How Credit Card Debt is Addressed in a Personal Bankruptcy Case
How credit card debt is handled in a bankruptcy case depends upon numerous factors. First, the kind of bankruptcy case plays a large part in determining how credit card debt will be treated in bankruptcy. Generally, individual consumers file bankruptcy petitions under chapter 7 or chapter 13 of the United States Bankruptcy Code. Second, whether a debtor has non-exempt assets available for distribution to creditors may also play a part in determining whether the holders of credit card claims are paid anything. Third, the type of charges made to the card and the timing of those charges can affect whether credit card debt is dischargeable.
Credit Card Debt in a Chapter 7 Bankruptcy Case
Chapter 7 bankruptcy is a form of liquidation. In the case of a business, liquidation would mean that the debtor’s assets would be sold and distributed to its creditors. The same is true of consumer debtors except that consumers can apply exemptions to protect certain of their property from the reach of their creditors. Depending on the exemption law applicable to a debtor (which varies from state to state), a debtor may be able to elect from the exemption scheme set forth in the Bankruptcy Code or to use state exemptions. While most facets of bankruptcy law are controlled by Federal law, Congress left it to the states to determine whether debtors could choose between state and Federal exemptions. Congress also gave states the power to compel debtors to accept either the state or Federal exemption scheme, leaving them without a choice. In any event, all states allow debtors to exempt some of their property and, for many debtors, there is no non-exempt property available for distribution to unsecured creditors. When this happens, credit card companies are not paid any distribution.
Credit Card Debt in a Chapter 13 Bankruptcy Case
A debtor in a chapter 13 bankruptcy case attempts to repay its creditors some or all of what they are owed over a period of 3 to 5 years. Generally, debtors pay their mortgage and car payments and certain other obligations through a chapter 13 plan. Debtors report their monthly expenses and pay their disposable income into their chapter 13 plans. If a debtor’s disposable income is more than enough to pay secured and priority claims, the holders of unsecured claims, including credit card claims, may receive some distribution. In addition to the requirement that debtors pay their disposable income into their chapter 13 plans, such debtors must also satisfy the liquidation analysis test. Said differently, a debtor must demonstrate that, after application of exemptions and giving affect to certain costs, that creditors would fare better under its chapter 13 plan than if the debtor’s property were liquidated in a case under chapter 7. Often, that means increased plan contributions which could result in a distribution to the holders of credit card claims.
Certain Types of Credit Card Charges Give Rise to Dischargeability Issues
Bankruptcy lawyers are prohibited from advising their clients to incur credit card debt in advance of filing a bankruptcy case. Additionally, charges for luxury goods incurred within the 90-day period preceding the filing of the bankruptcy case are presumptively non-dischargeable if they exceed $650 to a single creditor. Likewise, cash advances of more than $925 from any creditor within the 70-day period preceding the filing of a bankruptcy case are also presumed non-dischargeable.
To determine whether your credit card debt would be dischargeable in bankruptcy case, contact an experienced bankruptcy lawyer for a free initial consultation.
The Hunt for the Best Bankruptcy Lawyer in Pittsburgh.
Looking for the best bankruptcy lawyer in Pittsburgh to handle your business bankruptcy or personal bankruptcy case? It’s important for you to understand what you are really looking for in a bankruptcy attorney in order to find the bankruptcy lawyer that best suits your needs. Certainly you will need an experienced bankruptcy lawyer. Also, you will want a bankruptcy lawyer that you get along with and trust.
The Importance of Finding the Best Bankruptcy Lawyer for Your Particular Case.
While every bankruptcy case is different, certain issues tend to recur across similar cases. One of the best qualities a bankruptcy lawyer can have is experience with cases similar to your bankruptcy case. For instance, a lawyer that can anticipate the response of creditors to a bankruptcy filing can put you in the best position to prepare for and respond to that reaction. A lawyer who understands case law developments on the requirements of a good faith bankruptcy filing and the eligibility of a debtor to file a bankruptcy case will be best prepared to respond to the motion of an adverse party to dismiss your bankruptcy case.
The Best Method for Evaluating a Bankruptcy Lawyer is a Free Initial Consultation.
A free consultation with a Pittsburgh bankruptcy lawyer puts you in the best position to understand whether that bankruptcy attorney is a good fit for you and your bankruptcy case. If your case is complex, you should expect to be spending a significant amount of time with your bankruptcy lawyer–on the telephone, in person, at a meeting of creditors and in bankruptcy court. For that reason, you are best served by a lawyer with whom you can comfortably interact on a personal level.
A free initial consultation also gives you the opportunity to see a bankruptcy lawyer in action. You will pose questions to your bankruptcy lawyer and you should be able to gauge that bankruptcy attorney’s poise and competence from your interactions with him–and all without spending a dime or committing to any engagement at all. If you are not comfortable with a bankruptcy lawyer after a free consultation, you should move on to find a different attorney. Even the most credentialed bankruptcy attorneys are not right for every client.
Ask About Your Pittsburgh Bankruptcy Attorney’s Experience.
Most Pittsburgh bankruptcy lawyers are glad to talk about their prior experience. Beware however, that is often a topic upon which lawyers can expound for hours. Still, it’s worth asking a few question about a Pittsburgh bankruptcy lawyer’s experience. Find out about a few representative cases. If you’re interested in seeing a lawyer’s work product in prior cases, they will often be willing to show you that as well in the form of filed documents that are already public record (Pittsburgh bankruptcy lawyers are very sensitive to client confidentiality and will be very reluctant to disclose non-public information regarding their clients).
