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December 16, 2015

WHAT HAPPENS IN A CHAPTER 7 MEETING OF CREDITORS?

,,, - Edward D. Magauran @ 2:59 am

Once you file for chapter 7, your bankruptcy estate is created and the Court sets the date of the meeting of creditors or 341a hearing. The hearing is normally 30-45 days after the date of filing. All of your creditors are notified of the meeting and that you filed for bankruptcy. They or their counsel can ask you questions about the nature and validity of the debts at the meeting of creditors. The trustee will confirm that all of the information provided is accurate and seek assets to liquidate which assets are not exempt.If the trustee seeks more information, the trustee may hold the meeting of creditors open and continue the hearing until another date in the future in order to get and review the additional information requested. Once the meeting of creditors is closed, in most cases, that is the last hearing or meeting which you will need to attend.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.


December 16, 2015

WHAT HAPPENS TO MY TAX REFUNDS IN A HAWAII BANKRUPTCY?

,,,, - Edward D. Magauran @ 2:55 am

It depends whether you are filing chapter 7 or chapter 13.

If you receive your tax refund after filing chapter 13 bankruptcy, it has to be payed to the bankruptcy trustee unless it can be exempted and minus any earned income or child tax credit It is also subject to setoff, recoupment or otherwise provided for by your plan.

If you are filing chapter 7, your tax refund must be listed as an asset to the extent that it is earned and claimed as exempt if permitted under your state or federal exemptions. Any non exempt refunds through petition date will have to go to the chapter 7 trustee (minus any earned income or child tax credit ,setoff or recoupment).

This is a general breakdown and the rules are complicated. The best thing you can do is to get advice from a bankruptcy attorney as each case is unique.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

WHAT IS A HAWAII BANKRUPTCY ESTATE?

,,,, - Edward D. Magauran @ 2:54 am

A bankruptcy estate is another name for your property or assets and debts as of the moment you file a bankruptcy. The estate can also include a few various items which you disposed of prior to the bankruptcy. You are required to list all assets and debts in the bankruptcy even those you wish to keep after the bankruptcy. Depending on the type of asset and any debts secured by that asset it may or may not be considered part of your bankruptcy estate.If it is part of your estate and you have equity in the item, you may be able to exempt that equity.

If you are in a Chapter 7 the asset is abandoned back to you at the conclusion of the case unless the trustee sees equity in it that is non exempt and he liquidates it to pay your creditors on a pro rata basis.

In a chapter 13 you can keep even non exempt assets provided your creditors receive as much as they would receive in chapter 7.

The rules are complicated and not necessarily intuitive. Your best best it s to talk to a bankruptcy attorney and discuss both your assets and your debts to find out what options you have when dumping your debt.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

WHAT IS CHAPTER 7 BANKRUPTCY IN HAWAII?

,,, - Edward D. Magauran @ 2:52 am

Named after the chapter detailing the law in the Federal Bankruptcy Code, Chapter 7 is also referred to as “straight” or “liquidation” bankruptcy.

Filing for and completion of a Chapter 7 bankruptcy takes on average 4 to 6 months. As part of the process you are required to list all of your property, income, living expenses, debts, former properties owned within the last 4 years, and payments made on debts to creditors within the last 90 days unless those creditors are friends or family- then it is one year.

Most people can exempt or keep all of their assets and still dump the debt.

Once you have filed for Chapter 7 bankruptcy, an “Order of Relief” is put into effect which stays or stops most, if not all, creditors from try to collect debts from you. While in the process of Chapter 7 bankruptcy, the court and the court appointed trustee are in control of your assets and debts so you should not sell or transfer them without prior approval.

You will be ineligible for Chapter 7 bankruptcy if you have filed for chapter 7 bankruptcy within the last 8 years or if you are deemed to be financially capable of completing a Chapter 13 Bankruptcy repayment plan. Once the case is filed, a ” Trustee‚ will be appointed to versee your case and to liquidate any non exempt assets for the benefit of your creditors.

When your Chapter 7 bankruptcy case has been discharged most of your debts are dumped- forever. Some debts which are not discharged are some tax debts, student Loans, child support and alimony. Another type of non dischargeable debts are those incurred by fraud.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

WHAT IS A CO-DEBTOR STAY IN A CHAPTER 13 HAWAII BANKRUPTCY?

