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Solicitor

Keeping Investment Property in Bankruptcy

Some people find the idea of “being their own boss” to be more attractive than working for an established company. Small business owners do this by opening a restaurant or boutique, but some choose to pursue real estate as a way of building wealth. But with the recent economic downturn, what happens to investment property if the owner has to file for bankruptcy? Can a debtor keep rental property if they are going through bankruptcy?
Qualifying for Bankruptcy as a Property Owner
Financial means does not determine who files bankruptcy: a person living on $30,000 a year may have the same eligibility for filing bankruptcy as someone making $300,000 a year. Bankruptcy courts take each person’s income, assets, and debts into account when a debtor files for bankruptcy. These elements give some idea of the debtor’s ability to pay creditors.
How is Investment Property Treated in Bankruptcy?
Investment property is often used as rental property, and because of that, it is treated differently according to which bankruptcy chapter the debtor is filing.
Consumers typically file chapter 7 bankruptcy or chapter 13 bankruptcy. Chapter 7 bankruptcy discharges many debts and offers a fresh start for the debtor, so there are strict requirements. To determine whether the debtor makes enough money to pay off their debt in a reasonable amount of time, the bankruptcy court administers a “means test.” If the court finds that the person filing for bankruptcy makes more than their state’s average income and has a low cost of living, then they do not pass the means test. This means that the debtor has to pursue filing for chapter 13 bankruptcy, which allows them to reorganize their debt so they can pay it back over a three to five year period with court approval.
Exempt vs. Non-exempt Assets
Chapter 7 bankruptcy is designed for individuals who do not have a steady source of income. Once the debtor determines that their debt is out of control, the court appoints a trustee to liquidate their non-exempt assets so that the money from those sales can be used to pay off outstanding debts. What is exempt from liquidation in chapter 7 bankruptcy? The debtor is usually allowed to keep possessions that provide for basic needs, such as a home, car, and furniture. Their non-essential assets, however, are sold.
If you own investment property and plan on filing for chapter 7 bankruptcy, you may not be able to keep that property. Even if it is used as rental property, your situation may be subject to United States Bankruptcy Code 541, which states that “proceeds,…rents, or profits of or from property of the [debtor’s] estate” are included in their overall estate. This means that if you rent your property and earn an income, it is likely counted as non-exempt property.
Debtors dealing with chapter 13 bankruptcy are not required to liquidate their property. The issue concerning investment property in filing chapter 13 bankruptcy, however, comes with the means test. If the court feels that you have enough assets to settle your claims on your own, they may not approve your claim. However, you may be able to show the court that your investment property also brings you a steady income if you use it as a rental property. The court may see it as a necessary piece of property in your plan to repay certain debts, so in this case, it won’t be considered a personal asset.
Small Business Owners and Bankruptcy
Investment property is a concern for many entrepreneurs and small business owners who are considering bankruptcy. Many times, their personal finances are closely tied to the business’s finances, and it can be difficult to confront the fact that bankruptcy may be inevitable. You may be able to keep investment property during bankruptcy proceedings, however.…

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Legal

Reasons to Consider Bankruptcy

As millions of American’s are feeling the sting from the recession, they are using Chapter 7 and Chapter 13 bankruptcy to dig themselves out. Since so many people are faced with unemployment and underwater mortgages, they are being forced to reassess their personal situation and make important decisions that will impact their financial future.
Virtually any bankruptcy attorney will tell you that if your debt has reached an unmanageable stage, then you should consider bankruptcy as one of your options. Of course, making the decision to file for bankruptcy should never be taken lightly – one has to do so while taking into consideration all of their alternatives.
Have you already tried to negotiate with your creditors? Suppose you have exhausted your resources. If you have tried to negotiate with your creditors and they have not budged or if you are unsatisfied with the terms of your agreement, bankruptcy might be a better option.
Do your liabilities exceed your income? If your monthly payments cost $6,000 a month, but you are only bringing in $4,000 – you have a problem. At this rate, there’s no way that you would be able to compensate for the deficit unless you either filed for bankruptcy or miraculously found a much higher paying job in this economy.
What types of debts do you have? If a majority of your debts are unsecured such as medical bills, credit cards and old taxes – then bankruptcy might be an optimal solution.
Do you have a steady source of regular income but can’t afford to keep up with your monthly expenses? Or, do you want to keep your home from going into foreclosure? If this is the case, filing for Chapter 13 bankruptcy would allow you to pay all or a portion of your debts over a three to five year period. This is a debt reorganization bankruptcy that allows you to pay monthly payments at a rate you can comfortably afford.
Have you already exhausted all of your options? Have you already maxed out your credit cards? Have you borrowed money from friends or relatives? Have you already taken out a second mortgage on your house? Unfortunately, borrowing money is more of a band-aid than a permanent solution to a problem. Borrowing money from one source to pay off another source only serves to increase your total debt load, as opposed to reducing it. Borrowing can be a downward spiral for many individuals and a significant warning sign that trouble is brewing.
After assessing your situation, if you truly feel that bankruptcy is your only option – don’t wait. The longer you wait the worse things will get. A qualified bankruptcy attorney will be able to sit down with you and go over the details of your situation. They will be able to give you a good idea of what you should do next. In fact, they can probably paint a clear picture for you in just one consultation. You have nothing to lose from their advice, so contact a lawyer today!…

