In re Wettach of the Western District of Pennsylvania from 2013 involved the Chapter 7 trustee bringing an adversary action to avoid alleged fraufulent transfers of the debtor's income deposited into his entirieties bank account (one he had with his wife), thusly preventing his creditors from reaching those funds. The Trustee objected to the state law exemptions to his pension fund. The court ruled that the individual debtor's compensation into the entireties accounts may constitute a fraudulent transfer unless such deposits were subsequently spent on "necessities" (i.e. rent, utilities, food) for the marital unity.
The court ruled that the defendant has the burden to show how the money was spent. The court, upon examination, ruled that stock purchases were not necessities (no kidding!). The person also had 7 cars, and the court allowed the debtor and his wife to keep 2 passenger cars and an SUV, but surrender the remaining 4 cars.
The court further ruled that charitable contributions of 3% of their income were allowed, but not political contributions. The court further stated that they would look back 4 years to see how these funds were spent.
As you can see, this was a tumultuous case and I don't know a Chester County bankruptcy lawyer who would have stretched the rules so far (and ultimately lose).
]]>So, you have filed your bankruptcy petition with your Chester County bankruptcy lawyer. You now, however, must change your exemptions on Schedule D.
You have a right to amend, as a matter of course, at any time before the case is close. This is controlled by the case of Matter of Yonikus from the 7th Circuit of 1993. The ability to amend is construed quite liberally and courts have little discretion to deny a motion to amend a claim of exemption. The only time they may is in a matter of fraud (which you better not have done!).
But, if you try to amend and the property has been concealed or the property has been amended in bad faith or is prejudicial to creditors, you are in a pickle. There is a host of cases, from all across the country, that show that you can't amend (especially if it hurts the creditors) if you are acting dishonestly or in fraud. For example, In re Grogan in Utah in 2003, stated that debtors who intentionally concealed a personal injury cause of action and its proceeds could not be allowed to amend their schedules to claim an exemption in the proceeds. You have to understand that prejudice may be found where a trustee has commenced proceedings to sell property or commenced distribution of assets of the bankruptcy estate.
The debtor must provide notice of any exemption changes. This in turn will apply to creditors. Creditors will then be given 30 days to object to the amended exemption. If the debtor fails to send notice of an amended exemption, the 30-day notice begins to run upon the creditor's receipt of actual notice. If, however, the creditor is never notified, the exemption may be lost.
]]>I wrote about joint bankruptcy cases in Chester County earlier last month. In a bankruptcy, a married person must include both their income and their spouse's income, even if the spouse is not a debtor. The adjustments for a non-filing spouse is made under the "marital adjustment" on Lines 13 and 19 of the petition. In addition, if there are other "income-earners" in the household, these contributions must be included on Line 7. This typically includes if a dependent gets Social Security.
]]>The bankruptcy case called In re Collins from 2002, was after the debtor husband's death, a debtor wife cleaned exemption of $50,172 in life insurance proceeds. The trustee claimed that the amount exceeded the exemption limit, something a Chester County bankruptcy lawyer would object to. The court had determined the wife's reasonable needs. She had a high school education and had worked as a court clerk for 13 years. She and her children, ages four and 10, were in good health and had no special needs.
In addition to nominal exemptions in other assets, she exempted interest in a retirement plan, a 401(k) plan, other life insurance proceeds and certificates of deposit having an aggregate value of $31,997. She had a monthly deficit on her schedules I & J of $352 for basic subsistence requirements, however, and exemptions were designed to avoid such a situation. Her age was not in evidence, but if she was young, she would incur taxes and penalties and making early withdrawals from her pension and 401(k) plans might reduce the amounts by 20% or more. In the absence of penalties, the total value of the uncontested exempt assets was insufficient for her entire term of retirement. Thus, all of the insurance proceeds were reasonably necessary for the subsistence of herself and her minor children.
Student Loan Bankruptcy in Chester County
I have written consistently about the difficulty of having student loans discharged in a bankruptcy filed with a Chester County bankruptcy lawyer. Student loan debt is now at $11.52 trillion in the last quarter of 2013. The Huffington Post calls it a ticking time bomb.
