Personal Bankruptcy Tips #1

 

Handling Disputed Debts in Bankruptcy 

If you feel you should dispute a particular debt, you’ll need to file an objection with the bankruptcy court. Then you’ll have to wait for the court to resolve the dispute and issue a ruling. 

You can also ask the court to issue a ruling as to whether a debt is dischargeable or non-dischargeable taking into account your personal situation. 

Be very sure to get any disputes ruled on before you file your plan. If you wait and the ruling goes against you, you’ll have to modify your plan which can involve considerable paperwork and the fees for those changes. 

You might even end up making payments on a debt that is later ruled to be dischargeable. Unfortunately you may find it difficult to get disputes handled quickly enough to avoid altering your plan.

The economy is in rough shape these days so banks are in general more willing to consider financial deals that a few years ago they would have laughed at. 

If you’re facing foreclosure you might want to consider this approach. A man goes for a mortgage with the intent of signing a 30 year fixed payment mortgage – the traditional kind of mortgage that your grandparents probably had. 
 

Bankruptcy Trustee Fees in Chapter 13 

The trustee that handles your payment plan under chapter 13 is due a fee of course. Depending on whether or not your bankruptcy judge allows you to make mortgage payments directly, your fees will vary widely. 

For planning purposes you can get a ballpark feel for the trustee fees by multiplying the amount you owe under your plan by .1 (10%). Hopefully this cost won’t ruin your payment plans. If it does and jeopardizes your chapter 13 plan’s viability, you may be required to cut expenses somewhat more.

Bankruptcy Exemptions - When In Doubt, Take it Out!

An old accountant once gave me the following advice regarding what I could deduct on my taxes. If it makes sense to me, I should go ahead and claim it. Leave it to the IRS to disallow it, if they will ever bother to.

The same sort of rule applies when you claim exemptions in a bankruptcy proceeding. If the exemption seems to you to cover a particular property – claim it.

In most cases you’ll find that both your trustee and your creditors are required to accept your exemptions. The law gives you the benefit of the doubt in this case, so take full advantage.

If a trustee or creditor complains, what have you lost? The exemption may or may not be changed. Why not shoot for the moon?