Your Bankruptcy Can Be Successful If You Are Prepared

Video Transcribed:  Oklahoma City Bankruptcy Attorney Edward Kelley 888 Debt Line, answering your bankruptcy questions. We’re finishing up our series on Special Powers of Bankruptcy. These are fairly amazing things you can do in a bankruptcy you might not know about. This is the last, so we’re just going to review in sequential order of the logical sequence.

So, first the automatic stay, either a 7 or a 13 or really any bankruptcy. Unless you filed one or more than one additional bankruptcy in the last year, you’re going to get the automatic stay, so that prevents any creditor from taking any action. The bankruptcy court now has sole power to do anything.

That continues throughout the bankruptcy unless a creditor petitions the court with an application to lift that stay, which can happen if you’re behind on payments, you’re going to surrender something. You may or may not agree with that, and you’ll have an opportunity through your attorney to object to that lifting of the stay.

But if you’ve got a garnishment, that’s gone, that’s got to stop. You got to make sure your attorney gets that notification to filing to your payroll, but they can’t take out a thing after that automatic stay goes into effect. Foreclosure, any state court action, PI case, dead in its tracks. Only the bankruptcy court has jurisdiction at that point over your debts and/or potential debts, so that’s a big power.

We talked about cram down. Talked about, for example, if your car is worth 2000 but you owe 10,000. This is primarily in a 13. You can bifurcate that debt into secured and unsecured based on the value of the car, meaning your secure debt now is 2000 because that’s all the car’s worth, i.e., that’s all the collateral is worth.

The remaining 8,000 becomes an unsecured debt. And as you recall, in a Chapter 13, you’re only going to pay your unsecured a certain percentage down to zero. So, if you want to keep the car, you’ll have to pay that 2000 in full in your plan, but the rest will be treated like any other unsecured debt. Even if you don’t pay any of it, you keep the car. Big power.

Chapter 7. The Chapter 7 version of that is a redemption, meaning in that same scenario, if you want to keep that car, you can pay 2000 to the trustee. Obviously, if you’re in a 7, chances are you don’t have that. But if somebody helps you as a gift and pays for it, you can keep that car, discharge all the rest of the debt. Another big power.

And I believe the last thing we talked about was taxes. May not be aware, if taxes were filed more than three years ago, they are dischargeable, federal and state, in bankruptcy. So this can be a huge tool in a 7 to just leave you with the debt that remains.

And some people, you may wait to file if you’re a month or two away from getting a whole year of tax liability off until such time as it is dischargeable. That doesn’t apply to child support or fines or student loans or any of the other special debts, but does apply to taxes.

So bear these things in mind. There’s a lot of things you can do. Make sure your lawyer talks it over with you. If you hire me, I definitely will. In any case, this is Special Powers of Bankruptcy. As always, you can reach me at 1888 Debt-Line or edward@wirthlawoffice.com, or on our Facebook group at Oklahomans for Debt Relief. So we’ll see you next week.