What’s the difference between Chapter 7, 11 and 13 of the Bankruptcy Code?

...A commonly asked question. Commonly asked because many are truly unaware of the differences between the two.


Chapter 7.



Chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.




Chapter 13


Chapter 13 issues a payment plan to repay some debts, with the rest of the permitted debts being discharged. Keep in mind, not all tax debts are able to be discharged in bankruptcy, but taxes that are eligible to be discharged in a Chapter 7 are also eligible for discharge in Chapter 13. When you file for bankruptcy, your tax debts must meet a certain standard in order to be discharged.




If you file for Chapter 13 bankruptcy, money owed to the IRS that does not meet the qualifications to be discharged can be repaid through a payment plan that lasts anywhere between three and five years without penalties or continuing interest. (Although in some cases interest and penalties must be paid if there is a tax lien).




One of the benefits of filing a Chapter 13 bankruptcy is if the IRS rejected your previous payment plan, this is a way to get them to accept one.


Chapter 11


Debtors should be aware that there are several alternatives to chapter 7 and 13 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.




It is recommended that you speak with your attorney regarding this matter before deciding between filing Chapter 7 or Chapter 13 to get rid of or aid with the burden of tax debt.




Gregory J. Wald, Attorney at Law

1500 Northland Plaza

3800 American Boulevard West

Bloomington, MN 55431

Telephone: 952-921-5802

Toll Free: 1-866-747-1130

Fax: 952-831-1346

BankruptcyMinn.com

Gwald314@msn.com

The Problems That Occur When Filing Bankruptcy Without An Attorney

WHAT HAPPENS AFTER I FILE FOR BANKRUPTCY?

Filing for bankruptcy can be a daunting and emotionally draining experience. Going it alone will only make the task even more monumental. It doesn't have to be so bleak though. Sometimes in life we need a reboot, if you will. Many of great financiers, moguls, and millionaires alike have filed for bankruptcy. As well have average salary earners, college students, contract holders et al. The point is, at one time or another many of us have been "in over our heads".

Once you file the petition there are a number of documents you must submit to the court and your Trustee within specific time frames. Failure to comply may cause your case to be dismissed. Unfortunately, if you file without an attorney, there is no one who will tell you what has to be filed and when. Which is why whenever dealing with anything above parking ticket a lawyer is your best course of action.

The Bankruptcy Court sends out a notice of your bankruptcy filing to all of the creditors listed in your schedules. This notice advises the creditors that you have filed for protection, which chapter you filed and advises them that an "automatic stay" is in effect, preventing creditors from pursuing any further efforts to collect the debt. This would include staying a foreclosure sale, wage garnishment, and even a civil court proceeding or trial. Criminal cases are not stayed, nor are child support hearings.

For more information regarding bankruptcy, chapters, filing, or simply answering any questions you may have, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

There Are Strict Laws In Place That Limit What A Creditor Can And Cannot Do When Seizing Your Vehicle

What Rights Do I Have When Facing Vehicle Repossession?

Getting behind on your credit card payment can be a hassle but when you go into arrears on your car payment, your life can be drastically interrupted. Whenever you enter into a lease/credit agreement with a finance company, they have the right to recover their property, any time of day or night and still invoice you for the balance due on the loan as well as late fees and towing fees. Pretty harsh huh? However, there are strict laws in place that limit what a creditor can and cannot do when seizing your vehicle.

What Can Creditors do

According to state law, and likely the contract you signed while purchasing the vehicle, your creditor can legally seize your vehicle when you default on your loan. The seizure can legally occur immediately. The contract between you and your creditor will usually define "default", but it normally means a failure to make timely payments. One missed payment may be just enough, but typically not. This is because your creditor can agree to accept a late payment or can change the payment date, however this may change the terms of your original contract. These changes can occur by speaking with the creditor, by writing, or by the creditor simply accepting multiple late payments without objection.

When default occurs, state law may permit the creditor to repossess your vehicle at any time of the day - even in the middle of the night while you sleep. Creditors do not need to give proper notice, and may come on to your property to repossess.

What Can't They Do?

Creditors cannot "breach the peace" while confiscating your vehicle. Examples of breaching the peace violations can be using force or threats of force to repossess, seizing your vehicle over protest, or removing it from a closed garage.

If a breach of peace is committed when your vehicle is repossessed, you can be entitled to money damages or your creditor may be required to pay a penalty. Importantly, your creditor may also lose the right to enforce a deficiency judgment against you. A deficiency judgment is the difference between the remaining amount on the loan and the resell amount obtained by the creditor.

If you or someone you know has had their vehicle repossessed or is facing repossession, call us now. There are limited, but effective actions that can be taken such as bankruptcy, that allow you to keep your vehicle. Remember, time is of the essence. Once they've repossessed your vehicle you have ten days to pay the debt. In some cases the creditor may even refuse the payment and keep your vehicle. Eventually they will sell it and reduce it from the debt you owe them. Don't let it get to this.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

How Can I Afford To File For Bankruptcy When I'm Already Short On Funds?

