St. Louis Bankruptcy Lawyers Blog

Because the main job of the Trustee is find any assets that you might have with equity, sell them, and use the proceeds of the sale to pay towards the unsecured creditors that are to be discharged in your case. But that doesn’t necessarily mean that there is anything in your particular case that the Trustee is interested in. The Trustee isn’t going to waste his time with assets that do not have substantial market value.

To begin with, a bankruptcy Trustee is the person hired by the federal government to oversee your bankruptcy estate. He/she is the individual whose job it is to look into and ask questions about what you own. If the Trustee determines that there are such assets, then he/she has the option of liquidating them. Which assets will the Trustee truly be interested in? Let me give you a few examples: If you own a car with a great deal of equity, then the Trustee is probably going to want to at least look into the value of the automobile, so as to make a proper determination. If there is significant value, the Trustee will demand turnover. In a Missouri bankruptcy, you are given a $3,000 exemption to cover any equity that may exist in your car. So if you currently owe $7,000 against the car, and the fair market value (usually, Blue Book value) is $9,000, then there is $2,000 worth of equity in the asset. But after you apply the $3,000 exemption that the government gives you, the equity is eliminated (in fact, you’ve got $1,000 to spare).

Sometimes, there are situation in which the value of your asset exceeds the exemptions that you have available. What do you do then? Well, to be honest, one option is to simply not file for bankruptcy. Because if you know there is a risk of losing the asset to the Trustee, then it becomes a question of whether or not you want to hold onto the asset (but keep all the creditors who are calling you non-stop), or risk losing the asset (but get rid of all the unsecured debts, like credit cards, medical bills, payday loans, etc.) Additionally, there is also an opportunity to try and cut a deal with the Trustee. So if you file a St. Louis Chapter 7 bankruptcy, and you have a car that is paid in full (and therefore a lot of equity), it’s possible to try and work something out. For instance, if your car’s Blue Book value is $5,000 (and there are no liens against it), the Trustee might want to liquidate the vehicle because of the extra $2,000 worth of equity. But if you want to keep the car, you can make an offer to the Trustee to buy out the equity (because to be honest, the Trustee could care less where the money comes from; either through the sale of the vehicle to the highest bidder, or by you buying out the equity).

No, if won’t. And to be honest, once you receive a discharge at the end of your bankruptcy, you can expect the credit card companies to start sending you applications right away. In fact, you can probably expect your mailbox to be flooded with credit card applications the moment you receive your discharge.

Why is this the case? Well, if you think about it, it makes sense (at least from their point of view). After a bankruptcy has run its course, you receive what is called an official discharge of debts. This means that all unsecured creditors (such as credit cards, medical bills, payday loans, deficiencies on a repossessed car, overdrawn bank account, etc.) are knocked out forever. You are not obligated on these debts anymore, and your former creditors can no longer demand payment or pursue any collection activity. All debts are quite literally wiped away, and you can begin your life fresh again.

And the credit card companies know this as well. But instead of it being a detriment to your ever having another card again, it actually works in your favor. This is because once you’ve had all your old debts wiped clean, you literally get a ‘re-do,’ a ‘start-over.’ You begin at ground zero. You are debt free. And to the credit card industry (even those same companies that you might have discharged in your bankruptcy) will now look at you with covetous eyes. They will view you as the most attractive candidate in the world. Overnight, you will have had your old debts knocked out. And to them, this means you are in a perfect position to begin making minimum monthly payments on a new card.

Yes, it is possible to get rid of a second mortgage if you file a St. Louis Chapter 13 bankruptcy. Such a filing allows for the possibility of stripping off any junior liens on a piece of real estate. And so long as you complete the Chapter 13 plan, the only thing you’ll have left at the end of the bankruptcy will be your first mortgage.

Here’s how it works: Let’s say you have a house with a first and second mortgage. You owe $100,000 on the first mortgage, and $25,000 on the second mortgage. But the fair market value of your home is only $75,000. In this scenario, it would be possible to strip out the second mortgage because no equity exists in the first mortgage (i.e. the first mortgage is underwater by about $25,000).

If you think about it, it makes sense. If you were to sell this house at $75,000, obviously all of that money would go to the holder of the first mortgage (because they are literally first in line, and are the senior lien holder). The junior lien holder (the second mortgage) would get nothing. From the court’s point of view, if there is nothing supporting the second mortgage, then it should be stripped out.