Call for a free initial consultation with a Pittsburgh Bankruptcy Lawyer today.
What is a bankruptcy reaffirmation agreement?
A reaffirmation agreement is an agreement between a debtor in a bankruptcy case and a creditor of that debtor. A reaffirmation agreement has the affect of binding the debtor to the reaffirmed obligations even after the entry of a bankruptcy discharge. The bankruptcy information sheet offers an explanation for a reaffirmation agreement. If a debtor does not enter into a reaffirmation agreement and the underlying debt is discharged in that debtor’s bankruptcy case, the creditor will have no recourse to the debtor personally if she later defaults on her obligation. In the case of an automobile, a lender will still have its lien and be entitled to exercise its legal right to repossess the car but it will not have a right to demand further payments from the debtor.
Should I Sign a Reaffirmation Agreement?
Debtors often ask, should I sign a reaffirmation agreement? The answer is, it depends.
In the case of a vehicle where the debtor is current on payments prior to the filing of a chapter 7 case, it often makes sense to simply retain the vehicle and continue to pay. In other cases, the secured creditor may offer more favorable terms to entice the debtor into reaffirming the obligation. A reduction in interest or principal might be sufficient incentive to enter into a reaffirmation agreement.
Will the Bankruptcy Court Approve a Reaffirmation Agreement?
Courts are required to review reaffirmation agreements when the presumption of undue hardship arises. Despite the presence of the presumption of undue hardship, a bankruptcy court might still enter the reaffirmation order if a debtor can demonstrate good cause to enter the order. For example, if a debtor has a good deal of equity in the collateral, if friends or family have committed to making contributions to the debtor for the payments, if the creditor has offered more favorable terms or if the remaining payments are few, a court might enter a order approving a reaffirmation agreement notwithstanding the presence of the presumption of undue hardship.
Debtors considering whether to reaffirm an obligation should consider the matter carefully after a thorough discussion of the matter with a Pittsburgh Bankruptcy Lawyer.
We are a debt relief agency. We help people file for relief under the United States Bankruptcy Code.
Pittsburgh consumers considering bankruptcy often wonder whether they can save money by filing a bankruptcy case without a lawyer. While people can represent themselves in any legal proceeding, it’s almost always false economy to “save money” by filing your bankruptcy case without an attorney. If your financial affairs are very simple and you are a detail-oriented person with excellent records, a do-it-yourself kit could work.
Even small mistakes can have big consequences in a bankruptcy case. Fail to take either of the required debt counseling courses within the timeframes required by the United States Bankruptcy Code and your case could be dismissed or you could be denied a bankruptcy discharge. If you fail to properly notify your creditors of your bankruptcy case, you could find that debts you believed would be discharged, survive your bankruptcy case. If you’re attempting to save your house from foreclosure or are self employed, the process takes on new layers of complexity such that many practicing bankruptcy lawyers will refer you to another lawyer to handle the matter.
If you’re considering filing a bankruptcy case, talk to an experienced Pittsburgh bankruptcy attorney. With a free consultation and no obligation, there’s no reason not to get professional advice.
-Robleto Law, PLLC
239 Fourth Ave. #1619
Pittsburgh, PA 15222
Pittsburgh bankruptcy attorneys have witnessed shocking stories of credit card debt. Many people are still paying finance charges on the tacos they bought a decade ago. Others find themselves struggling to pay the minimum payments on their accounts from month to month and never see their balances decrease. Often, people with significant credit card debt find it difficult to accomplish important financial goals. They are unable to adequately prepare for retirement. Many are never able to purchase their own homes.
But there is good news! Under the United States Bankruptcy Code, most individual consumers can have their credit card debt discharged. Chapter 7 bankruptcy provides a means through which consumers can fully and fairly report their assets and liabilities, income and expenses, which a bankruptcy trustee will review. Debtors must also comply with the debtor education requirements and attend a meeting of creditors under section 341 of the United States Bankruptcy Code.
In Pittsburgh, the United States Bankruptcy Court for the Western District of Pennsylvania has adopted local rules and forms. An experienced Pittsburgh bankruptcy lawyer can guide you through the process. Reach out to a lawyer today for a free initial consultation.
The Chapter 7 Bankruptcy process in Pittsburgh for most individuals is simple. It begins with a discussion with an experienced bankruptcy lawyer. After that meeting, you will provide certain documents and information to your lawyer to assist in the drafting of your bankruptcy schedules, statement of financial affairs and related documents. You must carefully those documents to ensure that they are complete and accurate and, when you are satisfied that they are, you will sign them. Prior to filing, you must take a brief credit counseling course with an approved provider and obtain a certificate of credit counseling.
After your case is filed, you must attend a first meeting of creditors. At that meeting, a Chapter 7 Trustee will ask you a series of questions regarding your schedules and financial matters. Additionally, creditors may appear and ask you questions. In many cases, no creditors appear. Within 60 days from the first date set for the meeting of creditors, you must take a second, debtor education course. If no issues arise, that will be your last order of business and you will await your discharge and you will get your fresh start without ever setting foot inside a Bankruptcy Court.