Financial problems weigh heavily on most people and families. The leading cause of family disagreements that can lead to divorce is financial problems. Most people are afraid to use their federal privilege of debt relief through bankruptcy. This is the attitude your credit card companies and other creditors want you to have. If you add up your credit card payments that you have made over the years on your smallest credit card loan, most likely the total of payments made is higher than the original amount that you borrowed. You may be surprised to find out that you have already paid back triple what you originally borrowed, but you still owe more than half of that amount. These types of loans were illegal years ago. Life happens…. loss of job, unexpected medical bills, mismanagement of money….. that’s why the bankruptcy laws exist.
No, current law allows you to keep your property subject to certain conditions. The Delaware bankruptcy laws have changed from being very inadequate to most equitable in allowing you to exempt up to $125,000 in home equity; $25,000 personal exemption; household goods and furnishings, clothing, jewelry, bank accounts, stocks and bonds, pension; $15,000 for automobiles; and 401k plans are unlimited.
If your income is greater than the median income, in order to qualify for Chapter 7 bankruptcy, the Means Test comes into play. If it shows that you have sufficient income to pay a significant portion of your unsecured debts, you may be required to file a Chapter 13 bankruptcy instead. The Means Test is a complex examination of your income and expenses. I don’t want to confuse you with all the details but suffice it to say that you want an experienced Delaware bankruptcy lawyer to help you figure out how best to move forward with Chapter 7 or Chapter 13.
Not all debts are eliminated when you file bankruptcy. Discharge means that the debts are forgiven and you no longer are legally obligated to repay them. The most common types of debts that survive bankruptcy are:
Student Loans
I have had some success in getting student loans discharged in Chapter 7 bankruptcies. Generally, you must show that paying back the loan will cause extensive hardship. I’d be happy to discuss with you what needs to be shown to seek a hardship discharge.
Most Taxes
This is a very complicated area of bankruptcy law. Some taxes may be discharged under certain circumstances.
Child Support & Alimony
Filing a Chapter 7 will not eliminate back child support or alimony obligations. It also won’t end your obligation to make these types of payments after filing.
Court Fines
DUI fines, parking tickets, speeding tickets, and court fines are non-dischargeable in a Chapter 7 bankruptcy.
Divorce Decree Debts
Debts that were ordered to be paid in a Divorce decree or a family court proceeding are not discharged in a Chapter 7 bankruptcy. This includes debts that your former spouse incurred during your marriage.
No. Unless the debt is paid back 100%, once Chapter 13 is completed, unfortunately, the credit card company can still go against co-signers because they do not receive a personal discharge of that debt unless they also file bankruptcy.
Married couples can file bankruptcy jointly, each file separately, or just one spouse files without the other. The spouse who does not file would remain obligated to creditors under any joint obligations. Chapter 13 provides protection from creditors to the non-filing spouse for joint obligations on consumer debts during the course of the bankruptcy. Whether to file bankruptcy jointly or not depends on a number of factors, that is why over 90% of cases are filed using an experienced bankruptcy lawyer.
When you file Chapter 7 or 13 bankruptcy and get a case number, it triggers an injunction against the continuance of any action by any creditor against you.
11 U.S.C. § 362(a)
Upon the filing of a bankruptcy petition, an “automatic stay” (i.e., an automatic injunction) goes into effect. The automatic stay restrains creditors from taking certain actions against the debtor or against “property of the estate.” Under Section 541, “property of the estate” includes all legal and equitable interests of the debtor as of the filing date. The types of actions which are stayed include the continuation of litigation, the enforcement of judgments, acts to obtain possession or control of property of the estate and acts to collect claims against the debtor.