If the defendant is not financially solid, the settling plaintiff should not just accept an unsecured obligation to pay, but rather should take the best payment protection possible to prevent the loss of its settlement expectancy in the defendant's bankruptcy.
What happens to a settlement involved in bankruptcy?
A settlement involving payment inherently involves the risk that the payment received by the plaintiff will be voidable as a preference if the defendant files bankruptcy within 90 days after the payment. 11 U.S.C. @ 547 (b).
When do settlement payments become voidable preferences in bankruptcy?
Again, the most important thing to recognize is that settlement payments most likely will become voidable preferences if the settling defendant files bankruptcy within 90 days after the payment. The simplest protection against this risk is for the plaintiff to take the payment as soon as possible, to start the 90-day preference period running.
What happens when you file Chapter 7 bankruptcy?
When an individual files a bankruptcy, the most basic reason is to eliminate debts by receiving a discharge. In a Chapter 7, the individual eliminates unsecured debts (such as medical and credit card debt) and keeps property that is exempt.
What debts should I avoid filing bankruptcy?
Back taxes, student loans, child support, alimony/spousal support, student loans (other than the most extreme circumstances) and a few other debts cannot be gotten rid of through filling chapter 7 or . Therefore if you are looking to get rid of these kinds of debts, you should avoid bankruptcy.
How can I protect my settlement money?
Keep Your Settlement Separate Rather than depositing the settlement check directly into your standard bank account, keep the settlement money in its own separate account. This can help you keep it safe from creditors that may try to garnish your wages by taking the money you owe directly out of your bank account.
How can I file bankruptcy without losing everything?
A bankruptcy filing under Chapter 7 eliminates only your obligation to pay the debt. It does not wipe out the debt for anyone else. Chapter 13 is the only type of bankruptcy that can protect a co-signer, but that only works because you end up paying the debt through your repayment plan.
Can I file bankruptcy and keep my money?
You can keep cash in Chapter 7 bankruptcy if it qualifies as an exempt asset under bankruptcy exemption laws. You don't have to give up everything when you file for bankruptcy. You can keep any property that qualifies as an exempt asset—including cash.
What debt doesn't go away with bankruptcy?
Child support and alimony obligations survive bankruptcy, so you'll continue to owe these debts in full, just as if you had never filed for bankruptcy. And if you use Chapter 13, you'll have to pay these debts in full through your plan.
What assets can be taken in bankruptcy?
There are three types of assets in bankruptcy:Personal property. This is what's considered material goods; examples include clothing, furniture, artwork and vehicles.Real property. Real property includes land and improvements or buildings tied to land, such as a house or barn.Intangible property.
What do you lose when you file Chapter 7?
A Chapter 7 bankruptcy will generally discharge your unsecured debts, such as credit card debt, medical bills and unsecured personal loans. The court will discharge these debts at the end of the process, generally about four to six months after you start.
Should I close my bank account before filing bankruptcy?
You'll want to open checking and savings accounts at a bank that doesn't service any of your debt and use the new account for banking purposes before filing bankruptcy. Again, you don't need to close other accounts—leave them open and report all accounts when filling out your bankruptcy paperwork.
Can a creditor come after me after bankruptcy?
Debt collectors cannot try to collect on debts that were discharged in bankruptcy. Also, if you file for bankruptcy, debt collectors are not allowed to continue collection activities while the bankruptcy case is pending in court.
How much debt should you have to file bankruptcy?
There is no minimum debt to file bankruptcy, so the amount does not matter. Examples of unsecured debts include credit card debt, cash advance (payday) loans, and medical bills. Secured debts: If you are behind on a house or car payment, this may be a very good time to file for bankruptcy.
Do you lose everything if you declare bankruptcy?
There is a misconception that, upon filing for bankruptcy protection from one's creditors, the court will take your home, car, and furniture. The truth is that, in the vast majority of bankruptcy cases filed by individuals, absolutely no property is taken or sold by the court.
Will I lose everything if I file Chapter 7?
Here's how it works. After filing for Chapter 7, your property will go into a bankruptcy estate held by the Chapter 7 bankruptcy trustee appointed to your case. The trustee will sell property in the estate for the benefit of creditors. However, you don't lose everything you own.
How much do you have to be in debt to file Chapter 7?
How much debt do I need to file for bankruptcy? There is no minimum or maximum amount of debt for Chapter 7 bankruptcy.