,,,,, - Edward D. Magauran @ 2:50 am

The Co-Debtor Stay is only applicable in a Chapter 13 bankruptcy and only to consumer debts. It is not applicable in a Chapter 7 bankruptcy.

It’s function is to stop collection activities against persons who are not filing bankruptcy but who also owe on one or more of the debts that the filing person may be liable. This protects the co-debtor from immediately being pursued because the filing person is now protected by the bankruptcy stay and can no longer be pursued. A co-debtor is someone who agrees to be liable on the debt with the debtor, the person filing bankruptcy. It does not matter if they sign as “secondary” or “primary” or as “guarnator” or as a “surety.” All of those persons are co-debtors.

To pursue the co-debtor the creditor must seek relief from the stay by motion filed with the Court and must demonstrate sufficient reasons why the co-debtor stay should be modified. If they do not so file a motion or if the motion is not granted and they attempt to collect the debt from the co-debtor they are in contempt of court order.

The purpose of Co-Debtor Stay is to delay collection actions against a co-debtor for consumer debts during the Chapter 13 bankruptcy case and remains in place until the bankruptcy case has been closed, dismissed, or converted to Chapter 7 or the stay is lifted.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

WHAT IS LIEN STRIPPING IN A CHAPTER 13 HAWAII BANKRUPTCY?

,,,, - Breezy @ 2:48 am

Lien Stripping is permissible, with several caveats, when the Fair Market Value of the property is worth less than is owed on the secured lien to be stripped. For example, if the fair market value of your residence is $450,000.00 and you have two mortgages. The first mortgage balance is $450,001.00 then the second mortgage is “wholly undersecured” and may be stripped.

If you are successful in stripping the lien, in order for it to stay stripped, you must fully complete the Chapter 13 Plan or it will not work.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

BANKRUPTCY HAWAII AND CO-SIGNED DEBT

,, - Edward D. Magauran @ 2:47 am

Money regrets. Who doesn’t have them? Among the poor and even among the rich, not to mention everyone in between, you’ll find that each person has more than a few. Some can be remedied.

One of the deepest and most frequently expressed money regrets we encounter in our practice has to do with co-signing loans. These statements of money regret come from both the “principal” borrowers and the co-signers who have lent them their good name and credit history.Maybe you were the “principal” borrower who was too young to have established credit, or maybe you were already starting your descent in the debt spiral and needed help to qualify for a car loan to help you get to work, or a student loan to help you better your earning capacity, or a personal loan to help you try to consolidate your unwieldy debt. A trusting and creditworthy friend or relative was willing to come to your aid by affixing his or her signature on the promise to pay the creditor back. Now life has handed you setbacks in employment or health, and you cannot make good on all your financial commitments, no matter how hard you try. You’ve learned that bankruptcy will let you dump most or all of your debts, but you wonder, “What will happen to that loan my mother/brother/best friend co-signed for me?”First of all, cast aside all popular misconception and wishful thinking. Co-signing a loan does not mean that the co-signer is only a borrower “on paper” and does not really have to pay for the loan if they never received the proceeds or got to drive the car that was purchased with the loan. In most states, including Hawaii, the creditor does not have to pursue the primary borrower before pursuing the co-signer if payments are missed. And the co-signer is not just “50 percent responsible” for the balance owed on the loan. Under the vast majority of loan contracts where there is a co-signer, each party signing is responsible for the entire loan balance. In Hawaii, if the primary borrower defaults, the co-signer can be sued for the entire balance owing and his or her wages can be garnished or his or her real estate liened upon to satisfy a judgment in the creditor’s favor.