An interesting angle on student loan debt was proposed in the San Francisco Chronicle. The op-ed writer states,
Monthly payments on student loans should be a percentage of the borrower's income, after essentials like food and housing are covered, instead of being fixed.
Even Forbes, a conservative bastion of the media, states,Interest rates on student loans should be nonprofit, which means equal to the Fed's discount rate, currently 0.75 percent.
Some Senate Democrats are pushing for a "plan to support a longstanding effort to make it easier for borrowers to discharge private student loan debt in bankruptcy and a new federal grant program aimed at creating incentives for states to chip in more money for higher education".Reforming loans does not necessarily mean eliminating loans entirely. Loans themselves can mitigate catastrophic risk to an individual if the repayment options are better. If student loans can be discharged in bankruptcy – you know, like other loans – it gives a potential last resort exit valve to unburden an individual who is struggling to pay. More broadly, any system that ties the level of repayment to a student’s income accounts for the risk of not being able to find a job or having a health emergency. If a student who chooses to become a teacher, rather than a financier or consultant, he or she benefits from a repayment scheme based on income.
You can have your cake and eat it too in a Chester County bankruptcy. Well, sort of. You can keep your personal household furnishings if you have less than $10,775 in total household furnishings and no particular item exceeds $525. Look to Section 522(d)(3) of the Bankruptcy Code.
So, what are household goods? They include clothing, furniture, appliances, 1 radio, 1 television, 1 VCR (do they even exist anymore?), linens, china, crockery (what I also call a group of lawyers), and kitchenware. It also includes medical equipment and supplies, furniture for minor children, personal effects including toys and hobby equipment and one computer.
It does not include works of art, antiques exceeding $550, and jewelry exceeding $550. As you can guess and the court in In re Barnes from the Maryland Bankruptcy Court of 1990 stated, it is a concept that furnishing relate to items routinely used within the household such as furniture or decorate items. Generally, the items have to be for personal, family, or household use. Also, some courts have taken a view that the exemption is in place to allow you to get a fresh start. Thus, household furnishings are necessary. If you are confronted by a U.S. Trustee over the value of the property, you will have to provide a subjective and objective value through your Chester County bankruptcy lawyer. This includes a possible appraisal (sometimes Ebay will do) and the purpose for the item.
Remember -- even if your household furnishings exceed the exemption, you can get the rest covered (possibly) through the wildcard exemption in bankruptcy.
]]>Your lawyer should have significant experience in your Chester County bankruptcy. They should already know what is required by the bankruptcy courts. This includes meeting with the Chester County debtors to determine their assets, income, and liabilities. It also includes providing you with guidance and strategic suggestions to put you in the best spot to make your filing the most optimal one possible.
Bankruptcy Reform Act of 2005 created a strange entity called a "debt relief agency". This entity is defined as any person who provides bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration. The controlling law on this section is 11 U.S.C. 101(12A). An attorney who represents an individual in a Chester County bankruptcy is typically a "debt relief agency".
The rule also talks about an "assisted person", which is defined as any person whose debts consist primarily of consumer debts and whose nonexempt property property is valued at less than $150,000. Easily, this is most people filing for bankruptcy in Chester County and applies to most if not all Chester County bankruptcies.
An individual or his/her spouse in Chester County may file a joint petition under Chapter 7, pursuant to 11 U.S.C. 302(a). Only a husband and wife may file a joint petition under Chapter 7. However, an unmarried couple may not file a joint petition even if they are jointly liable for all or most of the debts, own property together, and live as husband and wife in every respect other than being lawfully married (a bit frustrating, I know).
The filing fee for a joint petition is the same as a single petition. Both parties, if filing, must complete the credit counseling requirement and must sign the petition. Rule 1015(b) will normally establish that the parties court appearances will be scheduled for the same time and the same trustee will be appointed for both estates.
