Determine Which of Your Debts Can Be Eliminated in Bankruptcy

discharge in bankruptcy

Bankruptcy debts discharged in Pittsburgh

Bankruptcy Debts Discharged, Part One – Discharge of Student Loans, Credit Card Debt, Medical Debt and Criminal Fines Restitution in Bankruptcy

Bankruptcy debts discharged in any particular consumer case may depend on a number of factors. For people contemplating whether to file a bankruptcy case, the questions about whether certain debts may be discharged through bankruptcy are common. While debtors should discuss their individual circumstances with an experienced Pittsburgh bankruptcy lawyer, certain rules of thumb may help to determine whether a particular debt may be dischargeable in bankruptcy. This two-part series will explore whether certain kinds of debts can be discharged in bankruptcy.

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Are Student Loans Discharged in Pittsburgh Bankruptcy Debts Discharged?

Student loan debts are sometimes the most oppressive financial obligations for debtors in bankruptcy cases. Many people believe that student loans are not dischargeable in bankruptcy.  In fact, student loan obligations may be discharged in a bankruptcy case. While the United States Bankruptcy Code requires a showing of “undue hardship” to discharge most student loan obligations, student loans may still be discharged in a bankruptcy case. What constitutes “undue hardship” may depend on the governing case law in the court in which you file your bankruptcy case. In the region in which the Pittsburgh Bankruptcy Court is situate, the Brunner standard applies to define the meaning of “undue hardship” and imposes a three-part test which debtors must meet to have their student loans discharged.

Discharge of student loan obligations in bankruptcy must be done by filing an adversary proceeding, or a lawsuit, against the student loan creditor. That law suit will seek a determination that repayment of student loan debts constitutes an undue hardship and that the student loan obligation is dischargeable in bankruptcy.

You may be eligible to discharge your student loan obligations. Talk to an experienced bankruptcy lawyer today

to determine if you can discharge your student loan debt.

Are Credit Card Obligations Bankruptcy Debts Discharged in Pittsburgh?

Generally speaking, credit card obligations are dischargeable in bankruptcy. Congress has emplaced certain protections in the Bankruptcy Code to prevent abuse by limiting discharge for cash advances in the days leading up to the filing of a bankruptcy case. Pittsburgh bankruptcy courts enforce the Bankruptcy Code with exacting attention. In like fashion, the Bankruptcy Code may bar discharge of late-incurred charges for luxury goods. Consumers must honestly discuss their credit card use before the filing of a case with their bankruptcy attorneys. Honest disclosure to your bankruptcy lawyer can often prevent unneeded difficulty in the entry of a discharge order.

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Open field of bankruptcy discharge

debts dischargeable in bankruptcy cases

Are Medical Debts Bankruptcy Debts Discharged?

Pittsburgh bankruptcy cases where the bankruptcy court enters a discharge order almost always result in medical debts being discharged.  Usually medical debts are unsecured obligations that do not enjoy priority protection under the Bankruptcy Code. For that reason, medical debts are dischargeable in most Pittsburgh bankruptcy cases.  While a particular obligation arising from medical debt could be non-dischargeable in bankruptcy, such exceptions are exceptional.  Discuss whether your medical debt may be discharged before you file your bankruptcy case in Pittsburgh with your own Pittsburgh bankruptcy lawyer.

Are Pittsburgh Criminal Fines or Restitution Orders Bankruptcy Debts Discharged?

Typically criminal fines and restitution are not discharged in bankruptcy cases.  States are empowered to exercise their police power and, with some exceptions, federal bankruptcy law under the United States Bankruptcy Code does not inhibit that exercise of the rights of states.  If you have question whether a particular debt might be dischargeable in your bankruptcy case, consult an experienced bankruptcy lawyer in Pittsburgh during a free initial consultation.

FREE CONSULTATION – 412-925-8194

Up Next: Bankruptcy Debts Subject to Discharge Including Mortgages, Car Loans, Tax Debts, Child Support and Alimony and Judgment Awards in Pittsburgh

Watch for our next installment in this series where we will continue to take up the question of exactly what kinds of debts can be discharged in a bankruptcy case. If you have any particular concerns about whether a certain debt may be discharged in a bankruptcy case, you should contact an experienced Pittsburgh bankruptcy lawyer today for a free initial consultation.  In Pittsburgh, call 412-925-8194 today.

