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Bankruptcy Laws and Rules

What is bankruptcy law?

Bankruptcy laws help people that file for bankruptcy get a new start on his/her financial situation. By a person filing bankruptcy, he/she liquidates his/her assets to pay the debts that he/she has or they create a payment plan. Bankruptcy laws also protect a person’s business and provide the business with an organized way of giving out money to the business creditors by reorganizing or liquidating the business possessions. There are three main chapters of bankruptcy, chapter 7, chapter 11, and chapter 13. Federal courts have the exclusive jurisdiction over bankruptcy cases which means that a person cannot file for bankruptcy on a state level, he/she would have to file on a federal level.

If someone files for bankruptcy and continues to get calls from the bank regarding an old loan that was discharged, would this be violating the automatic stay of the bankruptcy?

If the debt was discharged under the bankruptcy laws, then the bank would be in violation of the discharge order and the bank would have needed to foreclose on the property and not continue to follow the debt. If the bank is violating the discharge order then the person would need to find a bankruptcy attorney and file against the bank for the violation, which would need to be filed in the federal court, in this case it is often believed that this process is very complicated for an individual do on their own, that is way an attorney is advised. This process is not simple and can be very lengthy as well.

In the state of Colorado, if two spouses file for bankruptcy and in the event that one spouse passes away before the completion of the bankruptcy, can the court proceed to take the life insurance money to use to pay the creditors to get the accounts written off?

In the state of Colorado, if the spouse that died did in fact have life insurance, but it was a group plan, then it would be allowed from the bankruptcy proceeding and could not be taken by the court to pay the creditors. If the policy was not a group policy, the court may be able to take it and use the money to pay off the creditors, as long as the policy does not state that the money cannot be used to pay creditors. Once a person starts a bankruptcy, the proceeding cannot not be canceled and will go on as if the person were still alive and all debts would not be erased upon the person’s death.

If a person files chapter 13 bankruptcy, makes all his/her payments on time and completes all the requirements, and then finds out that their trustee failed to pay one of the creditors, what can the person do if the lawyer wants the fees to be refunded?

The attorney is going to have to work a little harder for the person. This person would need to go ahead and accept the refund of the attorney fees, and then the attorney would need to negotiate a reaffirmation with the creditor to make payments on the balance that was not paid after the bankruptcy is over. The attorney would need to also modify the chapter 13 plan to have the creditor paid outside of the bankruptcy plan once the bankruptcy is discharged.

If a person that filed for bankruptcy pays the trustee all but $900 of the money owed to a creditor, can the trustee still sell the property for the original amount of money owed?

The person would need to contact the trustee and see if he/she would accept the $900 to be paid in full and then completing the agreed payment plan to recover all of the property. If there was a written agreement in the payment plan, then the person could take the trustee to court and have the courts force the trustee to stick with the agreed statements that are included on payment plan. If the trustee sells the property, then they would be allowed to keep what is owed to them, but would have to give the amount of what has been paid by the person back to the person.

When a person files for bankruptcy, he/she may not understand the laws and proceedings that go along with the bankruptcy. He/she may have questions regarding how to proceed, what a creditor/trustee can do, or even a simple question as to where to begin. When these questions arise, this person would then need to consult an Expert online to receive these answers to any bankruptcy law questions.
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Recent Bankruptcy Rules Questions

  • Background: I was involved in a partnership in 1995-1997.

    Background: I was involved in a partnership in 1995-1997. My then partner retired abruptly. The partnership agreement stated that he was to receive certain payments after he retired. I could not meet these payments and I eventually closed the business. My partner filed a civil lawsuit against me personally in 2005 and obtained a judgment against me for failing to pay him.

    I then formed a corporation in 2005 and opened another business buying and selling real estate. My former partner then filed a new civil action against me personally and the corporation in an effort to collect money from the judgment. This case alleged that I formed the corporation to purposely keep or hide assets from his collection efforts.

    While this new case was pending, I filed for chap 7 bankruptcy personally in 2008. I listed my former partner as a creditor. The bankruptcy stayed the pending civil case. My former partner did not file an adversary case in the bankruptcy court. However, he did obtain a relief from stay to continue the civil case.

    I received my discharge in 2012. I closed my corporation and moved from Ohio to Georgia. The civil case continued and I did not contest it as my corporation was closed and I moved from the area. Since I did not contest, the Court granted judgment in his favor in 2013. The civil court entered a judgment in his favor against me personally and against my closed corporation.

    The reason I did not contest the case was that my closed corporation had no more assets and I believed that the potential debt was discharged as it pertained to me.

    Question: Is the judgment against me personally valid? I don't care about the judgment against the corporation. Can I file a motion to vacate the judgment against me personally? Is my former partner and his attorney guilty of violating any bankruptcy rules for proceeding with a judgment against me personally that was discharged?

    Thanks in advance.
  • What are the allowed objections during 2004 exam.

    What are the allowed objections during 2004 exam.
  • 1) If 2 parties are responsible for a debt, and only 1 of

    1) If 2 parties are responsible for a debt, and only 1 of them files CHAPTER 7 bankruptcy, may a creditor continue collection of the debt from the non-filing party while the filing party is still in bankruptcy? Or does the creditor have to wait until the filing party is discharged in bankruptcy to attempt collection from the non-filing party? THIS QUESTION PERTAINS TO DEBTORS IN A NON-COMMUNITY BANKRUPTCY STATE.

    2) Are there any specific bankruptcy rules/laws that address this issue?
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