Is it better to file a Chapter 7 or 13?
Most people prefer Chapter 7 bankruptcy because, unlike Chapter 13 bankruptcy, it doesn't require you to repay a portion of your debt to creditors. In Chapter 13 bankruptcy, you must pay all of your disposable income—the amount remaining after allowed monthly expenses—to your creditors for three to five years.
How to avoid bankruptcy?
9 Useful tips to avoid bankruptcy 1 Analyze your income, expenses, savings, debts, investments, etc. to make an accurate estimate of your financial situation. 2 Follow a proper budget to know the areas where you can save money and avoid getting entangled with debt problems. 3 Reduce your spending and practice a frugal lifestyle to save more every month. 4 Increase your income and use the amount to repay your existing debts. 5 Get short-term help from your family and friends who can afford to lend you money for a short-term. 6 Negotiate with your creditors to make a realistic deal; request them to reduce a portion of the debt amount or give you more time to repay the debt. 7 Sell assets you don’t need and use sale proceedings to repay debt. You'll need to sell your non-exempt properties when you'll file Chapter 7 bankruptcy. You can avoid filing bankruptcy by just selling your assets and saving your credit score. 8 Take out a debit card instead of a credit card. This is because there is less chance of incurring debts when you use a debit card. You can only spend up to the amount available on account. So, there is no possibility of overspending or becoming bankrupt. 9 Quit bad financial habits; gambling can make you bankrupt in a single day. So, exercise self-control and restrict all your impulses to hit the nearest casino.
How does bankruptcy affect your financial situation?
For instance, it can influence the status of your security clearance if you don't inform your employer about your bankruptcy and why you've filed for it, and can also limit future job opportunities depending on the field of work you are in.
What is bankruptcy?
Bankruptcy is a federal court process where you get the chance to eliminate or reorganize your debts through discharge (which can mean the sale of assets), or by following a repayment plan that will often last 5 years. Consumers typically file either Chapter 7 or Chapter 13 personal bankruptcy depending upon your financial situation.
Why do you need debt consolidation?
It makes sense to choose debt consolidation in order to avoid bankruptcy when you still have good credit and a dependable income. Debt management. This is where a credit counseling agency or a debt management firm helps you reduce your interest rates and penalties.
How long does bankruptcy stay on your credit report?
It may only remain on your credit report for 7 to 10 years, but you will find the question "Have you ever filed for bankruptcy" and "If so, when" on many types of financial forms throughout your adult life. Not all debts can be eliminated. It's a myth that bankruptcy can get rid of all of your debts.
How long does it take to get approved for a loan after bankruptcy?
Getting approval for new loans/credit is tough after you've filed bankruptcy. It'll take anywhere from 2 to 5 years for you to qualify for a secured loan (such as mortgage). Unsecured loans are hard to qualify for if you file chapter 13 for the entire 3 to 5 year repayment plan. Not all retirement plans are protected.
How to make extra money without affecting your job?
Get a part-time job. Grab the opportunity to pursue your hobby and earn extra bucks without affecting your present job. If you have to look after your children, choose the work from options. You can also babysit along with looking after your own baby and earn extra dollars. Downsize your lifestyle cost.
Why debt settlement is better than bankruptcy
Because of the many disadvantages and pitfalls of bankruptcy, you may want to consider the next best thing – debt settlement.
How to stretch your finances to afford debt settlement
To be sure that you are doing the right thing, you may want to consider going through credit counseling to determine if your finances can really afford debt settlement. Anyway, bankruptcy will require you to go through this so it may be best to get a head start.
National Debt Relief
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How long does it take to pay off a Chapter 13 bankruptcy?
Because Chapter 13 bankruptcy is about restructuring your debt, you’ll be paying it off in three to five years. This means that although your creditors aren’t directly seizing your personal injury claim money, you’ll probably have to use some or all of it to pay off your debt on time.
What are the exemptions for Chapter 7 bankruptcy?
When you file for Chapter 7 bankruptcy in California, there are two sets of bankruptcy exemptions you can use. These are known as 703 and 704 exemptions, and each set is substantially different from the other.
What is Nguyen Law Group?
Nguyen Law Group can provide the legal support clients need when they wish to protect awards and settlements related to an injury they endured. We know that you need this money to afford your ongoing medical care and recovery, and losing it could adversely affect how you heal and move forward.
Is There Any Way to Protect My Personal Injury Settlement during Bankruptcy?