(c) 2017.  Robleto Law, PLLC.  Robleto Law, PLLC is a law firm of bankruptcy attorneys based in Pittsburgh, Pennsylvania.  Our help may involve bankruptcy relief under the United States Bankruptcy Code. We are a debt relief agency. We help people file for relief under the United States Bankruptcy Code.

Bankruptcy Schedules

What Are the Bankruptcy Schedules, Anyway?

Bankruptcy Schedule CThe bankruptcy schedules are the primary forms that debtors use to reveal their basic financial information.  Disclosure of debtors’ financial condition is an essential condition of relief under the United States Bankruptcy Code.  The bankruptcy schedules, along with the statement of financial affairs are designed to elicit almost every detail of debtors’ financial condition. From a modest consumer debtor in a case under chapter 7 of the Bankruptcy Code with a few thousand dollars in debt to an extraordinarily sophisticated financial services company with liabilities in excess of one billion dollars, all debtors must submit complete and accurate bankruptcy schedules.

“Both business and consumer debtors must submit complete and accurate bankruptcy schedules.”

The following is a concise and plain description of those bankruptcy schedules as they apply to individual debtors in consumer bankruptcy cases.  On December 1, 2015, a new set of forms became effective to all newly filed bankruptcy cases.  Those forms arose from the Judicial Conference Forms Modernization Project.  The new forms track the same information as their predecessors but the design is retouched.  Additionally, the new forms exist in separate sets, applicable to individual debtors and non-individual debtors (think corporations, partnerships and other business organizations).  This review will focus on the new bankruptcy forms schedules A/B, C, D, E, F, H, I and J, as applicable to individual bankruptcy debtors.

Bankruptcy Schedule A/B – Property

Bankruptcy schedule A/B seeks information relevant to a debtor’s interest in property.  Previously, schedule A pertained only to a debtor’s interests in real estate and schedule B sought a listing of all other interests in property that a debtor may have.  Schedule A/B merges those two previously distinct schedules into an integrated, itemized list of various sorts of property.  The first category in schedule A/B is real property (in the parlance of part 1 of bankruptcy schedule A/B, “Each Residence, Building, Land, or Other Real Estate”).  Next, a debtor lists vehicles, followed by personal and household items.  Within those two asset classes, there are further subitems (e.g., electronics, collectables and jewelry).  Next on schedule A/B, a debtor must list all financial assets and business related property.  If a debtor owns farm or commercial fishing-related property, that property must also be detailed on this bankruptcy schedule.  Responses to the specific inquiries on schedule A/B will generally reveal all of a debtor’s property but the final category does not leave the matter to chance and requires a debtor to describe all property not disclosed in response to the prior questions.

Bankruptcy Schedule C – Bankruptcy Exemptions

Bankruptcy schedule C requires that a debtor list all of the property claimed as exempt and therefore unavailable to pay the claims of creditors.  Because Congress left it up to the legislature of the individual states to determine the property that debtors in bankruptcy cases could exempt from creditors, exemption law may vary from state to state.  In many states, a debtor may rely only upon the exemptions available under state law.  In other jurisdictions, a debtor in a bankruptcy case may only apply the “federal” exemptions set out in section 522(d) of the Bankruptcy Code.  The Commonwealth of Pennsylvania permits a debtor to elect the federal exemption scheme or Pennsylvania exemption law.

Depending on the circumstances of any particular case, the decision whether to use the federal or state exemptions may have very serious consequences and may impact a debtor’s right to keep certain assets.  After the selection of the appropriate exemption menu, careful application of each exemption is also very critical.  Misapplication of exemptions to assets could result in a debtor being required to turn over property to a chapter 7 trustee to be liquidated for the benefit of the debtor’s unsecured creditors.  In a chapter 13 case, the same mistake could mean that a debtor would be forced to pay a considerably higher amount of money each month.  When it comes to selection and application of bankruptcy exemptions on schedule C, a highly experienced bankruptcy lawyer will help ensure that a debtor maximizes the value of exemption rights in a bankruptcy case.

