What Are the Most Common Reasons A Bankruptcy Case is Dismissed?
There are numerous reasons a bankruptcy case may be dismissed. A dismissal of a bankruptcy case is when the federal judge issues an order terminating a case. Usually the debts are not eliminated if the case is dismissed. In contrast, a “discharge” means the debts have been eliminated. Listed below are the most common reasons a bankruptcy case could be dismissed:
1) The debtor gives a false oath or information on the bankruptcy petition with the intent to defraud creditors,
2) The debtor has filed a previous bankruptcy within a certain time period and is not eligible to file another bankruptcy and receive a discharge of the debts,
3) The debtor has not filed all the required documents with the bankruptcy court,
4) The debtor did not take and complete the required court approved credit counseling and/or financial management courses as required by federal law,
5) The debtor fails to provide certain documentation to the bankruptcy Trustee upon request of such documents by the Trustee,
6) The bankruptcy Trustee has objected to the discharge of the debtor’s debts based upon his investigation of the debtor,
7) In a Chapter 13 repayment plan, the debtor fails to make the required Chapter 13 plan payments to the Chapter 13 Trustee,
8) The debtor has non-exempt property and fails to turn such property over to the Trustee upon request,
9) The debtor fails to obey a lawful order of the court, and
10) The bankruptcy judge believes there is good cause to deny the debtor a discharge and dismisses the bankruptcy case.
In conclusion, the above list is not exhaustive, but does highlight some of the most common reasons a bankruptcy case could be dismissed.
Can I Collect Workers’ Compensation Benefits If My Employer Files For Bankruptcy?
Most employers’ employees are covered by workers’ compensation insurance. This workers’ compensation insurance is provided by a third party insurance company, not the employer themselves. Insurance companies are required by the state to keep a reserve of money on hand to cover the cost to pay out benefits to the injured worker. Therefore, if your employer files bankruptcy and they had workers’ compensation insurance at the time you were injured, the insurance company will be required to pay you your benefits.
However, there are a few exceptions to this rule, especially if your employer is a large company that is “self insured”. In the event your employer is self insured, they must usually have a bond through an insurance company that will “guarantee” injured workers receive their benefits in the event the employer files bankruptcy or cannot provide benefits to the injured worker.
Sadly, if your employer does not have workers’ compensation insurance and they file bankruptcy, it may be difficult to collect money from them if you were injured on the job because they are “broke” and you “can’t get water from a dry well.”
Can Children Attend the Creditors Meeting?
The creditors’ meeting is a serious affair and can take several hours. Most children (adults too) will find it boring and may not be able to sit still that long. While you may bring your child with you, if he or she can’t remain quiet and sit still for an extended period of time it may be best to find some kind of child care. The Bankruptcy Trustee will want your full attention and will not look kindly on disruptive children.
At the same time, if you have a young child and cannot get reasonable child care then you can bring your child to the creditors’ meeting. As with most areas of the law, the different courts and trustees may vary on their tolerance of children at the creditors meeting so be sure to ask your bankruptcy attorney specifically about your areas courts and trustees.
Are Food Stamps Considered Income in Bankruptcy Filings?
When you go to file bankruptcy, the court considers your income to determine whether or not you qualify for a Chapter 7 bankruptcy, and in the case of filing a Chapter 13 bankruptcy, to determine the amount of your monthly payments. Obvious income would be wages earned from employment, self-employment income, social security and child support; but what about government assistance such as food stamps? In short, food stamps are considered as income for the purposes of a bankruptcy.
The Means Test in a bankruptcy considers most income that you receive: wages, self employment, child support, family support, retirement withdrawals. When you receive food stamps, the monies go straight to a debit card in which you can only use to purchase food in a store that accepts the card. You cannot get cash back from the card?. However, for the purposes of the Means Test, it is still considered income. Since you can use the governmental assistance to purchase necessities, such as groceries, it is considered to be a part of your monthly income that is calculated under the Means Test. Therefore, it needs to be accurately reflected in both the Means Test and in Schedule I, which is the section that discloses your income to the courts.
How Are My Creditors Paid in a Chapter 13 Bankruptcy?
As many are aware, a Chapter 13 bankruptcy is known as a repayment plan to the court for the next three to five years. Whereas many would think that everyone in the bankruptcy receives an equal chunk of the payment; that is not the case. Previously in a Chapter 13 bankruptcy, you would have made a payment to the court then paid your own mortgage yourself. The court no longer does that, the bankruptcy Trustee will now include your mortgage in the plan payment and pay those each month.
Your creditors’ claims (who all have come forth with documentation that you owe them money) get paid out into tiers starting with your mortgage payment. Here is an example of the typical tiered repayment:
Conduit payments (these are your mortgage payments)
Administrative fees: these are your fees that the Trustee takes and a portion of attorneys fees if you still have a balance with your attorney, along with any additional attorneys fees in which you have incurred during the duration of your plan.
Mortgage arrears: everything (100%) that you were behind from the time that you filed.
Vehicle payments
Priority claims: these are taxes, alimony and child support you are behind on.
Unsecured claims: these are credit cards, medical bills, etc. Usually, you’re only paying back a percentage of unsecured debt.
When you miss a payment, you are not only behind with the court, but will in turn be behind on your mortgage as well. Each time this occurs, you will be brought upon a hearing (such as a Motion to Dismiss or Motion for Relief from Stay), and you will need representation from your attorney and there are usually fees involved. Making your payments in a timely fashion and in the full amount is essential to a smooth bankruptcy. You have to always keep in mind that when you do not pay, your bankruptcy Trustee has no money to send out to your creditors and will usually try to dismiss your case.
What is Cross Collateralization in Bankruptcy?
Cross collateralization is a clause in a purchase contract that secures a loan which serves as collateral for all other loans made with the borrower in the past, present, and future. This type of loan is usually found at credit unions, but can sometimes be found at your typical banks. Cross collateralization most commonly occurs […]