It costs money to hire an attorney and pay a court filing fee. How can you pay for your bankruptcy case when you are already short on funds? Some of the best bankruptcy attorneys offer a free half hour consultation so that you can learn your options. If bankruptcy is not the best option for you, the attorney may be able to suggest other options, such as debt settlement or loan modification.

For a Chapter 7 case in Minnesota, the attorney’s fee must normally be paid in full before the bankruptcy case is filed. However, some attorneys are willing to accept installment payments over several or more months. When the fees are paid in full, the case is filed. May people use income tax refunds. Some people borrow the funds from friends or relatives. The attorney may be able to accept a credit card payment from a friend or relative.

If you file for Chapter 13 bankruptcy, you can pay all or most of the attorney’s fee through the debt consolidation plan over a period of three to five years. Chapter 13 does not require full payment of debts, so the payment can be affordable.

If you have some questions about bankruptcy, the law firm of Gregory J. Wald will answer your questions with a free consultation. Call us at 952-921-5802 or send us a message at www.BankruptcyMinn.com

Can Tax Debts Be Simply Eliminated Through Filing For Bankruptcy?

There are many ads on the TV and radio that claim tax debts can simply be eliminated through filing for bankruptcy. Unfortunately, this is not always true.

Income tax debts are able to be discharged in Chapter 7 bankruptcy if all of the following is true:

• All tax returns for the tax debt you're seeking to discharged must have been filed at least two years before filing for bankruptcy.
• The tax debt must have been due at least three years prior to filing your bankruptcy petition. 
• You must have filed a return for the tax at least two years prior to filing your bankruptcy petition. 
• The income tax debt has to have been assessed by the IRS a minimum of 240 days prior to filing your bankruptcy petition. 
• If a fraudulent tax return was filed or you attempted to evade paying the taxes by, for example, using a false Social Security number, bankruptcy won't be able to eliminate this debt. 

Certain events like a prior bankruptcy or an offer-in-compromise with the IRS can toll (stop) the running of these time periods. There are entire books written on how to interpret the rules for discharging a debt in bankruptcy. Be sure to obtain competent advice.

Unfortunately, even if you qualify to have your tax debt eliminated, your bankruptcy will not rid you of prior tax liens. If the IRS placed a lien on your property before bankruptcy was filed, the lien remains. This requires the debtor to satisfy the balance before they are able to sell the property. If the tax lien does not attach to any property, the IRS may abate (remove) the lien.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

Bankruptcy Can Be A Way Of Obtaining College Transcripts That Are Withheld For Nonpayment Of Tuition Or Loans

Bankruptcy can be a way of obtaining college transcripts that are withheld for nonpayment of tuition or loans. The filing of a bankruptcy petition creates an “automatic stay” that prevents any effort by a creditor to collect on a debt. The great majority of courts that have ruled on the issue have held that the withholding of a college transcript on account of an unpaid debt constitutes an attempt to coerce payment of the debt and is therefore in violation of the bankruptcy stay. The Bankruptcy Court in Minnesota ruled this way in the matter ofre Lanford, 10 B.R. 132 (Bankr.D.Minn.1981) At least two U.S. Circuit Courts of Appeals have also ruled this way, In re Merchant, 958 F.2d 738 (6th Cir. 1992); In re Gustafson, 111 B.R. 282 (Bankr. 9th Cir. 1990), rev’d on other grounds 934 F.2d 216 (9th Cir. 1990). As a result, it is very likely that your former school will release your transcripts voluntarily after your file a bankruptcy petition. If the school refuses to release the transcripts and the court finds that the school has violated the bankruptcy stay, the school can be sued for actual and punitive damages, including attorney’s fee and costs.

Tuition debt in most cases is not discharged (eliminated) in bankruptcy, so ultimately you may still have to pay the tuition debt. However, if you have other debts problems that bankruptcy can resolve, the release of your college transcripts may be one more reason to consider filing for bankruptcy protection.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

Will My Credit Be Ruined Forever If I File For Bankruptcy In Minnesota?

Bankruptcy Myths

"My credit will be ruined forever if I file for bankruptcy."
While bankruptcy does stay on your credit report from seven to 10 years (depending on which type of personal bankruptcy you file), often times your credit is even better (with time) because you've taken control of your finances and have attainable goals.

"I can get rid of all of my debt through bankruptcy."
There are certain types of debt that are not able to be discharged through bankruptcy, such as student loans (unless undue hardship is proven), criminal restitution, spousal support, and child support. Also, debts that came about as a result of some type of improper behavior (such as fraud) are deemed non-dischargeable. Certain types of taxes are not typically discharged either. For more in-depth info regarding this subject consult with a bankruptcy attorney.

"Only irresponsible people file for bankruptcy."
Even thought the economy is on the upswing, many people have been forced to file for bankruptcy due to past economic issues, whether it was job loss, divorce, injury, the cost of living, student debt, or medical bills. Today, many families with normal spending habits have filed for bankruptcy to get a fresh start.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.