This class kicked ass! I left the meeting with my head hurting which meant I got my money's worth..
The instructor went over the new rules that are going into effect this October 2005. Things are changing quite a bit later this year.
The main point I want to make is that it WILL be much harder to FILE Bankruptcy in the near future.
Here are the "new" requirements
- Allow more time to file
- Require credit counseling
- Show tax returns - i.e, 1040's, 1099, laest W-2s
- Qualify for bankruptcy - last 6 months of spending , proving that you can't pay 25% of unsecured debt OR $167 a month
- You have to keep all spending records before filing - ALL expenses for 2 months
The new law essentially makes a chapter 7 (liquidation) into a chapter 13 (reorganization of debt). The "stay" will not happen until they qualify for bk. This will allow the credit card companys to get more money before any debt is discharged.
- Homestead act (Arizona) is up to 150 k (equity) so this is off limits in a chapter 7. Chapter 13 will allow you to keep the property if arrears can be made up.
- Chapter 7 has trustees, Chapter 13 has receivers
- Chapter 11 is usually for businesses
- Chapter 13 are harder to complete because of the payment plans
- 95% complete a chapter 7
- Health is #1 reason for bk
- You can't eveict a tenant if he has filed bk! You have to receive $ even if its not the full amount
- The "stay" ends when case is closed /dismissed/discharged A stay is when creditors are directed to leave you alone
- Things that don't go away in a bk - 1) criminal files 2) student loans, 3) fines to government, 4) damages - willful injury, 5) spousal /child support, 6) income tax, 7) property tax, 8) medical melpractice, 9) willful tax evasion, 10) co-sign debt
- Go to keytlaw.com for good bk resource
The main buying strategy that the instructor recommends is to contact the trustee of a chapter 7 and offer him to buy the property directly. He would of done this anyway since he will take the proceeds to pay the creditors. First, you want to make sure its a property that he is planning to liquidate (exceeds homestead). There's a federal website that allows you to find his contact info. This works well for commercial, land, and luxury homes.