trustee each month.
Some potential clients cannot afford to do a Chapter 13, so they suggest removing their name off the deed or putting the property into someone else’s name. That too will not work since all property transfers from two years from the date we file the petition would need to be disclosed. Usually transferring property before considering filing for bankruptcy results in worse issues and is not recommended.
If you find yourself in this situation, feel free to contact my office to discuss your options.
In today’s current market business owners are faced with numerous challenges from finding employees to drastically increased costs. They are faced with the question of whether they will be able to continue their business or whether it’s better to close it.
That is a very personal decision since so much goes into starting and sustaining a business. There are several factors we look at in making that determination.
Are there any business assets such a commercial building, inventory, or equipment that should be liquidated to pay your creditors? Your assets cannot be sold or transferred for your benefit at the expense of paying your creditors. Even transferring assets to a new business venture can disqualify you from filing bankruptcy so its very important to consult with an attorney before making any decisions on the proper steps to close your business. Another issue is whether the debt is exclusively in the business name, did you personally guarantee the business debt, or did you use your personal credit lines to fund your business?
In most cases, there is a personal guarantee on business debt and personal credit cards are used to keep the business afloat. If the majority of your debt, is non-consumer or business-related then you would qualify for a Chapter 7. Again, it is important to seek the advice of an attorney to determine which Chapter type you would qualify for under the bankruptcy code.
Many times, if the business has no assets and will be closed then it can just be administratively dissolved without the need to file for bankruptcy. Another issue also is whether there are any outstanding account receivables, do you reasonably expect payments in the future, or expect any reoccurring income? There is also a potential that that could be collectable by the trustee if you are filing a business bankruptcy.
All of these factors need to be considered whether determining whether to file a business bankruptcy or a personal Chapter 7 or 13 bankruptcy.
Whether you are married or separated, you can still file for bankruptcy on your own. There is no requirement that your spouse file for bankruptcy.
Chapter 7 or Chapter 13 Bankruptcy?
If you are married and maintaining the same household, then the trustee will consider your joint income to determine if you are over the median income qualifications for a Chapter 7 bankruptcy or to determine what you are financially able to repay in a Chapter 13 bankruptcy.
If you are separated and maintaining separate households, you expenses should also be listed separately.
Contact Gina Rosato Law Firm, P.A. to discuss your Bankruptcy Options
Your divorce decree is a contract between you and your ex-spouse. This is completely separate from any contractual obligations you have with your mortgage lender or your credit card company.
Therefore, if you have a joint debt, even though your divorce decree says your ex-spouse will assume all the debt, your creditors can still come after you for the debt. For example, suppose you and your ex-spouse had a joint credit card with Bank of America for $20,000. During your divorce, your spouse assumes payment of the $20,000 debt. Your ex-spouse does not make a payment on this debt or files for bankruptcy. Bank of America can come after you for the $20,000 debt. If this happens you would need to pay it or file for bankruptcy. If you end up having to pay a anything to Bank of America you would have a cause of action against your ex-spouse once you have re-paid the creditor. If you and your spouse have significant amount of joint debt, it maybe beneficial to consider bankruptcy prior to filing for divorce to resolve these issues that may cost you more down the road in payments to creditors and additional attorney fees.
Contact Gina Rosato Law Firm to discuss your Bankruptcy Options
It is common for a bad financial situation to spiral into marital discord. One spouse may incur a significant amount of debt, fail to work for an extended period of time, or does not consult the other spouse when making purchases on joint accounts.
Divorce and Bankruptcy
If you and your spouse have a significant amount of joint debt it may be best to entertain bankruptcy as an option prior to filing for divorce. Bankruptcy is a much cheaper alternative to racking up a large bill with a family lawyer to argue about who is going to take over which debts when both people may be able to get rid of all the debt.
Furthermore, your spouse cannot assume your debt in a settlement agreement. For example, if you have a joint judgment against you from Company A for $50,000 and your divorce decree says your spouse should assume all debt from Company A. Company A can still pursue you for the debt despite what your divorce decree says. You would then have to sue your spouse to recover what you paid Company A. Therefore, if both spouses owed money to Company A, that could have been discharged in a bankruptcy, that would obviate the need and expenses to file suit against the other spouse for collection of debt after the divorce is finalized.
Contact Gina Rosato Law Firm to discuss your Bankruptcy Options