The Most Effective Way to Discharge Debt – Be Honest with Creditors

In a Chapter 7 liquidation bankruptcy proceeding, you have the right to discharge certain debts in exchange for the sale of non-exempt property. That right, though, is not absolute. If there’s evidence that you have been less than forthright with the bankruptcy court, or that you have engaged in wrongful conduct, the bankruptcy court has the power to deny a petition for discharge. Here are some of the situations where your Chapter 7 discharge petition may run into problems.

Dishonesty in Obtaining Debt

If you incurred debt through false pretenses, through fraud or misrepresentation, or through illegal acts, that debt may not be subject to discharge. For example, if you embezzled $100,000 from your employer, but spent the money, you cannot file for bankruptcy protection to discharge the restitution requirement. Likewise, if you obtained credit cards or consumer loans through fraud or misrepresentation, including the falsification of income or debt, the creditor to whom you owe that money may ask the bankruptcy court to deny discharge.

Another way to lose the right to discharge debt is to fail to disclose income or debt during your bankruptcy proceeding, or to otherwise mislead or lie to the bankruptcy court. You must fully disclose all information about the assets, debts and income, and ignorance will typically not be an acceptable defense. Hire a bankruptcy attorney, tell your attorney the truth about everything, and you’ll be fine.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

Can I Save My Home from Foreclosure with a Bankruptcy Filing?

Bankruptcy Filing

If you are behind in your mortgage payments and fear that a foreclosure proceeding may be imminent, or if you are already facing foreclosure action, you may be considering filing for bankruptcy protection, so that you can save your home. It’s more than a question of if you can save your home, though. You also want to consider whether it’s in your best interests to try to save your home. Here are some factors to consider.

A Bankruptcy Filing Will Suspend a Foreclosure Action

You can temporarily suspend all legal action, including foreclosure proceedings, by filing for bankruptcy protection. With a Chapter 7, you can often keep a certain amount of equity in your home while forfeiting other assets, but you won’t be able to keep your home and discharge the mortgage. With a Chapter 13, you can restructure payments on your home to make them more affordable.

Reasons For and Against Trying to Save Your Home from Foreclosure

The first question you need to ask yourself is whether or not you can realistically afford your home. If not, there’s no point in trying to save it. You’ll be better suited by trying to sell it for fair market value, even if that’s less than what you owe. In such a situation, you may be able to dispose of the property through a short sale. This will discharge any remaining liability for mortgage payments, but may cause you to recognize income on your taxes, though the Foreclosure Tax Relief Act may minimize the impact.

If you have equity in the home, though, it may be a good idea to try to save it. If you file bankruptcy and discharge other debts, you may be able to bring your mortgage current and keep it that way, provided you don’t incur new debt.

Another question to ask yourself—is it more important that you have reliable transportation or that you have a nice home. If you work from home, transportation is not as important, but if you need a vehicle to get to your job, you may be better off downsizing your living arrangement.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

What to Do If You Have Been Sued on a Fraudulent Transfer

Fraudulent Transfer

Under the federal bankruptcy laws, there are very tight restrictions on the transfer of property, both before and after you file. If the bankruptcy court determines that you improperly conveyed property to keep it out of your bankruptcy estate, you could face legal action alleging fraudulent transfer, a form of bankruptcy fraud. What should you do if you are sued for fraudulent transfer?

First and foremost, don’t ignore or minimize the seriousness of an allegation of wrongful transfer. Start by gathering all the documentation you have related to the item or transfer in question. Find anything that confirms when the item as transferred, why the transfer was made, and what the perceived value of the item was at the time of transfer.

It’s not uncommon for people to make transfers without knowing what they are doing. The key, with respect to fraudulent transfers, is that they require intent. If you can demonstrate to the court that you had no knowledge that your transfer was wrongful, or you had no intent to hide assets or wrongfully keep assets out of the hands of creditors, the transfer may not be considered fraudulent. The court may still have the power to recover the asset, but you won’t be personally liable.

Another situation where you may avoid liability is where there’s no perceived value in the property. For example, if you have a home that has no equity, a court may rule that there’s no fraudulent transfer as there was nothing of value for a creditor.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

What to Do When You Are Sued on a Preference Claim

Bankruptcy

Under the bankruptcy laws, certain payments made by debtors within a specific time frame before a bankruptcy filing are known as “preferences.” The federal bankruptcy code allows a trustee to seek reimbursement of any payments made by a debtor within 90 days before the filing of the bankruptcy petition.

The payment must be made on a debt that was incurred before the bankruptcy filing. The 90 day period only applies to someone not considered an insider—someone not related to the debtor or who has the ability to control the activities of the debtor. If the payment is made to an insider, the time period for a preference is a year.

If you’ve been paid by someone who subsequently filed for bankruptcy, you can be at risk of a lawsuit by the trust to recover the funds paid to you. It’s important that you don’t simply dismiss the lawsuit out of hand. There are defenses you can raise, but you have to be prepared. You’ll want to present the trustee with all the relevant facts to support your claim.

Here are some of the defenses that you can make:

  • You gave something new of value for the money you received—a preference only applies to payments made for prior debts. If you delivered new goods or services and the payment was for those goods or services, it’s not a preferential payment.
  • The payment was in the ordinary course of business—If you can show that the payment was simply one in a series of payments as an ordinary part of business, you may be able to avoid repaying it.

If you believe the payment was subject to the rules governing preferences, your best option is probably to seek to negotiate a settlement as soon as possible.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

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