Bankruptcy Schedule D – Secured Claims

In schedule D, a debtor is called upon to list all secured creditors.  A secured creditor is one that has recourse to a debtor’s property to protect its right to receive payments.  The two most common kinds of secured creditors for most consumers are mortgagees and vehicle lenders.  However, certain tax claims including real estate taxes may also be secured obligations.  Additionally, a creditor with a judgment against a debtor may also hold a secured claim.  That is so because a judgment acts as an automatic lien on all real property that the judgment debtor owns in the property in which the judgment is entered.  A judgment may also form a lien on other property of the debtor if the judgment creditor has taken the necessary steps to perfect its lien before the filing of the bankruptcy case.

“Ignored secured claims can prevent a debtor from getting a meaningful fresh start even if that debtor receives a discharge.”

 Ignored secured claims can prevent a debtor from getting a meaningful fresh start even if that debtor receives a discharge.  Absent a debtor taking some affirmative measure to avoid or limit a secured claim, a lien will generally survive a bankruptcy case even if a debtor otherwise does everything right and receives a bankruptcy discharge.  As with bankruptcy exemption and selection application, an effective bankruptcy lawyer may prove to be critically important to a debtor developing a strategy for the treatment of secured claims.

Bankruptcy Schedule E/F – Unsecured Claims

The new schedule E/F merges the priority claims together with other general unsecured claims against a debtor.  The Bankruptcy Code gives priority to certain types unsecured claims.  Each priority claim is listed in order such that first priority claims must be paid in full before any second priority claim may be paid.  The priority scheme is designed to provide protection to certain kinds of creditors.  Thus, domestic support obligations, wage claims and certain kinds of taxes are designed priority claims and must be identified that way.  Although the new schedule collapses priority and general unsecured claims onto a single bankruptcy schedule, schedule E/F still requires debtors to list priority claims in a separate section on the schedule and to identify the nature of the claim.  Your Pittsburgh bankruptcy lawyer will help you correctly identify and classify priority claims.

Bankruptcy Schedule G – Executory Contracts and Unexpired Leases

Debtors must also list all “executory” contracts and unexpired leases.  Prior to a bankruptcy case, many people ask:  what is an executory contract?  An executory contract is one that has neither terminated nor expired and upon which substantial performance remains due from both parties.  Just like an unexpired lease, an executory contract is a living, binding legal agreement.  Debtors often face difficult decisions about whether to assume or reject an executory contract or unexpired lease.  A clear explanation of the impact of rejection or assumption from a bankruptcy lawyer can make that difficult decision making process far easier.

Bankruptcy Schedule H – Codebtors

As the instructions on bankruptcy schedule H explain “[c]odebtors are people or entities who are also liable for any debts you may have.”  It is important to list all codebtors with names and addresses and identify the debt upon which each codebtor shares liability.  In many cases, the discharge of indebtedness of a debtor in a bankruptcy case may impact a codebtor’s financial life.  It is important to discuss joint liability during a candid conference with a bankruptcy attorney.

Bankruptcy Schedule I – Income

Bankruptcy Schedules Crunching NumbersDebtors must disclose their income from all sources.  Income information is important and, as entered in the means test, may impact a persons qualification for relief under chapter 7.  A debtor must have a regular source of income in order to qualify as a debtor for a case under chapter 13.  Schedule I is detailed and seeks information about income from all sources and requires information about deductions from payroll.  Additionally, if a debtor has a non-filing spouse, that income must be disclosed too unless they are separated and living apart.  Your bankruptcy lawyer can help you to address the implied problem of having someone else’s income imputed to you (even if it is your spouse).

Bankruptcy Schedule J – Expenses

Bankruptcy Schedule J enumerates almost every typical consumer expense and debtors must honestly report their regular monthly expenses.  Calculation of monthly expenses is an important exercise for the debtor and provides critical information to all parties in interest in the case.  Very often the “monthly net income” calculation reached by subtracting expenses from income gives debtors a sense of how their cash flows on a monthly basis.  Schedule J can also help debtors in chapter 13 cases determine whether they can present a chapter 13 plan that they can pay and is therefore, feasible.