The general rule is that if both spouses are liable for one or more significant dischargeable debts, they should normally file a joint petition. If it is difficult to determine whether one or both spouses are liable for a significant dischargeable debt, the best practice is to file a joint petition if there is any chance that both spouses may be liable for the debt. If, however, it is clear that only one spouse is liable for all the debts of one spouse, a joint filing ma not be necessary.
Credit reports should be run to determine if the debts are joint or not. In addition, original statements and or bills should be disclosed and review by your Chester County bankruptcy lawyer to make sure the appropriate debts are covered, explored, and analyzed.
]]>There were a host of cases over the past couple years that discuss the discharge injunction. The discharge injunction is permament and is authorized by section 524(a)(2) of the Bankruptcy Code. It "operates as an injunction against... an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived...." 11 USC § 524. As the Eastern District of Pennsylvania state in In re Meyers in 2006, Section 524(a) is a broad injunction power which effectively bars creditors from collecting debts as personal liabilities from a discharged debtor." It eliminates a debt permanently (not liens) and gives people the "fresh start" they desire.
In re Brown of the Western District of Pennsylvania, found that a mortgage company did not violate the discharge injunction by sending a "generic informational letters and notices" that contained no request for money. Another Western District case In re Englert involved a case where the debtor re-opened their case to file an adversary action against Ocwen mortgage company. Ocwen was tremendously non-compliant with the process (failed to respond to Interrogatories, their attorney failed to appear at the status hearing). The Court ruled that the debtor's only remedy for a violation of the discharge injunction was a civil contempt proceeding via 11 U.S.C.§ 105. They had to prove the contempt through:
The court ruled that it would not hold Ocwen in contempt as there was doubt that they were trying to collect a pre-petition debt. They Court did hit Ocwen for failing to comply with th Discovery Order and sanctions were ordered.
Here's the general rule -- if you receive a debt collection after your bankruptcy and it is for a pre-petition debt, contact your Chester County bankruptcy lawyer to make sure there has not been a violation of the discharge injunction.
The debtor's interest in a vehicle cannot exceed $3,225 in value for one vehicle (double for married couples filing). This is under section 522(d)(2) of the Bankruptcy Code.
The exemption is pretty straightforward. You can keep your car/not go into a Chapter 13 as long as the value is less than or equal to $3,225. If you are financing a car, it is almost assured that you are not going to have any worries since most people owe more on their car than their value. Even if you have more value in your car than $3,225, your Chester County bankruptcy lawyer can elect to apply the wildcard exemption to cover the remaining value.
Sometimes, arguments with creditors and the trustee surround whether the vehicle qualifies as a tool of the trade for lien avoidance.
But, by and large, you can keep your car to live your life and move forward with getting your fresh start.
]]>This type of issues is rooted in the bankruptcy rules. First, Rule 4002(a) creates a requirement that a debtor puts their property and their exemptions (claimed under section 522) in the applicable time limit stated in Rule 2001.
Rule 1007(c) states that a debtor in a voluntary case (the most common) is required to file a list of their exemptions within 15 days of the petition being filed (but your Chester County bankruptcy lawyer in an emergency filing may push the deadline back via Rule 1007(c)). This extension may be granted only on motion for cause shown on notice to the U.S. Trustee and with a host of other complicated rules. Trust your lawyer to get this done if necessary.
Bankruptcy Rule 1007(c) provides that a schedule of exemptions filed prior to the conversion of a case to another chapter (either 7 or 13) is deemed filed in the converted case unless the court directs otherwise. But, if your lawyer doesn't get the exemption, it will be interpreted as a waiver of exemptions (note: This never happens if your Chester County lawyer is halfway decent).
]]>I sometimes get calls from individuals in Bucks County. I received a call from a Bucks County criminal lawyer this week. He was inquiring about whether his client could file for bankruptcy at the conclusion of his criminal case.
The bottom line: The court costs and fines and restitution are not discharged in a Chapter 7 bankruptcy. They are deemed automatically non-dischargeable. Similar to child support for a Bucks County divorce lawyer, a person can not get a fresh start on child support. It is public policy.
