Do you have too much debt? Chapter 7 Bankruptcy might be an option.
Many Americans simply have more debt than they can afford to repay.
Despite what you hear, it is rarely due to irresponsibility. No one sets out to accumulate $7,000 in credit card debt, but a temporary job loss, sudden illness or other financial emergency can quickly drain savings and force people[…]
If you are considering filing a Chapter 7 or Chapter 13 case, it is essential to understand that there are a few actions you should avoid in order to ensure that your case goes smoothly. Below are a few of the most common mistakes made by debtors that you will want to avoid:
Continuing to make charges on credit cards
In the months leading up to your bankruptcy filing, you should stop making charges on your credit cards. Any charges that are deemed to be for “luxury goods or services” on your credit card that totals in excess of $600 within the ninety (90) days prior to your case being filed, will be assumed to be non-dischargeable. A luxury good or service may be anything that is not reasonably required for the maintenance of your household. It is important to also understand that the $600 amount is not for a single charge to your credit card that exceeds $600, but the total amount of your charges incurred within the 90 day time limit. As a result, it is very important for you to cease all use of your credit cards as you prepare for your bankruptcy filing.
Repaying family members
If you have borrowed money from a relative, you may want to pay them back before you file for debt relief. However, this can cause trouble in your case. All debtors are required to disclose any payments in excess of $600 that have been paid to any creditors (including friends and family) within the six (6) months prior to the filing. The court will look back at payments made within the one (1) year prior to the filing for payments made to “insiders” such as your relatives. If you have repaid a debt to an insider, it will be deemed a “preferential payment.” In other words, you preferred one of your creditors over your other creditors, which is prohibited by bankruptcy law. If there is a preferential payment, the trustee will demand that your relative refund the money back to the trustee for the benefit of your bankruptcy estate. Failure by your loved one to refund the money could result in the trustee filing a lawsuit against him or her to recoup the funds.
It is common for people to think they can protect their assets from being included in the bankruptcy filing by transferring them into another person’s name. However, the trustee will conduct an investigation for all transfers of property (which includes sales and gifts) that the debtor made within the two (2) years prior to the bankruptcy filing. Thus, it is essential that you discuss with your lawyer all assets that you want to keep in order to determine if they are protected by an exemption under the law.
Even with all the planning and forethought that goes into your bankruptcy filing, mistakes can still happen. So, what do you do if you discover an error after your case has been closed? Typically, it is possible to reopen a case to cure a procedural error such as:
forgetting to name an important creditor
failing to file your credit counseling certifications
forgetting to list a valuable asset
the debtor receives a windfall of money or income
neglecting to follow the appropriate procedure to remove a judgment lien on real property
any other reason approved by the court
How do you reopen a case? We can file an ex-parte motion with the bankruptcy court requesting permission to reopen your case without providing notice to all of your creditors. The court may also allow the case to be reopened without holding a hearing. The motion outlines the relief that is being sought and what error will be fixed by reopening the case. If the court grants our motion, we can proceed with your case on the one issue until it is resolved.
It is critical to understand that there is no guarantee that the bankruptcy court will permit you to reopen your case once it has been closed. Therefore, it is important to make every effort to ensure that your pleadings and paperwork are correct and all-inclusive when they are originally filed.
If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
The drafters of the bankruptcy laws were wise enough to realize that humans make mistakes. As a result, if you realize after your discharge order has been entered that an error was made in your bankruptcy case, it may be possible to reopen your case to fix the mistake. It should be noted that it is not a guarantee that the court will allow you to reopen your case, so it is essential that you try to get everything done correctly when you initially file.
The most common reason for reopening a bankruptcy case is that a procedural error occurred. This includes errors such as:
failure to timely file your counseling certification (Official Form 23)
failure to follow procedure for removing a judgment lien on real property
failure to name an essential creditor
failure to list a valuable asset
a windfall of money or income (trustee might request the reopening)
any other reason approved by the court
The process to reopen a case involves the debtor filing a motion asking the court for permission to reopen the proceeding. You must typically pay a fee to file the motion. Typically, the debtor requests that the case be reopened without giving notice to all of the creditors and without a hearing. Providing limited notice only to the parties impacted by the error being fixed is usually sufficient. The debtor’s motion must provide a detailed explanation of the mistake that occurred and why the case should be reopened to cure it. If the motion is approved, the case will proceed on the specific issues outlined in the motion until they are resolved.
You should never rely on the idea that you can reopen your bankruptcy filing. It is imperative that you closely review your initial pleadings to verify that they are complete and correct. Reopening a case costs you time and money, but it is an option if you need it.