It is important to note that bankruptcy schedules I and J seek the sort of information as does the means test.  However, because the income on the means test is a backward-looking analysis of the six-month period preceding the filing of the bankruptcy case, the income information may diverge from that stated in bankruptcy schedule I.  Similarly, the allowable expenses on the means test of primarily grounded in standard expenses having nothing to do with the actual expenses relevant to the debtor.  Discuss these important distinctions with your bankruptcy lawyers.

Pittsburgh Bankruptcy Lawyers and Important Discussions about Bankruptcy Schedules

Disclosure is of income, expenses, assets and liabilities are a cornerstone of every bankruptcy case.  The bankruptcy schedules are designed to facilitate that disclosure.  Complete and accurate responses to all of the questions in the schedules is vital to the bankruptcy process.  Before you file your bankruptcy case, carefully read and understand the information contained in those schedules.  Candid disclosure is an important step in a bankruptcy process which allows honest but unfortunate debtors some relief from their debts with a fresh start.

 

Taking the Mystery and Mean Away From the Bankruptcy Means Test

Means Test and Chapter 7 Bankruptcy

It Has Never Been Easier to Determine Whether You Qualify for Relief Under Chapter 7 of the United States Bankruptcy Code in Pittsburgh.

Means TestIn 2005, Congress put in place very substantial changes to the United States Bankruptcy Code through an amendment known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).  The BAPCPA amendments set new requirements for eligibility to be a debtor under chapter 7 of the Bankruptcy Code and to receive a discharge under chapter 7.  Importantly, debtors must now undergo a means test if their income exceeds the then-applicable median income for consumers of debtors’ household size in the state in which they reside.

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Eligibility for Chapter 7 Bankruptcy – Median Income Analysis

Debtors whose income does not exceed the relevant median income need not undergo further means testing.  Median incomes information is calculated and published by the United States Census Bureau and median income data is adjusted periodically.  The Office of the United States Trustee publishes median income information on its website.  As of the date of this entry, the median income applicable to debtors in the Commonwealth of Pennsylvania with a household size of one is $50,501.  A household of two in Pennsylvania can earn up to $60,508 without further means test analysis.  A three-person family in Pennsylvania has a median income of $74,083.  With four people the Pennsylvania median income is $89,690 and increases by $8,400 for each additional member of the household.
Median Household Income in the United States: 2015

[Source: U.S. Census Bureau]

The Bankruptcy Means Test Exception Applicable to People with Primarily Business Debts

Individuals whose debts are primarily business debts are excused from the means testing analysis.  The means test analysis under section 707(b) of the Bankruptcy Code applies to individual debtors whose debts are primarily consumer debts.  A Pittsburgh bankruptcy lawyer will be able to help you make the determination of whether your debts are primarily consumer debts or whether you may be exempt from further means testing because of the primary nature of your indebtedness.

The Chapter 7 Means Test and the Presumption of Abuse

The chapter 7 bankruptcy means test is codified in section 707 of the Bankruptcy Code and individual chapter 7 bankruptcy debtors in Pittsburgh and throughout the United States must submit an Official Form 122A-1, Chapter 7 Statement of Your Current Monthly Income.  Debtors must disclose information relevant to their income and household size to determine whether they need to complete the means test.  The means test itself is incorporated into Official Form 122A-2, Chapter 7 Means Test Calculation.  Debtors must draw income data for the means test from the income during the six-month period preceding the filing of their bankruptcy cases.  The Bankruptcy Code permits debtors to subtract from their household any portion of the income of a non-filing spouse that is not dedicated to the payment of household expenses or expenses of debtors’ dependents.  The means test also provides that certain expenses be deducted from a debtor’s adjusted current monthly income to determine monthly disposable income.  That monthly disposable income is then multiplied by 60 to determine a debtor’s five-year disposable income.  If a debtor’s disposable income over five years is less than a certain threshold value (currently $7,700), then the presumption of abuse does not arise.  If the five-year income exceeds the threshold value and a cap value (currently $12,850), then the presumption of abuse arises but the debtor may still elect to complete a statement of special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.  A showing of special circumstances may justify continued eligibility for relief under chapter 7.  If a debtor’s five-year disposable income is between the threshold and cap values, the presumption of abuse will not arise unless the five-year disposable income is at least 25% of the debtor’s total nonpriority unsecured debt.