Obviously, lying or failing to disclose the existence of money from a paid or unpaid personal injury claim isn’t the right way to protect it. So, if you’re forced to disclose assets from a personal injury claim, is there any way to protect them? Maybe – and probably yes.
How does bankruptcy affect divorce?
Bankruptcy Can Affect a Divorce Settlement / Advantages, Disadvantages, and Misunderstandings of Bankruptcy. You can use a Chapter 13 plan to catch up on child support arrearage or spousal maintenance support (alimony) arrearage. If you have received a Chapter 7 bankruptcy discharge, you may still be obligated to relinquish to ...
What happens to your tax refund when you file bankruptcy?
JS: Because, when you file bankruptcy, the bankruptcy trustee takes control and possession of all of your assets until they are abandoned or are determined to be exempt. Certain portions of a tax refund may be exempt, but usually it is a non-exempt asset.
What assets can a trustee take?
Other similar types of assets a debtor might receive in the future, which the trustee could take, include an impending inheritance or the settlement from a pending personal injury case, if they stem from an event that happened prior to the bankruptcy petition date.
What is the role of a Chapter 7 trustee?
JS: One of the roles of a Chapter 7 trustee is to determine if you qualify for a Chapter bankruptcy. A second role is to determine if the debtor has any non-exempt assets that can be liquidated for the benefit of creditors.
What happens when you get discharged from Chapter 7?
So, when people receive their Chapter 7 discharge, they sometimes forget about their non-exempt assets, because they might not have received their tax refund at the time they filed their case, but they have accrued their rights to at least a portion of their tax refund. That portion is what becomes an asset.
How long do you have to file Chapter 13?
CH: Sometimes people must file Chapter 13 case because it has been less than eight (8) years since they filed a previous Chapter 7 case, which renders them ineligible to file another Chapter 7 until it has been more than eight (8) years since the date of filing the previous Chapter 7 case. In other words, if they desperately need debt relief during that eight-year time frame, they must file for relief under Chapter 13 of the U.S. Bankruptcy Code.
Can you file Chapter 13 bankruptcy?
CH: You can file a Chapter 13 anytime, but a debt will not receive a discharge unless the new case is filed more than four (4) years after the filing of the previous Chapter 13 case. Also, some debtors are rendered ineligible for a Chapter 7 case because they earn too much money to qualify for a Chapter 7 case because of something called the Means Test. In other words, the computer program we use determines that a debtor has the ability to pay back a significant portion of their debt; therefore, they are not allowed to discharge certain debts in their entirety under Chapter 7 of the U.S. Bankruptcy Code. As a result, they must file a Chapter 13 case and pay back as much of their debt as they can afford during a five-year plan.
What happens if you don't have a trust?
If you don’t have a trust, and your assets are out in the open, especially if held domestically. The courts carry a big stick in the U.S. So, you have a very real possibility that if you try to hide money domestically, the courts can seize most, if not all of it. Hide your money from a lawsuit and it can be taken.
What is the waiting period for a Nevada asset protection trust?
We will discuss some important details, if you consider opening one. When you transfer your assets to a Nevada Asset Protection Trust, after two years, your assets can theoretically be protected from creditors. If you publish assets transferred into that trust in a newspaper in Nevada, the waiting period is only 6 months. This can work well in theory, as a place to hide money, but the case law doesn’t look too favorable. The offshore asset protection trust has worked much better in practice. Consider this suggestion if you want to keep assets domestic, and review this website information. Then you can feel free to ask us for a consultation.
How to hide your real estate?
What to hide your real estate ownership? A land trust is interesting in that it allows for you to hold onto property anonymously without your name appearing on title in the county recorder’s office. If you own a home and that asset is in a land trust it does not tie you to that property publicly. Your name does not appear in the public records as owning that property. So, say someone sues you or your business. It is unlikely that an opposing lawyer will initially be aware of your ownership the properties that you are associated with that are entitled to land trust. They will not be drooling at the sight of what financial benefits they can obtain from your real estate holdings, because your association with them are essentially invisible.
How long do you have to wait to publish assets in Nevada?
If you publish assets transferred into that trust in a newspaper in Nevada, the waiting period is only 6 months. This can work well in theory, as a place to hide money, but the case law doesn’t look too favorable. The offshore asset protection trust has worked much better in practice.
What happens if you transfer assets to your mother?