There are many benefits to filing a St. Louis Chapter 13 bankruptcy. To begin with, the Missouri Chapter 13 is described as a repayment plan over the course of three to five years in length. It is an opportunity to consolidate your debts, keep the property that you wish to hold onto, and get rid of those creditors that you want to get rid of. All of this is done with one monthly payment that is made to the Chapter 13 Trustee each month, whose job it is to distribute the funds to the various creditors.

The primary reason why a Chapter 13 is filed is because a piece of real estate is facing foreclosure. The bankruptcy petition stops the foreclosure, and gives you a chance to get into a repayment plan to get the arrearage paid off. Stretching this kind of debt over a period of years (a debt that can, depending on how many months the mortgage is delinquent) is much easier than coming up with a lump sum payment made all at once.

Another major benefit of a Chapter 13 is the opportunity to ‘cram down’ the value of an asset to its fair market value. For instance, if you have a car that was purchased more than 910 days ago (or about two and a half years), then instead of paying back the balance of the existing loan in the bankruptcy, you would only have to pay back whatever the current market value (which could be substantially less). So for example, if you have a car that you bought in 2007 with a loan balance of $9,000; but the fair market value of the vehicle is only $4,000 (Blue Book value), then you would only be required to pay back four thousand (instead of nine thousand).

Yes, it will. When a creditor sues you after you default on a loan, the court will most likely rule in its favor. Once the creditor receives this judgment, it then has the option of doing one of three things: 1) garnishing your wages; 2) levy (freeze) your bank account; or 3) put a lien against your property, like a house. They move quickly to do one of the three things, or they may take their time. I have had clients whose judgment sat around for over a year before the creditor went ahead and started garnishing. Unfortunately, there isn’t a time limit under which they must move on the garnishment (or bank levy and lien attachment).

But once the bankruptcy is filed, all action from the creditor stops. They can no longer continue garnishing your wages, the bank account must be unfrozen, and there is an opportunity to strip off any lien that may have been placed on your asset. But until the case is filed (regardless of whether it is a St. Louis Chapter 7 bankruptcy, or a St. Louis Chapter 13 bankruptcy), the creditor can still legally take money from your paycheck or bank.

And of course, the filing of the Missouri bankruptcy will also discharge the underlying debt that is associated with the creditor that has sued you. This means that the creditor will no longer be able to demand payment on the debt ever again, nor will you ever be obligated to make a payment on it. It quite literally goes away forever.

Yes, you can. But there are a few limitations that need to be observed. The idea behind the filing for bankruptcy is the ability to get a “fresh start / clean slate”. This is an extraordinary thing if you think about it: the government is giving you the chance to break free from the oppressive load of debt that you are now carrying around with you. A chance to start over, to begin to rebuild. But the government also wants to make sure there are some safeguards in place.

For instance, the rules state that if you file a St. Louis Chapter 7 bankruptcy, then you have to wait a full eight years before you become eligible again. Once those eight years have passed, you can file another Missouri Chapter 7. With a St. Louis Chapter 13 bankruptcy, things are a little bit different. This chapter of the code does not have time limitations between filings. But there are a few rules nonetheless. For example, if you filed a Chapter 7 in 2010, the only thing you could file now would be a Missouri Chapter 13. But because the filing of the Chapter 13 would be so close in time to the Chapter 7, you would not be eligible for a discharge of your unsecured debt (like credit cards and medical bills). But if you filed your Chapter 13 in 2015 (remember, you’d still be within the eight year time limitation because of having filed your Chapter 7 in 2010), then you would be eligible for a discharge because it would be greater than five years since the Chapter 7 was filed.

It gets a little confusing, but basic format is pretty straightforward: you can only file a Chapter 7 every eight years; you can file multiple Chapter 13s, but receiving an actual discharge in this chapter of bankruptcy depends on how close in time you filed your last Chapter 7.

Yes, absolutely. What we have seen over the past several years in this country is not only an increase in job loss, home foreclosures, car repossessions, and bankruptcy filings. We have also witnessed a tremendous growth in the collection industry. This growth is due to the unprecedented levels of debt that people have recently accumulated; debts that people are having more and more difficulty paying.

To begin with, it is important to understand that when a collection agency takes over a debt, they have purchased that debt from the original creditor. But they end up paying sometimes pennies on the dollar, so there is a lot of incentive. For instance, let’s assume you owe $20,000 on an old credit card. Eventually the creditor will sell the debt to a collection agency. The collector will typically pay the original creditor 20 cents for every dollar of the debt. But the collector still gets to collect on the full $20,000. And as everyone who has been called by one of these guys knows, they tend to use aggressive tactics.