Close Call on the Means Test?  Discuss it with a Pittsburgh Bankruptcy Lawyer!

The increase in the administrative cost and duration of a chapter 13 bankruptcy case from a chapter 7 bankruptcy case is considerable.  In many cases a chapter 13 bankruptcy may be warranted but for other individuals a fresh start under chapter 7 of the Bankruptcy Code will offer the optimal path away from financial distress.  A free consultation with a Pittsburgh bankruptcy attorney could help you understand all of your bankruptcy nonbankruptcy options before making any decision.

412-925-8194

Bankruptcy in Pittsburgh – I Want to Keep My Car!

File Bankruptcy and Keep the Car

bankruptcy keep my carCan I File Bankruptcy and Still Keep My Car – Talk to a Pittsburgh Bankruptcy Lawyer Now!

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If you’re considering filing a voluntary bankruptcy case under chapter 7 of the Bankruptcy Code or entering into a repayment plan under chapter 13, you may be interested to know how a bankruptcy case might affect your vehicle loan.  Most workers need their vehicles just to bring themselves to work and back.  In most Pittsburgh bankruptcy cases, people can file bankruptcy and keep their cars.  Generally, as long as one continues to pay on his or her vehicle, she may retain it.

Chapter 13 Bankruptcy.  If you’re behind on your car payment, you may wish to use chapter 13 to retain that vehicle.  Under chapter 13, debtors may pay into a plan over a period of three to five years and, during that time, they may cure and reinstate certain loan balances.  In most cases, even when a debtor is substantially behind on a vehicle payment, chapter 13 may still offer a pathway to keep that car.

Chapter 7 Bankruptcy.  Often debtors are not in a position to repay creditors but still want to keep their automobiles.  In those cases, they may usually retain them as long as they keep current on their vehicle payments.   Particularly in this context, its very important to know whether creditors are secured or unsecured and whether they may have priority claim status.  In order to ensure that you are able to retain your interest in your vehicle, contact Robleto Law today.

412-925-8194

We are a debt relief agency.  We help people file for relief under the United States Bankruptcy Code.  (c) 2017 Robleto Law PLLC  |  Pittsburgh Bankruptcy Law Firm

 

Saving Your Home With Chapter 13 Bankruptcy

Chapter 13 bankruptcy puts a stop to foreclosureConsumer Reorganization Through Chapter 13

If you are behind on your mortgage payments, filing a chapter 13 bankruptcy may help you avoid foreclosure.  If you are behind on payments to the point where a foreclosure complaint has already been filed by your lender, filing a bankruptcy case will immediately halt it.  The moment a bankruptcy case is filed, something called the automatic stay is put into effect.  The automatic stay is a powerful provision of the Bankruptcy Code which prevents any creditor or party-in-interest from continuing litigation against you or depriving you of your property.

Chapter 13 bankruptcy also helps you repay your past due mortgage payments.  Often, once you are several months behind on mortgage payments, you lender may refuse to accept any payment less than the total amount of the arrearages plus penalties and interest as payment, and consider the payment of a single mortgage payment a partial payment.  This perpetuates the vicious cycle.  A chapter 13 bankruptcy case allows you to pay off any arrearages over a three or five year time period – making catching up far more manageable.  Often times, chapter 13 bankruptcy is the only practical option for those substantially behind on their mortgage payments.

There are other solutions for debtors with no other problematic and significant debt beyond mortgage arrearages.  Mortgage modification, an arrangement to mitigate the lender’s loss and lower your monthly mortgage payments, can serve as a solution as well.  Modification is a negotiation and loan restructuring process which back loads your mortgage arrearages and sometimes (though not always) lowers your monthly mortgage payment.  This process often extends the term of your loan allowing your even greater advantages than might otherwise be available in a chapter 13 case limited to five years.

If you are behind on your mortgage payments and have mortgage arrearages  in excess of what you can pay back, give us a call for a free consultation to discuss a solution based on your individual goals and problems with debt.