There is good news, however. If you are unable to meet all of your financial commitments, Chapter 13 of the Bankruptcy Code will allow you to make good on that commitment to your co-borrower while paying what is often a very small dividend (pennies on the dollar) on your remaining debt. The Bankruptcy Code generally provides that all general unsecured creditors – those without collateral or special “priority” such as tax or child support creditors – must be treated equally. But the Code provides an exception for co-signed obligations for consumer debts. Those can be paid in full over three to five years through a Chapter 13 payment plan, while other creditors receive a usually much smaller dividend (again, pennies on the dollar in most cases). What’s more, co-signers on consumer debts are protected from any act to collect on the debt if a Chapter 13 payment plan that is complied with provides for full payment of the loan obligation and the person in bankruptcy is the one who benefited from the loan.The protections for co-signers and favorable treatment for co-signed loans do not apply in Chapter 7 bankruptcy cases. In a Chapter 7 case, the person filing the case can have his or her liability on a loan discharged in full, but the co-signer will remain liable for 100 percent of the balance owing and will not be protected from the co-debtor stay that applies in Chapter 13. When a primary borrower has dumped his or her co-signed debt in a Chapter 7 case, sometimes it becomes necessary for the co-signer to file his or her own bankruptcy case if the loan is for an unmanageable amount.Our advice: Think hard, very hard, about co-signing a loan or asking a friend or relative to be a co-signer. But if transaction has already happened and gone sour, know that the Bankruptcy Code offers protection and a way out to both the primary borrower and co-signer.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

The Law Office of Edward D. Magauran files bankruptcies from our Honolulu office on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 16, 2015

CAN I KEEP MY CAR IN BANKRUPTCY?

,, - Edward D. Magauran @ 2:44 am

Can I keep my car in bankruptcy?

We’ve heard the question more times than you’ve cursed the traffic on our Island roads and highways. And we understand why: Next to our homes, our cars are our most precious material asset. We count on them to get us to work, to haul our groceries, and to carry our most precious assets of all – our kids.The fear of having to give up a safe, dependable and comfortable vehicle is enough to keep some people from even inquiring about the possibility of filing bankruptcy. Such fears are almost always unjustified, though. In the vast majority of cases, you can keep your car – even multiple cars – in bankruptcy. What’s more, for many bankruptcy filers, it is even possible to retain a vehicle on more favorable terms than the car loan provides.First of all, let’s dispense quickly with the idea that the bankruptcy judge is going to demand that you hand over the keys to Old Betsy before he grants your bankruptcy discharge. Remember, the whole idea of the Bankruptcy Code is to provide a fresh start to the “honest but unfortunate debtor.” Congress and the courts understand that a car is essential to most people’s livelihoods and to getting that fresh start. There are generous exemptions that protect cars and other essential items of property, up to certain values, from being liquidated by a bankruptcy trustee. Rarely in our practice do we encounter an individual who is unable to exempt the full value of their vehicle. And when we do, the Bankruptcy Code offers other options for retaining the vehicle, including filing a chapter 13 bankruptcy case where no property is ever liquidated.One of the worst mistakes a person can make is to transfer their car title to a friend or relative soon before filing bankruptcy in hopes of avoiding having the car sold by a bankruptcy trustee. The bankruptcy trustee has the power to undo such transfers, and when he or she does, the bankruptcy filer most likely will lose the exemptions that would have protected the car from liquidation had the transfer not occurred.If you are still paying the bank for your car and want to keep it, the Code gives you several options for doing so. One attractive but rarely used option for those who are upside down on their car loans – as most borrowers are – is to “redeem” the vehicle in a chapter 7 case by paying the lender the fair market value of the car and discharging the balance through the bankruptcy case. Since this requires a lump sum payment, few bankruptcy filers are able to take advantage of this option, but we are pleased when circumstances allow for it.In a chapter 13 case where the car loan was taken out more than 910 days before the filing of the bankruptcy case, the loan can be modified so that the principal is reduced to the current retail value of the car and is paid over a three to five-year period at an interest rate that presently stands at 4.75 percent. Even newer car loans can often be modified in a chapter 13 bankruptcy to reduce high interest rates to the current court-set rate of 4.75 percent. For those borrowers who simply want to keep paying for their cars under the original loan terms and can afford the payments, the Code allows them to do so in any chapter. In a chapter 7 case, however, Code changes made in 2005 allow the lender to repossess the vehicle if the borrower does not sign an agreement reaffirming the car loan. Signing a reaffirmation agreement means that the reaffirmed amount will not be discharged in the bankruptcy case. Sometimes, we are able to negotiate a reduction in principal or interest rate as a condition of signing a reaffirmation agreement. Some of our clients prefer to forego signing a reaffirmation agreement altogether and take the chance that the lender will not exercise its right to repossess the car as long as the loan payments are made on time.With or without a reaffirmation agreement, timely car loan payments can help rebuild credit scores after bankruptcy.For those who don’t want or can’t afford to continue making payments on their car loan, there is the option of surrendering the vehicle and discharging the loan in the bankruptcy case.So don’t let your love affair with your car keep you from getting advice from an attorney about whether bankruptcy is right for you. With our combined twenty-six years of legal experience, we can help you escape the credit rat race and get you on the road to financial security.

Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.

The Law Office of Edward D. Magauran files bankruptcies from our Honolulu office on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!


December 15, 2015

SOCIAL SECURITY INCOME EXCLUDED FROM PROJECTED MONTHLY DISPOSABLE INCOME IN HAWAII CHAPTER 13 BANKRUPTCY

- Edward D. Magauran @ 6:12 am

We hate to see people who have worked hard all their lives use their Social Security earnings to try to pay down high-interest credit card debt. So we’re pleased that another appellate court has weighed in favorably for retirees on the question of whether Social Security income must be included in calculating the monthly payments that chapter 13 filers must make in their debt consolidation plans.

The Fifth Circuit Court of Appeals is the latest to hold that a chapter 13 debtor’s Social Security income is not included in determining the debtor’s “projected disposable income” available for repayment of credit card and other unsecured debts. In re Ragos, – F.3d -, 2012 WL 5292949 (5th Cir. Oct. 29, 2012). The Tenth Circuit Court of Appeals had issued a similar ruling just a few days prior. In re Crammer, – F.3d -, 2012 WL 5235365 (10th Cir. Oct. 24, 2012). Both courts also held that a chapter 13 debtor’s exclusion of Social Security income from the debtor’s projected disposable income in proposing a chapter 13 plan does not demonstrate a lack of good faith.

Our own Ninth Circuit Bankruptcy Appellate Panel has also held that a chapter 13 plan could not be determined to be in bad faith solely on the basis of the debtors’ exclusion of Social Security income from the calculation of disposable income. In re Welsh, 465 B.R. 843 (B.A.P. 9th Cir. Feb. 17, 2012).

We think the plain language of the Bankruptcy Code makes this an easy question to settle. The Code provides that a chapter 13 plan cannot be confirmed over the objection of an unsecured creditor or the bankruptcy trustee if the debtor does not devote all “projected disposable income” over the life of the plan to payment of unsecured creditors. 11 U.S.C. § 1325(b)(1)(B). The Code in turn defines “disposable income” as “current monthly income” minus reasonable expenses. 11 U.S.C. § 1325(b)(2). “Current monthly income” is the average income a debtor received in the six months before filing for bankruptcy. 11 U.S.C. § 101 (10A)(A). The Code expressly provides that “benefits received from the Social Security Act” are excluded from the calculation of “current monthly income.” 11 U.S.C. § 101(10A)(B).

Congress has demonstrated a clear policy preference for encouraging retirement savings over repayment of credit cards and other general unsecured debt. The Bankruptcy Code protects tax-exempt retirement savings up to $1 million from the reach of creditors. 11 U.S.C. § 522(d)(12), 522(n). Repayment of 401(k) loans is also excluded from the disposable income calculation in chapter 13. 11 U.S.C. § 1322(f). And the “means test” that determines eligibility for chapter 7 expressly excludes Social Security payments from income calculations. 11 U.S.C. S 707(b)(2).

These policy choices make economic sense. Society as a whole is worse off if a retiree has to get extra support from friends, family or the government because of unwieldy credit card or other debt. Congress has made a calculated decision to give our kupuna a break, through the Bankruptcy Code. For those on the edge of eligibility for chapter 7, this can make a critical difference and allow for a payment-free fresh start. For those whose household earnings rule out chapter 7 relief, the exclusion of Social Security income can mean an affordable debt consolidation plan that ensures a comfortable retirement.

If debt is interfering with your ability to enjoy your twilight years, call us today at 808-585-1000 for a free no obligation consultation. The Law Office of Edward D. Magauran serves clients on all Hawaiian Islands, including Oahu, Maui, the Big Island, Kauai, Lanai and Molokai.

Watch my videos and read my articles to learn more about ways bankruptcy can help.

We file bankruptcies on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!