Another problem with transferring assets to your mother, brother, or child is you lose ownership of that asset. Families can argue. Parents, siblings or children can disagree. You are essentially putting the trust of your hard-earned assets into the hands of another person. People are unpredictable. There are many stories where trusting people have transferred assets to family members, to hide money from a lawsuit, and the family member never transferred then back. Moreover, since the US has 96% of the world’s lawsuits, what if someone sues your family member?
Is a retirement account a safe place to hide money?
Retirement accounts are logical places to hide money (and to protect it). Many retirement accounts offer a reasonable level of protection for your funds, keeping others from seizing the money you have placed inside. There are laws in many states protecting those funds.
Can you hide your retirement money from lawsuits?
Therefore, you must be cautious in using a retirement account as a place to “hide” your money from a lawsuit in a way that can actually provide protection. There are much better alternatives available to you.
What is the purpose of filing bankruptcy?
When an individual files a bankruptcy, the most basic reason is to eliminate debts by receiving a discharge. In a Chapter 7, the individual eliminates unsecured debts (such as medical and credit card debt) and keeps property that is exempt. In a Chapter 13, the debtor proposes a plan to pay back certain types of debt over a three to five year period, can catch up delinquent loans on secured property, and can keep non-exempt property. In either a Chapter 7 or 13, the debtor receives an order at the conclusion of a successful case that discharges (eliminates) any remaining debt. However, some debts may be non-dischargeable, and high among the non-dischargeable debts are debts related to divorce.
What happens if a spouse is obligated to pay a divorce debt?
If a spouse is obligated to pay a divorce-related debt, the indemnification language would make it near irrefutable that the non-filing spouse has legal standing to challenge the treatment and classification and dischargeability of a debt included in the filing spouse’s bankruptcy.
What is a hold harmless debt?
Hold-Harmless Debts. When an order or agreement contains language that orders Spouse A to hold harmless or indemnify the Spouse B for a debt that Spouse A is to pay, the Court is creating a potentially non-dischargeable debt – the indemnification debt from Spouse A to Spouse B.
Why was Giddens' debt not dischargeable?
The court denied some of the grounds but ultimately, agreed that Giddens debt was not dischargeable because it was procured through fraud. More specifically, the court found that at the time Giddens entered into the marital settlement agreement, he had no intention of living up to his obligation to pay and transfer property to Morales.
What to consider when drafting a divorce agreement?
Protecting the Non-Filing Spouse in a Chapter 13. There are several items that should be considered when drafting a divorce agreement or judgment and trying to avoid issues and protect the non-filing spouse in case of a Chapter 13 filing.
How to protect a client in a divorce agreement?
Another way to protect a client in a divorce agreement or order is to reserve the issue of alimony for failure to abide by the orders of the court, including payment of the debts.
How to determine if a divorce debt is dischargeable?
The primary question that needs to be asked when determining whether a divorce-related debt is dischargeable is if the debt is a Domestic Support Obligation (DSO). The Bankruptcy Code defines the domestic support obligation at 11 U.S. Code § 101 (14A). The simple version is any child support, alimony, or any other payment that is “in the nature of alimony, maintenance, or support” will be a DSO. The Bankruptcy Court will look to federal law to make this determination, and will look past any labels that may have been used in the divorce agreement or order. The determination is a case-specific determination of whether the intent of the parties or the divorce court was for the obligation to be the nature of support.
Damage Awards Must Be Listed in Bankruptcy
- When anyone files for bankruptcy, they must provide the court with a complete list of their assets and debts. This is to give the court a clear picture of the filer’s financial situation, which will direct the course of proceedings down the line. If you earned an award for damages or settlement as a result of legal action for a personal injury, you...
How Can I Protect My Settlement Money?
- Obviously, lying or failing to disclose the existence of money from a paid or unpaid personal injury claim isn’t the right way to protect it. So, if you’re forced to disclose assets from a personal injury claim, is there any way to protect them? Maybe – and probably yes. Depending upon how large or small the settlement or award is, and the type of bankruptcy you filed for, you can exempt all or …
Need Assistance with Bankruptcy? We Can Help.
- Nguyen Law Group can provide the legal support clients need when they wish to protect awards and settlements related to an injury they endured. We know that you need this money to afford your ongoing medical care and recovery, and losing it could adversely affect how you heal and move forward. Rest assured that with guidance from Nguyen Law Group, you can increase your …