Archive for October, 2013

Practical Bankruptcy in Utah: Protecting Your Co-Signer More Flexibly Under Chapter 13

If you can’t protect your co-signer through Chapter 7, Chapter 13 provides a strong and creative solution.   The last blog post explained how in very limited circumstances you could use a Chapter 7 “straight bankruptcy” to protect a co-signer from being harmed by your discharge (legal write-off) of your joint debt. But a Chapter 13 “adjustment of debts” is more often the more practical solution because it covers much broader circumstances. The “Co-Debtor Stay”

Immediately upon the filing of your Chapter 13 case, not only are you protected from your creditors through the “automatic stay,” so is “any individual that …

Practical Bankruptcy in Utah: Protecting Your Co-Signer under Chapter 7

Chapter 13 provides a very special way to protect your co-signer with the co-debtor stay. But sometimes the simpler Chapter 7 is more effective.   The last blog post explained how to protect yourself from a no-longer friendly co-signer. But what if one of your highest priorities is to protect that co-signer from being harmed by your bankruptcy filing? One powerful way is to do so is with the co-debtor stay that is only available by filing a Chapter 13 “adjustment of debts” bankruptcy—a 3-to-5 year payment program. We’ll cover that in the next blog. If you have other good reasons…

Practical Bankruptcy in Utah: Protecting Yourself from Your Co-Signer

Bankruptcy provides ways for you to protect your co-signer. But what if instead you’re the one who needs protection from the co-signer?   Your Separate Obligations to the Creditor and the Co-Signer It’s important to understand that you have two distinct legal obligations when you’ve either co-signed on someone else’s debt or someone co-signed for you on your debt. First, you owe the creditor based on your signing for the debt itself. And you likely have some legal obligation, or at least a significant risk of one, to the co-signer, based on what was either clearly agreed between the two of…

Practical Bankruptcy in Utah: The “Super Discharge” of Non-Support Divorce Debts

If your divorce decree obligates you to pay debts other than child or spousal support, Chapter 13’s “super discharge” may help.   Non-Support Divorce Debt Child and spousal support can never be discharged (legally written off) in bankruptcy, under either Chapter 7 or 13. On the other hand, financial obligations that are NOT “in the nature of support” CAN be discharged in a Chapter 13 “adjustment of debts” case, although not in a Chapter 7 one. This may be reason enough in the right situation to file a Chapter 13 case instead of a Chapter 7. But what ARE non-support divorce…

Practical Bankruptcy in Utah: Avoiding the Embarrassment of a “Preference”

Paying a certain favored creditor within the year before filing bankruptcy can cause major headaches. Here’s how to avoid them.   The Law of Preferences Most of bankruptcy law focuses on the present—your financial life as of the moment you file your bankruptcy case. But “preferences” look into and can actually undo a bit of your past. Specifically, certain creditors can be required to disgorge payments you made to them before your bankruptcy case was filed. You may not want such creditors to have to surrender the payments you made to them, especially if you have a continuing personal relationship with…

Practical Bankruptcy in Utah: Encouraging the Dismissal of a Business-Ending Lawsuit

If a lawsuit against your small business is driving you to close the business, filing bankruptcy will likely get rid of that lawsuit forever.   A lawsuit against your sole proprietorship business can drain money, time and focus away from the business. Especially if your business is already in financial trouble, that litigation can push you over the edge into ending the business. But once you’ve decided to do that, and to deal with the financial fallout of the business closure by filing bankruptcy, where will that leave the lawsuit? Will it continue into your bankruptcy case? Usually ongoing litigation against…

Practical Bankruptcy in Utah: Encouraging the Settlement of a Business Lawsuit

If a lawsuit against your small business is draining your time and money, Chapter 13 can encourage the favorable settlement of that lawsuit. A lawsuit against your sole proprietorship business can jeopardize its survival. The last blog post was about litigation that drives a business owner into closing the business, and how to protect the owner afterwards. But bankruptcy can often save a business by getting rid of the lawsuit more quickly and usually under much better terms. How does filing bankruptcy accomplish this? The Example We’ll show how bankruptcy can help with the following scenario. Ken has been operating…

Practical Bankruptcy in Utah: Dealing with Collection Agents Who Say They Will Object to Your Bankruptcy

Most debts can be written off in bankruptcy. Collection agents who say otherwise about your debt are often wrong. Here’s how it works.   No question—some types of debts can’t be discharged—legally written off—in bankruptcy. Child and spousal support, most recent taxes, most student loans, criminal fines and restitution are common examples. In addition the discharge of any debt can be challenged by the creditor, BUT only under very narrow grounds.  For a creditor to succeed in such a challenge it must show serious inappropriate behavior by you, usually rising to the level of fraud. That involves you intentionally cheating…

Practical Bankruptcy in Utah: Keeping Non-Exempt Assets through Chapter 13

Chapter 13 can be the best way to protect assets. All the more so if you are led there for other reasons, especially for “priority” debts.   The last blog post was about using Chapter 7 “straight bankruptcy” to keep non-exempt assets by negotiating a “buy-back” monthly payment plan with the bankruptcy trustee. But that’s only appropriate if the non-exempt asset is low enough in value that the debtor would be able to pay off the trustee in a matter of months. Usually four months of payments is the average amount of time that Chapter 7 trustees allow, but may…