Traffic fines are a little different and you should consult a Bucks County bankruptcy lawyer to see if you can get that debt discharged in a bankruptcy. Of course, there is the potential to repay the debt in a Chapter 13 plan. You have a lot of options with a great bar association over in our sister county and it would make sense to seek appropriate legal advice to make sure you protection yourself legally.
]]>State exemptions is the predominant exemption law applicable in bankruptcy cases as the majority of state legislatures have opted out of authority (remember - Pennsylvania has not). As a state legislature amends an exemption statute, the amended exemption becomes applicable to bankruptcy cases filed after the amendments effective date. Those living within an opt out state are therefore subject to such changes made in state exemptions laws. The opt out, however, does not affect the federal non-bankruptcy exemptions that may be available to a debtor with an opt out state. Again, you and your Chester County bankruptcy lawyer should explore the limited reasons why you may want to choose the state exemptions in your bankruptcy.
The language of the code permits the state legislature to prohibit use of only bankruptcy exemptions under 522(d). The state may not, therefore, prohibit bankruptcy debtors who are living within that state from claiming other federal exemptions that are not found in the bankruptcy code.
Any doubt about this confinement of the states to opt out of section 522(d) only was answered implicitly by the Supreme Court's decision in Owen v. Owen, where "Petitioner purchased his Florida condominium in 1984 subject to respondent's pre-existing judgment lien, and the property first qualified as a homestead under a 1985 amendment to the State's homestead law". The fact that the state legislature has opted out of the section 522(d) bankruptcy exemptions does not deprive the bankruptcy court of subject matter jurisdiction over the exempt property, at least until it has been determined to be exempt in fact, either by the absence of timely objections or by the courts ruling upon objections favorably to the debtor. The exemption, once allowed, acts to revest that property in the debtor.
]]>Here's a quick overview of the automatic stay in bankruptcy. It is a powerful reason for Chester County families to file a bankruptcy with a Chester County bankruptcy lawyer. As most people know, the automatic stay will stop most civil legal proceedings (i.e. lawsuits from creditors such as credit card companies). It will not stop/stay paternity, support or alimony proceedings.
It will stop most "execution" proceedings (there are limitations for evictions) and they may compel restoration of utility service (i.e. your PECO services). For an eviction based on "judgment of possession", the automatic stay does not go into effect unless the debtor pays the rent which will become due within 30 days after filing and files a certification that the debtor is entitled to cure the default. Obviously, for strategic purposes, a bankruptcy should be filed before a judgment of possession is entered.
The automatic stay may be limited if you filed a prior bankruptcy. Specifically, the automatic stay will only last for 30 days if you had one prior dismissal within the year prior to the new filing. Your bankruptcy lawyer in Chester County could file a motion to extend the automatic stay which could potentially extend this time limitation.
If there are two or more dismissals within the year prior to the new filing, the stay does not go into effect unless the court imposes it.
]]>After your Chester County bankruptcy, you should read my posts on the best ways to get a mortgage (Part 1, Part 2).
You will also have to get a Realtor. My first and biggest rule is this -- get a full-time Realtor. You picked a Chester County bankruptcy lawyer because they focused on bankruptcy. You did not go to a Bucks County criminal defense lawyer for your bankruptcy. Thus, you should pick someone who sells real estate full-time. This is not a hobby and it is not something you should do just to help out a neighbor or friend. The Realtor needs to see deals, transactions, and issues in volume. Part-timers do not cut it when it comes to protecting you and getting the best deal.
You will also want a Realtor who knows a lot about people buying homes after a bankruptcy. Find out if they know a lot about FHA mortgages. Make they set you up with the Multiple Listing Service (known commonly as MLS) and offer you robust options, including flexibility in home visits.
You will want to get their opinions on pricing of various homes. Most importantly, make them substantiate the opinion. This is typically done via comparisons ("comps") of other homes in terms of condition of homes, past sales, etc. Stay on top of the person -- you need to make sure you get the best deal possible to get your life moving in a positive direction.
