What Is A Homestead Exemption?

Debtors often ask us what will happen to their home if they file for bankruptcy protection.  Fortunately, federal bankruptcy law and most states provide for what is often called a “homestead exemption”.  A homestead exemption acts as a shield against the claims of certain creditors.  It does this by protecting up to a specific dollar amount in real property.  Homestead exemptions are particularly important for debtors with equity in their home.  On the other hand, where a consensual lien on real property, such as a mortgage, exceeds the home’s value, the homestead exemption does not apply since there is usually no equity in the home to protect.

There are certain requirements for the homestead exemption to apply.  For instance, the real property typically must be kept as the debtor’s residence.   And depending on the state where the debtor resides, the debtor may elect to apply the federal homestead exemption over their state’s homestead exemption.  As of April 2010, the federal homestead exemption was $21,625.  Federal exemptions are not generally available to Oregon residents.  However, Oregon has protected much more home equity for its residents.

By |Apr 24, 2010|Categories: Bankruptcy, Uncategorized|Tags: , , , |

Should I Sign A Reaffirmation Agreement?

Debtors often have property subject to a lien when they file for bankruptcy.  In order to keep the property debtors can often sign a reaffirmation agreement.  A reaffirmation agreement is a new contract between the debtor and secured lender.   The contract is the debtor’s promise to continue making future payments in exchange for the lender’s promise to not repossess.  Reaffirmation agreements must be approved by the bankruptcy court.  Bankruptcy Rules reqire reaffirmation agreements be filed within 60 days after the first meeting of creditors.

By |Nov 6, 2009|Categories: Bankruptcy|Tags: , |

What is the Bankruptcy Automatic Stay?

j0280272The Automatic Stay is an Order from the Federal Bankruptcy Court requiring that all debt collection actions against a person or business that has filed for bankruptcy protection be suspended or terminated as of the date of filing.  The court ordered stay is entered automatically in all bankruptcy cases unless some limited statutory exceptions apply.  The automatic stay is a type of injunction or formal command by the court that prohibits any act intended to collect a debt or recover a claim against the debtor that arose before the bankruptcy case was filed.

By |Oct 17, 2009|Categories: Bankruptcy|Tags: , , , , |

Should I Give My Stuff Away Before Bankruptcy?

Giving grandma the car, the kids the keys to the bungalow in Hawaii or putting Uncle Joe on title to the stock certificate is never a good idea for someone considering filing for bankruptcy.  While giving stuff to family members may seem innocent enough, it is something that can come back to haunt a debtor.  This is because when an individual files for bankruptcy protection, he or she automatically subjects their past and present financial lives to close inspection.  The trustee administering the bankruptcy case typically has a window of time, up to six years in some states, in which to look back and review each transaction entered in to by the debtor.

By |Oct 14, 2009|Categories: Bankruptcy|Tags: , , |

They Took My Car, Can I Get It Back?

Hooked Up and Gone!Having a car repossessed can be a traumatic experience for anyone.  Feeling powerless in this situation is understandable.   However, there may be no need to despair!  Most Chapter 13 debtors can get their car back once they file for bankruptcy.  When a Chapter 13 bankruptcy petition is filed, an estate is created of the debtor’s property.  The estate may be comprised of property that is subject to a creditor’s interest.  A Chapter 13 filing grants debtors an overriding interest in estate property that trumps even a creditor’s interest in the property. 

By |Oct 13, 2009|Categories: Bankruptcy|Tags: , , , |

Am I Eligible For Chapter 7?

A debt discharge is the goal of consumer debtors when they file bankruptcy.  In Chapter 7, a discharge may not be available to everyone.  To ensure that potential filers were not abusing the system, Congress created a Mean’s Test that debtors must “pass” in order to invoke Chapter 7 bankruptcy relief.  When computing the Mean’s Test formula, there are several steps to determine whether a presumption of abuse arises.  The first step is to compare the debtor’s annual income to the median income of the state in which they reside.  The US Trustee website keeps track of government figures in this area.  The applicable state median income will go up or down depending on the size of the debtor’s family. 

By |Oct 11, 2009|Categories: Bankruptcy|Tags: , , , |