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Lawsuit

Alternatives to Filing For Bankruptcy

Before you consider filing for personal bankruptcy, there are alternatives that you could evaluate for yourself. The first would be a debt settlement. In this option you hire negotiators from a company to deal with your creditors and reach an amicable decision on lowering the debt owed. This is a good option for those who are unable to manage even their minimum amounts due each month. It is also an ideal option for those who don’t have equity in the form of a home, land or other assets. It is considered the fastest and cheapest way to becoming debt free that declaring bankruptcy.
In the credit counseling option, you discuss with the creditors and negotiate a lower rate of interest. This reduces the burden substantially. Though safer, it can get considerably expensive. On an average, the debtor is able to become free of his debts within a 5 year span.
Declaring bankruptcy under Chapter 13 will have you on a repayment plan. A court appointed official will take control of your disposable income and this is channeled into your various debts. This can take up to 5 years. This is a good option to relieve you of secured debts like car or housing loans. This is not a good idea for credit card holders as it can turn out to be a much more expensive proposition. Chapter 7 on the other hand is a severe and last ditch option. In this case, you will be relieved of all your unsecured debt such as credit cards, medical bills etc. But you will have to surrender your fixed assets to be sold and the proceeds distributed between your creditors.
For those who own a lot of property, liquidating your assets would be a good option to declaring personal bankruptcy. This can also be done in the case of filing under Chapter 7. Based on exemptions and possible surplus that you may have, it’s best to sell your assets and clear off your debts rather than declare bankruptcy. In all cases, you will have to have an experienced debt lawyer with you. Make sure you hire the services of a company or individual that comes well recommended.…

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Law School

Donald Trump and Bankruptcy

Historically in the United States, bankruptcy is a term that has carried an extremely negative connotation.  Those who file for bankruptcy protection are seen, mostly by themselves, as failures who could not meet their monthly obligations.  Unfortunately, this is almost always an inaccurate way to think about and approach bankruptcy, as you’ll see below.
Donald Trump
When people think of successful businessmen in the United States, many will either immediately or quickly think of Donald Trump.  He’s long been famous for his aggressive business tactics and his willingness to make the ‘big deal’ that makes a huge splash with the media.  Most of Trump’s success has been within the real estate field, but as anyone who’s been paying attention in recent months understands, the real estate market is in dire straits.
When a market-wide crash occurs as it is right now, no one is exempt from its effects.  That includes Donald Trump, whose real estate company has also fallen on hard times given the dropping values of land and property, the extreme difficulty with obtaining competitive financing and the lack of ability to sell property at a price that presents a profit to the seller.
As a result, Trump’s real estate company recently filed for bankruptcy.  Since it was technically a corporate bankruptcy petition, filed under Chapter 11 of the United States Bankruptcy Code, Trump’s individual assets are not at risk.  However, his company must now be reorganized under the tenets of bankruptcy law and it must meet all the criteria set out by the court in order for the reorganization to be accepted and to ultimately be successful in getting the company back on its feet.
Not the First Time
Additionally, this latest filing for bankruptcy protection is not the first time one of Trump’s development companies has sought bankruptcy protection.  Trump’s company also filed for bankruptcy protection in 1991 during the previous American recession and for many of the same reasons – his company owed too much money and his assets could not be sold to the point where the company could meet its obligations.
Lessons Learned
What anyone should take from this brief bit of history is that anyone can fall into hard times financially and because of circumstances beyond his or her control.  Those who may be struggling should also understand that bankruptcy is not an end, but rather a beginning anew, as Trump has already proven.…