]]>As I continue to blog, I get questions that are great. I find that I make some assumptions that people understand certain issues, but they may not. Today, an old client came in to discuss credit after their bankruptcy. They wanted to know what an FHA loan is.
As I previously blogged on the best ways to get a mortgage (Part 1, Part 2) after a bankruptcy, I mentioned that is most likely that people will best qualify for an FHA mortgage 24 months after their discharge date because the down-payment requirements are best suited for a person coming out of a bankruptcy.
If you need a good mortgage person, make sure you call your Chester County bankruptcy lawyer to see if they have a good referral for you.
]]>Bankruptcy petitions must be properly and completely prepared, both in their totality and in their technical aspects. The bankruptcy clerk may reject a petition if they are not technically correct. This one one of the big reasons why you hire a Chester County bankruptcy lawyer to help you with the bankruptcy process. The forms include the schedules (A-J), the Statement of Financial Affairs, and the Means Test Calculation.
A bankruptcy attorney must sign every petition, pleading, and motion. You must also sign the bankruptcy petition and your attorney must maintain that original document. This requirement is controlled via Rule 1008.
If your bankruptcy forms are incomplete or incorrect, you may be deprived of rights or property to which you may otherwise be entitled to. Or, in the alternative, your attorney may be sanctioned or may have to file additional motions or amended schedules and statements to correct the problems. Thus, it makes sense for time, economics, and professional obligations, to prepare these forms properly and correctly.
]]>This is an important case regarding the exemption of annuity payments. Essentially, the Chapter 7 Trustee objected to the debtor exempting annuity payments they were receiving from an auto accident. The payments were part of a structured settlement where she would receive lump sum distributions at 3 year intervals.
The court held that the debtor's right to receive the distributions were not exempt. It recognized that she did not "own" the annuity contract and the contract was not part of the bankruptcy estate, but her "interest" in the "stream of payments" was property of the estate.
To me, as a bankruptcy lawyer in Chester County, this seems like a no-brainer. I would have made sure to have the client recognize that it was likely that the payments would not be exempt as they most closely reflect income/inheritance.
I had somebody write in after I discussed conventional and FHA mortgages after a bankruptcy. I represented them as a Chester County bankruptcy lawyer.
They wanted to know two things:
1) What is the debt-to-income ratio?
2) What number do the mortgage companies like to see?
First, the debt-to-income ratio is the measure of your debt payments to the recurring monthly income you have. The higher the number/ratio the more difficult it is for a person to meet their debt obligations. It is expressed as a decimal or a percentage. If you have no debt payments, your debt-to-income ratio will be 0.
You can find a pretty rudimentary calculator for the debt-to-income ratio here.
For mortgages, FHA mortgages don't like to see anything higher than 28% on FHA mortgage loans for the debt-to-income ratio. For conventional mortgages, it normally can't be higher than 36%.
]]>I previously discussed finding Realtor to purchase a home after your bankruptcy. But, a big question remains -- Should you tell them about your bankruptcy?
Here are my thoughts -- I would not immediately volunteer the information. I would first vet them for their professionalism and experience. Then, I would line up a mortgage professional to get you a pre-approval letter. If you are not beyond your 24 months, you won't be able to get a pre-approval letter yet.
I would then approach the Realtor with "your story". Explain why (but keep it brief) you went into bankruptcy (i.e. medical, job loss) and what has changed to make a home purchase possible. Present your budget and your income. Explain what you can afford and why. Explain your timeline to purchase, where you want to purchase, and your long-term plan. The more, organized information you can provide, the better.
]]>After a bankruptcy, people often ask their Chester County bankruptcy attorney how to improve their credit. One definite way is by "piggybacking". Essentially, someone gives their credit card permission to "piggyback" off of their good credit by making you an authorized user. The person does not have to physically give you a card. You just ride on the hopes that they maintain good credit behavior.
