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Bankruptcies are on the rise in February of 2010

The new law Congress passed to slow down bankruptcy filings is not working. All the new law does is impose unnecessary cost burdens on you. 111,693 bankruptcy cases were filed in the US in February of 2010 – that is 9% increase from January. Chapter 7 filings are up and Chapter 13 filings are down. That means less people are trying to save their houses from foreclosure and are deciding to walk away. Do you need help or have questions about your financial situation? Call me or contact me through this website. Thank you for visiting. Attorney Mike Shovan

Who is the bankruptcy trustee and what do they do?

In every case under Chapter 7 or Chapter 13, a trustee is appointed to supervise your case. Typically most Chapter 7 cases do not contain any non-exempt property. In other words, most Chapter 7 individuals, couples, and businesses do not have assets which exceed the exemption allowances – these cases are referred to as “no asset” cases. In these cases, the trustee evaluates your schedules, statements, and exemption claims and makes sure that you carry out your stated intentions with respect to loans that you want to reaffirm.

Doesn’t the new law prevent me from filing bankruptcy?

No. You can still file bankruptcy under the new law. The new law imposes some additional requirements including credit counseling and a financial management course. The new law also requires you to complete a means test if you make more than the median income. If you make too much money, you may have to file a Chapter 13 rather than a Chapter 7.

What is the difference between a Chapter 7 and a Chapter 13?

A Chapter 7 – or straight bankruptcy – is a process where all of unsecured debt (credit cards and medical bills) are discharged. In a Chapter 7, you get to exempt or keep equity – your house, your car, your personal property and up to $1,000,000.00 in your 401k or other retirement account. A Chapter 13 – wage earner’s reorganization – consists of a plan where you pay back your debt over the course of 3 to 5 years. Your plan is carried out under court supervision (the trustee) and your property is protected from your creditors. At the end of the case you receive a discharge from personal liabilities on most debts, other than those that you have reaffirmed – like your home mortgage.

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