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Statutory

Bankruptcy and Your Marriage

You might read the title of this article and shudder. After all, bankruptcy can’t be a good thing for a marriage, can it? If you’re like many people, you may be under the impression that bankruptcy always means bad news. However, we’d have to tell you that you’re wrong. In fact, bankruptcy might be the best thing that ever happened to your marriage!
If you’re marriage is struggling, there’s a good chance that a lot of the difficulty is financially-related. Everyone knows that money issues are one of the biggest struggles that most couples go through. From money management and budgeting to strategies for approaching debt, even the closest couples sometimes disagree about money. Those disagreements become even more serious when dealing with the kind of debt that involves bankruptcy.
Seeing a Marriage Counselor
If your marriage is burdened by serious debt, many people are probably quick to recommend you see a marriage counselor. For many couples, marriage counseling can be a great way to address and resolve many of the relational issues they face. Many marriage counselors are more than qualified to help you work through some of the financial issues that strain your relationship.
However, not even the best marriage counseling can get rid of your debt. Solvency is hard to come by; and, it might take bankruptcy for you to get the solvency you so desperately need! While other debt solutions are available, the biggest problems need the most extreme solutions. More and more couples are finding bankruptcy to be a terrific “extreme” solution.
Seeing a Bankruptcy Lawyer
Here’s where the bankruptcy lawyer comes in. While your bankruptcy lawyer might not provide you with relationship advice, a good bankruptcy lawyer will help you attain solvency through the bankruptcy process.
When the heavy financial burden is lifted from your shoulders, you and your spouse will notice that your relationship becomes much easier. After bankruptcy, there’s no more fighting about how debt will be addressed; there are no more disagreements over what expenses have to be cut in order to pay a bill. Further, the bankruptcy process can be a mutual learning experience and teach both of you valuable skills for the future.
Bankruptcy might be the smartest money management tactic the two of you ever employee. If you’re curious to learn more about the bankruptcy process, and you’re serious about getting rid of debt and saving your relationship, contact a bankruptcy attorney. Why not you and your spouse? Don’t delay in getting your life back on track!…

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Barrister

A Bankruptcy Lawyer Can Help Ease the Financial Burden

Bankruptcy is an extreme financial situation and many people across the world have faced this situation at some point in their lives. Individuals who are overburdened with debt can be under tremendous stress and this can also impact their overall health. Creditors will try hard to recover the maximum amount of money owed to them and the debtor will be in a difficult situation. Under these circumstances, hiring the services of a bankruptcy lawyer can be the best way out of the troubled times. The lawyer provides all the help and support required to guide their clients through the entire process.
When an individual files for bankruptcy, the creditors and collection agencies are required to halt their procedures of recovery. The debtor is required to appear in court and provide the evidence of the inability to repay debts. A bankruptcy lawyer guides the individual through various chapters involved in the process. In order to have the bankruptcy case approved by the court, it is essential to prove the financial hardship of their client. The student loans and child care payments are excluded in this process. A bankruptcy attorney makes sure that their client’s case is approved and the assets are protected.
It is necessary to consider various options before going ahead and filing a bankruptcy. A bankruptcy lawyer can be able to explain these options in an effective manner. The debts may not be so worse that a bankruptcy case seems as the only possible solution. The debts can be consolidated with the help of a loan or the assistance of close friends or family members can be sought to pay off the dues. A bankruptcy attorney analyzes the financial situation of the client and provides the most appropriate solution. They help their clients decide whether the option of filing for bankruptcy is the best for them.
The clients have many questions in their minds before they consult the lawyers. Generally they are concerned about losing their homes and cars or the way their credit will get affected due to this event. Some are worried about not getting any loan in the future. While the answers to these questions may depend entirely on the financial situation of the clients, a bankruptcy attorney can be in a better position to guide these individuals. After a brief consultation with the attorney, their clients can get a better view about the implications that the filing of bankruptcy can have on them.
Generally, a bankruptcy lawyer is well-qualified and have years of experience in dealing with such type of cases. These lawyers can handle the bankruptcy cases of individuals and business organizations. They services that they provide are always in the best interests of their clients. The situation of bankruptcy may require these lawyers to come up with more creative solutions to deal with the problem. They approach each case with high amount of diligence and professionalism to make sure that their client gets the desired benefit. This enhances their reputation and ensures that the clients are satisfied with their service.…