You can still piggyback off of someone's credit. There was a bit of drama about 6 years ago as some "industrious" businesses started facilitating the sale of piggybacking. My biggest warning to everyone -- make absolutely sure the person will keep paying their bills and maintaining their good credit. You absolutely do not want to have a situation where the person hurts you down the road. You must get a good, positive read on their potential.
Also -- be honest with them. Tell them you don't even need to touch the credit card. You just want to get some wind in your sails to get a good jump-start on rebuilding credit.
]]>A Chester County Chapter 13 creates a process where creditors must file a proof of claim. This is typically done for any debt included in the bankruptcy. Some creditors do not file a proof of claim.
If a creditor does not file a proof of claim, the debtor's Chester County bankruptcy lawyer or the trustee can do so. Typically, the proof of claim filed by the debtor's lawyer or the trustee involve a car loan or mortgage. This is one to make sure the plan with the Trustee aligns with what is owed on the secured property.
The proof of claim must include the debtor's name, amount owed, and additional information, including the date of the last payment made and the original obligation. If a third party files the proof of claim, they must file an appropriate power of attorney for the creditor.
Last month I wrote about the Trustee's turnover powers. Now, this month, I'm going to review the Trustee's avoidance powers under 11 U.S.C. 547 & 548.
This power is one of the long-arm powers of the Trustee, where they essentially say "Stop what you're doing and give it back." Specifically, they can avoid both pre-petition and post-petition transactions, even if those transactions were otherwise legally valid. They do all of this to try and benefit the creditors.
First, under 547, the Trustee can seek to avoid an agreement because it is a preferential transfer. This is a transfer of money or property that occurred 90 days prior to filing.
Sometimes, you don't care about avoidance in this case. Some debt collectors could harass you to the point where you pay them a ton of money and they you later file for bankruptcy. The Trustee could avoid that agreement, get the money back from the creditor, and then distribute the funds pro-rate to all creditors. Other times, if you repaid a debt to a family member or friend, the Trustee could seek to get that money back. This is the wrong type of preference.
The Trustee can get the money back by just writing letters and the recipient agrees or, in the alternative, the Trustee can file an adversarial complaint.
]]>You filed for bankruptcy. You attended your 341 hearing/Meeting of the Creditors along with your Chester County bankruptcy lawyer. There were no problems and you received a discharge letter in the mail. Now, you can start getting credit. Remember the discharge date. Why?
Some creditors will not extend credit to people until a time period has elapsed from their discharge date (not filing date). Frequently, creditors will want the discharge letter as proof of the discharge of your debts and the date. Make copies of this letter and store them safely and separately.
Every lender has different credit guidelines. These are their internal rules for who they will extend a loan/credit to. Some creditors will require you get a co-signer. If this is a requirement, it generally should be avoided if possible. Getting a co-signer takes time and is a pain in the neck. But, if that's what it takes, make the call appropriately.
Remember -- cash is king in the beginning after discharge. You will start getting secured credit card offers (see this article about rebuilding credit through secured credit cards) and will still have to pay your bills. Get a safety net of cash and reduce your living expenses
]]>So, in previous months I've covered normal income on the means test and less normal income. Now, I want to cover "income from all other sources", which is included on Line 9 of the means test for Chester County bankruptcies.
Again, it does not matter whether this income is taxable or not. Think hard -- do you deliver newspapers? Babysit? Have a part-time job? Are an Avon salesperson? All this income must be included. Private disability income is not included as "other income". Do you have a lunch truck and only get paid in cash? You must include it. Again, think about all of your side jobs, gigs, hustles, and work. This will all be added in.
If, however, you are receiving reimbursement from expenses from work, you do not have to include this as income. Mileage reimbursement? You are all good and do not have to include it. Again, this makes sense -- you are essentially being brought back to zero with these reimbursements as you spent the money and will be getting reimbursed.
Line 10 is the subtotal and Line 11 is the total (where both spouses are added up). This is where you must double-check your Chester County bankruptcy lawyer's numbers and your own. Make sure they make sense and the income makes sense.
