Information about bankruptcy, the process, and some of the basics one should to be aware of
In bankruptcy, do inheritances go to the debts, or can the debtor keep them? Does timing matter? What about Chapter 7 vs 13? What happens when someone in a Chapter 13 bankruptcy receives an inheritance after confirmation?
It all depends on the chapter, and when the debtor got the interest. Not the money interest, but the property interest.
Let’s break it down.
How often can you file bankruptcy? How many years do you have to wait between filing bankruptcy cases? Is there a limit? It’s not straightforward, and it depends on a couple of factors. Here we take a look at how often you can file bankruptcy, and if you have to wait before filing again.
And what makes this different from all the other “how often can you file bankruptcy” websites is that we’ll include cites to the Bankruptcy Code so you can go check them out for yourself.
Let’s get started.
Continue reading “Definitive Guide on How Often You Can Do Bankruptcy & Years to Wait”
The maximum California homestead exemption now protects over $600,000 of home equity. However, there are conditions for a debtor to protect this amount in a bankruptcy. One of these is that the homeowner must have acquired the interest over 1,215 days ago. Does a refinance or transfer to a will, trust, or LLC restart this crucial timer? Let’s take a look.
Continue reading “Can a Home Transfer to a Trust in 1215 days Blow the Homestead?”
Unvested stock options aren’t very common, but if someone gets compensated with contingent stocks, they can be worth a lot of money. Keeping the unvested stock options in a Chapter 7 bankruptcy liquidation, then, becomes critical.
The first place to start is determining whether stocks or stock options are property of the estate. Looking at 11 USC 541(a)(1), we see that “Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.”
Continue reading “Keeping Stock Options in Bankruptcy Depends on This Key Factor”
It’s not uncommon for a debtor in Chapter 13 bankruptcy to need to convert to Chapter 7 if debtor has a job loss or health problems. In a rising real estate market, homes can appreciate between confirmation and conversion. To whom does the appreciation in equity belong? This is where debtors and Chapter 7 trustees fight fiercely over the home and its new equity.
Continue reading “9th Cir: Here’s who gets Asset Appreciation in Converted Bankruptcy”
In Pancic v Lokan (In re Lokan), BAP No. OR-22-1249-CLB, Bk. No. 6:20-bk-62593-TMR (9th Cir. BAP 6/14/2023)(unpublished opinion), the Bankruptcy Appellate Panel for the Ninth Circuit (“BAP”) held that the chapter 13 debtors converted their case to Chapter 7 in good faith and therefore a post-petition inheritance was not property of the chapter 7 estate.
Stephen and Brenda Lokan filed a Chapter 13 bankruptcy in Oregon on November 23, 2020 with unsecured claims of approximately $100,000. Their plan was confirmed with plan payments of $150 per month giving unsecured creditors about 10% of their claims.
Does having primarily nonconsumer debt give someone a shortcut to Chapter 7 discharge? Generally, Chapter 7 is for people who can’t afford to repay debt. There’s a means test that makes someone eligible for Chapter 7. However, there appears to be a loophole that allows someone with primarily nonconsumer debt to skip the means test. Does that shortcut mean high-income debtors with primarily non-consumer debt are on easy street to Chapter 7 discharge?
Debt can be categorized as either consumer or nonconsumer. The big difference is if the debt is nonconsumer, you can skip the means test, and squeeze into Chapter 7 bankruptcy.
Continue reading “Nonconsumer Debt + No Means Test = Chap 7 Discharge? A Deep Dive”
In bankruptcy, debt is discharged unless there’s an exception that makes it nondischargeable. That’s the rule: all unsecured debt is eliminated in bankruptcy unless the exception is in Section 523 of the Bankruptcy Code. What kind of things are listed there? You can guess: recent taxes, most student loans, and so on. Here’s a look at the the bankruptcy discharge exceptions of 11 USC 523.
The rule is all unsecured debt goes away in bankruptcy, and 11 USC 523(a) is the list of exceptions to the rule. In some cases, there are exceptions to the exceptions. That is, the list below is not absolute; sometimes debts in 523a can be discharged in bankruptcy.
Before launching into the long list, Section 523(a) of the Bankruptcy Code says:
A discharge under section 727, 1141, 1192 [1] 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt:
That’s the preamble. It basically says that a discharge in Chapter 7 bankruptcy, Chapter 13 bankruptcy, Chapter 11 or Chapter 12 bankruptcy doesn’t eliminate the following debts.
Continue reading “Bankruptcy Discharge Exceptions of 523: Explained in Simple Terms”
In a bankruptcy case where you already got the order of discharge and has been closed, can you go back and reopen the case to amend the exemptions to protect an asset? The answer is (say it with me): it depends.
If you practice bankruptcy long enough, you know the situation. Debtor files bankruptcy, and somehow forgets that they had a cause of action and (potential) lawsuit against someone, and doesn’t disclose the potential asset.
Years later, defendant finds out about the bankruptcy, considers judicial estoppel, and for good measure, notifies the old bankruptcy trustee about the asset in the closed bankruptcy case.
Debtor then reopens the bankruptcy case, and amends the schedule of assets and exemptions and all is forgiven. No harm, no foul.
Of course, this can also happen when you want to avoid the lien of a home with no equity at the time of an old case, using Section 522(f). This would lead to the need to reopen and amend Schedule C with a de minimis amount to show that the lien is impairing an exemption. In re Higgins, 201 BR 965 (9th Cir BAP 1996)
We start with one potential issue:Â Rule 1009(a) of the Federal Rules of Bankruptcy Procedures says when a case can be amended. “A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.”
Continue reading “Amend Exemption in Reopened Bankruptcy? The Three Approaches”
If married, can you double or stack a homestead exemption? A homestead exemption helps protect your residence when you file bankruptcy. But if a married couple files jointly, does each get an exemption? Does the homestead exemption double for each spouse? Maybe. That would allow the debtors to double or stack the homestead exemption and protect more equity.
Courts have struggled with this. On the one hand, the law means what the law says. If the statute says the limit is a number, that’s the number. On the other hand, why should a person not get same the amount as if they were single? Put differently, if the exemption amount is the same if someone single or married, a married person is only getting half the protection.
Continue reading “Can Married Couples Double Stack Homestead Exemptions: Explained”