I have had clients who have been threatened with law suits, job loss, jail time, severing of friendships, and even a denial of the right to vote! Just to be clear, none of these things are going to happen. They are simply tactics used in an attempt to get money out of you. And to be sure, these tactics frequently work. When someone is calling you non-stop, day and night, with threatening phone calls, you just want it to stop. And people often cough up money they really don’t have in order to get some relief.

This is a very common question, because most people are concerned about whether the co-signer (who is usually a friend or a relative) will adversely affected. Simply put, if you file for bankruptcy and a co-signed debt is included to be discharged, then the creditor will still have the ability to demand payment from the co-signer. That person can either negotiate a settlement with the creditor, assume the regular payments, or file for bankruptcy themselves.

While this may not seem like the ideal situation (especially for the co-signer), it should pointed out that when an individual signs his or her name to a financing application in support of someone else, they are in essence taking on the risk that you might default on the loan in some fashion. And it is made clear to the co-signer (when he or she signs the documents) that in the event of a default of some kind, the creditor has the option of making a demand for payment on the loan from the co-signer. Most co-signers undoubtedly attach their name to a friend or relative because the person seeking to get the loan is unable to on his or her own (because of a poor credit rating, or because the lending institution has determined that the person is too much of a risk by themselves). But the risk is always there.

A variety of debts can have co-signers: credit cards, houses, cars, financing agreements, rent-to-own, etc. In a St. Louis Chapter 7 bankruptcy, unsecured debts such as credit cards and medical bills are discharged (even those that are co-signed). If you wish to keep assets such as a home or automobile, you may reaffirm those debts. But you also have the option of surrendering them as well (even those that are co-signed). In a St. Louis Chapter 13 bankruptcy, secured and unsecured debts are handled largely the same way, with the exception that a Missouri Chapter 13 is described as a repayment plan in which certain debts are paid back over a period of three to five years.

The whole idea behind filing for bankruptcy is so that you can move forward with life. This is what the court describes as a “fresh start / clean slate“. It’s a chance to wipe the slate clean, start fresh and new, and begin to rebuild your life. All the hassles that you’ve had to endure before (like rude phone calls, law suits, wage garnishments, bank levies, etc.) are wiped away in one broad stroke.

Once the debts are discharged, your opportunities to rebuild your credit score will be immediate. In fact, once the debts are officially discharged (within three to four months in a St. Louis Chapter 7 bankruptcy, and at the end of the plan period in a St. Louis Chapter 13 bankruptcy), your credit score will typically rise between 20 and 30 points just from that alone. Some people will even take a new credit card after their discharge, just so they can make small purchases and pay them off over time so as to rebuild their score more quickly (and believe me, the credit card companies will love to have you back, even if you discharged tens of thousands of dollars with them through your bankruptcy!!)

Another important factor that should be recognized is the reduction of stress that normally accompanies the filing of a bankruptcy. Once the debts are gone, it is like relieving yourself of an enormous burden that had been hanging over your head for years. The creditors can no longer contact you, and you are no longer obligated on the debt. Indeed, most of the clients that I meet with at the initial consultation feel greatly unburdened and start to relax after I have explained everything to them.

There are many reasons that filing a St. Louis Chapter 13 bankruptcy may be beneficial to a prospective client. One such reason is the ability of the debtor to modify the rights of holders of secured claims. This is commonly referred to as a “cram down,” and is typically applied to car claims. “Cramming down” a claim means that, within your Chapter 13 bankruptcy plan, you may have the ability to modify the contract you made with the creditor.

The harsh reality is that as soon as you drive a car off the lot, it loses value. By the time they file bankruptcy, many individuals find themselves owing way more on their car than what the car is actually worth. This is known as being “upside down” on the car. Unfortunately, when you signed all that paperwork at the dealership you agreed to pay the entire amount owed, with interest, regardless of the future value of the vehicle.

A Missouri Chapter 13 bankruptcy can allow you to split the car creditor’s claim into two separate parts: the secured portion and the unsecured portion. The secured portion is determined by the actual value of the vehicle, which is typically determined using Kelly Blue Book or N.A.D.A. values, depending on the district in which you file. If the value of the car is less than what is owed, then this difference is known as the unsecured claim.