]]>A Chester County debtor must list all real property of which you have legal, equitable or future interest on Schedule A, which is part of the bankruptcy petition. This is "real property" owned as a co-tenant or under community property laws and real property in which you have a life estate or a right or power excisable for your benefit. Generally, however, it is for a home, condo, building. or town home. You must list everything, including property that you do not reside in (i.e. a vacation home or rental property).
You should go over with your Chester County bankruptcy lawyer your requirements and obligations and bring up any questions with respect to your property.
In addition to putting the address of the real property on your Schedule A, you must also list the value o the property. This is the "estimated current market value of the property" or fair market value. This number should not include any mortgages or lines of equity. The amount of any claim secured by the property should appear on the far right column. This will include any mortgages, lines of credit, or additional secured debt on the property.
You do not need to put the creditor's name on this section of the petition as you will have to list it on Schedule D for secured debts. If the property has no debt attached, you should put "none" under the "Amount of Secured Claim."
]]>I previously referenced that a Chester County bankruptcy lawyer should look on PACER to see if their client had previously filed for bankruptcy. But, what is PACER?
PACER is an online repository for bankruptcy filings that is over 25 years old. It is a web-based product run by the Administrative Office of U.S. Courts. It bills itself as "a national index for U.S. District, Bankruptcy, and Appellate courts". You get charged quarterly for the use of PACER. So, you also have to have an account set up. The fees are 10 cents per page, so you must learn how to search judiciously and effectively. You do not have to be an attorney to have PACER access. You just must complete the requirements.
PACER has a host of tutorials via video. They are campy and old, but effective. To access PACER, you must get an account by registering. You will also have to set up to go to free PACER training. You will have to go through training modules and complete the class, which typically takes a day.
]]>I've discussed frequently that the Trustee has substantial power and authority. The Trustee has a duty to administer assets in a Chapter 7 estate. Sometimes, the Trustee will use their "long-arm" powers, which are turnover powers and avoidance powers. This means that sometimes the Trustee can reach out to property of the estate to satisfy creditors. Frequently, a Chester County bankruptcy lawyer will battle with a Trustee if there is a contentious issue. Most often, however, the cases are fine and there is no adversarial proceedings.
Turnover powers are provided to the trustee pursuant to 11 U.S.C. 542. If a person lists an asset and it is held by a third party and the Trustee seeks to liquidate the asset, they can force the third party to turnover the property (regardless of whether the person wants it). Most of the time, this is rare. If it does happen, the third party is normally scared and gives over the property in a timely matter. If, however, the person ignores the Trustee, they can file a motion in the form of an adversary proceeding.
I previously discussed how, as a Chester County bankruptcy lawyer, I must include normal income in a means test on a bankruptcy. Pension and retirement income must also be included. This includes IRA and 401(k) withdrawals. It does not, however, include Social Security benefits. This is important and I will repeat it -- Social Security benefits are not included in calculating income on the means test. But, if someone else in the household is receiving Social Security (and is a non-filer), you must include it on Line 7. You must provide these statements to the trustee to validate the pension and retirement income. This income is included on Line 6 of the means test.
On Line 7, you have "amounts paid on a regular basis for household expenses". This includes contributions from all household members and non-household members (i.e. your adult daughter helps you with your bills). You also have to include child support on this line but it later gets subtracted (dumb, right?).
Unemployment compensation is also included in the form. It is put on Line 8. Again, this is calculated over the last 6 months.
You and your Chester County bankruptcy lawyer may have received a letter closing the Chapter 13 case. This is done after 90 days after the final distribution of the Chapter 13 plan. The bankruptcy judge in the Eastern District of Pennsylvania will have issued a final decree discharging you from your Chapter 13.
But, you or a creditor can request, by motion, to reopen a bankruptcy in the court (it must be in the court which closed the case). If the Chapter 13 is reopened, a trustee will not be appointed by the U.S. Trustee unless the court believes that a trustee is necessary to protect the interests of creditors and the debtor or to insure an efficient administration of the case (look to Bankruptcy Rule 5010 for more guidance).
Again, this rarely happens, but it is important to understand what may occur in your Chapter 13.
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