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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Hi. My name is Gilberto. I reading the Chapter 7 article &

Customer Question

Hi. My name isXXXXX reading the Chapter 7 article & the rules that aply in the Distric of Puerto Rico I see the use of the word median income, but it does not say if it's gross or net.

Dose the proportion of debt to income add weight to the equation or these factors cut & clear are non-existent.
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.

It's net income, but the net is determined by the bankruptcy "means test," which does not equate to any other "net income" measurement that you would typically consider.

 

Various income and expenses matter. Debt, by itself, doesn't matter, the debt servicing costs/payments is what matters.

 

There is really only one way to determine whether or not you can qualify, and that is to sit down and do the calculations. For a free "means test" calculator, see this link.

 

Hope this helps.

Customer: replied 4 years ago.
But if you have payments of $5,000 dollars to service that unsecured debt & your income a month ago could suport that to the penny; no less, no more, & now with the sam debt the income to service it is $1,250, would that help us when declaring Chapter 7?
Expert:  socrateaser replied 4 years ago.

Your income is averaged over the six months prior to filing the bankruptcy petition. So, if your income has fallen off of a cliff, for example because you have lost your job, then waiting a few months to file, improves your means test advantage, and you don't have to ask the court to use its equitable powers to ignore the appearance of "phantom" income that bears no relationship to reality.

 

Hope this helps.

Customer: replied 4 years ago.

But doe this does not give creditors more time to build their case against you. I understood the sooner the better.

 

Also, is it advisable to contact them before you get too behind in payments to avoid:

 

interest build up

shows good faith

eases up negotiations latter

 

Should I negotiate payment terms directly or with legal help? By he way you have clear a lot of doubts so far & will not continue bugging asking questions.

Expert:  socrateaser replied 4 years ago.

A bankruptcy creditor's case is generally no better today, than it will be six months from today -- because unless the creditor has special rights (e.g. IRS, child support, alimony, property taxes, sales tax, etc.), then the creditor has no case at all, from the instant that you file the bankruptcy petition.

 

I think perhaps you don't understand that filing bankruptcy totally and completely wipes out your debts, except for collateral.

 

Examples:

 

Credit card: wiped out completely -- principal, interest, penalties, everything.

Auto loan: wiped out if you give up the car to the creditor

House: wiped out if you give up the house to the creditor.

Income taxes: wiped out if more than 3 years old.

 

The list goes on, but you should get the idea.

 

Customer: replied 4 years ago.

Can you keep paying the house & omit paying non-secured debts? If your car is paid for, can you keep it. In general are there things you can keep or all that is paid for is taken away?

 

What if one from the married couple has received an inheritance recently?; what happens & how does it differ from communal equity?, Are they exposed to the same rules & perils

Expert:  socrateaser replied 4 years ago.

Can you keep paying the house & omit paying non-secured debts?

 

A: Yes.

 

If your car is paid for, can you keep it. In general are there things you can keep or all that is paid for is taken away?

 

A: If the car is worth $6,000 or less, you can keep it.

 

What if one from the married couple has received an inheritance recently?

 

A: An inheritance received can be used to pay your creditors.

 

what happens & how does it differ from communal equity?

 

A: I cannot address this issue, because I have no expertise in Puerto Rico domestic relations property law.

 

Are they exposed to the same rules & perils?

 

A: Once again, I cannot address this issue, because I have no expertise in Puerto Rico domestic relations property law.

 

Hope this helps.

Customer: replied 4 years ago.

You have helped a lot to keep me glued to the screen. One more; Have you heard of settlements where time lapses are given to sell properties or other assets are used to pay for non-secured debts?

 

How can a creditor in the USA mainland access a property in Puerto Rico, not that I intend to take advantage, but how can they do it?

Expert:  socrateaser replied 4 years ago.

The bankruptcy trustee has discretion to act in the best interests of the creditors, which means that the trustee can negotiate and settle issues. However, this is offset by the requirement that the bankruptcy estate must be liquidated in Chapter 7, in a reasonably prompt manner. So, the answer is yes, settlements are possible, but I wouldn't count on it.

 

I really must move on now. Best of luck to you.

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socrateaser
socrateaser
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Attorney and Real Estate Broker -- Retired (mostly)