Many people worry that they’ll lose everything if they file for Chapter 7 bankruptcy, but it’s not the case. Exemption laws allow you to “exempt,” or protect property in bankruptcy, including a modest car (truck, motorcycle, or van). You’ll need to be able to protect any equity in your with a bankruptcy exemption if you want to keep it. You’re allowed to exempt (keep) property that your state decides you’ll need to continue to work and maintain a household. But, in Chapter 7 bankruptcy, you must give up your nonexempt property anything you can’t protect with an exemption. The bankruptcy trustee the person responsible for managing your case will sell your nonexempt property and use the proceeds to repay your unsecured creditors. Next, you’ll want to figure out how much you’d be able to get for your car. In your bankruptcy paperwork, you’ll be asked to report the “current” value of your vehicle, which is the amount you can sell it for considering its current age and condition (commonly known as the fair market value). You can find values on websites such as Kelley Blue Book the National Auto Dealers Association. Your bankruptcy trustee will likely favor one of the two websites and expect you to provide a printout from that site as proof of your vehicle’s value. How Much Equity Do You Have in Your Car?Once you know what your car is worth, you’ll use the value to determine how much equity is in it. Here’s how you do it. The trustee might also do the following:• Abandon the vehicle. The trustee will often abandon the car if money wouldn’t be available for creditors after selling it. The trustee must pay off the loan, the amount of your exemption, the costs of sale, and the trustee’s commission. If little or nothing would remain, the trustee will abandon it, and you’ll get to keep it. For instance, in Ella’s example above, if Ella’s Harley were worth only $6,000, nothing of consequence would be left for creditors after deducting all the costs, so the trustee would likely abandon it rather than go through the meaningless effort of selling it. Using Wildcard Exemptions to Protect Your CarIf the motor vehicle exemption doesn’t cover all of the vehicle equity, you might be able to use a wildcard exemption (if your state has one) to protect a certain amount of property of your choosing. A wildcard exemption protects any property of your choosing. In some states, you can also apply any unused portion of the homestead exemption to other assets. These exemptions can be added to your motor vehicle exemption to protect your car equity. Car Loans: Additional Issues to ConsiderEven if the trustee doesn’t sell your car to pay your creditors, you still have one more step to take if you have a car loan. If you don’t have a loan, you’re done. If you’re behind on your vehicle payments, the lender can take back the car, even if an exemption protects your equity. You might be able to save it one of two ways: Understand, however, that while you have the right to enter a reaffirmation agreement if you’re current on your payments (and your lender might insist on it), the lender doesn’t have to agree to “modify” the loan in any way. So if you’re behind on your car loan before you file for Chapter 7 bankruptcy, and you don’t have the money to redeem it, you’ll be able to keep your car only if your lender is willing to work with you. Keeping a car in Chapter 7 bankruptcy is a top priority for almost all filers. Your ability to do so will depend on: Protecting Car Equity in Chapter 7A Chapter 7 bankruptcy isn’t intended to deprive you of all of your property. Bankruptcy laws, called exemptions, let you keep a certain amount of your property to make a fresh start. Almost all people need a car to get to work, and most states have a motor vehicle exemption that will let you keep a modest vehicle. Exemptions in Chapter 7 BankruptcyEach state has a set of exemptions, and the protections vary widely. Some states even allow a filer to choose between the state and federal bankruptcy exemption system. A filer can use whichever system will work best. While you keep exempt property, what will happen to your nonexempt property not protected by an exemption will depend on the chapter you file. In Chapter 7, the trustee sells your nonexempt property for the benefit of your creditors. If your property is exempt, the Chapter 7 bankruptcy trustee can’t take it. Learn more about your property and exemptions. Whether you’ll be able to keep your car will depend on the exemption amount allowed by your state, as well as the amount of equity in it. For instance, if you own a car worth $5,000 and your state’s motor vehicle exemption is $7,000, the vehicle will be fully protected. If you have a car loan, the exemption amount only needs to protect the amount of equity you have in it—not the entire value. So if you have a car worth $15,000, but you owe $10,000, then you only have $5,000 of equity in the vehicle. You’ll be able to protect it if your car exemption is $5,000 or higher. In Chapter 7 bankruptcy, here’s what the Chapter 7 bankruptcy trustee appointed to your case will do if you can’t protect all of the vehicle’s equity: Your creditors will receive the remainder after the trustee deducts sales costs and fees. The trustee won’t sell the car if, after deducting these costs, nothing remained for creditors. This process is known as abandoning the property. Example: Suppose you own a car outright worth $5,000, so your equity is $5,000. Your state allows a $6,000 car exemption. You can fully protect the equity and keep your vehicle. Example: Suppose again that you own a car with $5,000 in equity. However, your state only allows a $2,000 car exemption and doesn’t have a wildcard exemption. The bankruptcy trustee will take your car and sell it. From the sales proceeds, the trustee will pay you your $2,000 exemption amount. The trustee will deduct the amount remaining after subtracting sales costs and the trustee fee. Using a Wildcard Exemption to Keep Your CarMany states have a “wildcard” exemption that you can use towards any property. If the motor vehicle exemption is not enough to cover your car equity, you might be able to protect the entire amount using a wildcard exemption. If You Have a Car LoanThe trustee won’t sell your car unless there’s enough equity to pay off the car loan balance, give you the exemption amount, and still have funds for creditors after paying fees and costs. Even if there isn’t enough money in the car to justify selling it, you’ll face another hurdle—you’ll need to be current on payments. Most people don’t have the cash to buy a car outright. In exchange for the loan, the lender takes an ownership interest in the vehicle using a lien. The vehicle becomes collateral for the loan. If you don’t pay according to the contract terms, the lender has the right to recover the car. Filing for bankruptcy doesn’t remove a car lien. If your payments aren’t current when you file, the lender can make a motion asking the bankruptcy court to allow repossession or wait to get the vehicle until the automatic stay gets lifted when the Chapter 7 case ends. In some cases, you might be able to work out a deal with the lender when reaffirming the loan (more below), but you can’t depend on it. Chapter 7 doesn’t have a mechanism to help you get caught up on a payment. Unlike Chapter 7, Chapter 13 allows you to make up missed payments over time so you can keep the vehicle. Example: Suppose you have a car worth $5,000 but you still owe $6,000 on your auto loan. Because you owe more than it’s worth and the lender gets paid first, the trustee won’t take the car. You’ll be able to keep it as long as your payments are current. Example: Suppose your car is worth $10,000. You owe $4,000 on your car loan, and you’re behind four payments. You’ll need a motor vehicle or wildcard exemption of at least $6,000 to protect the equity and prevent the trustee from selling it. But the lender can still take the car back because of the late payments. In this case, you might want to consider Chapter 13. It can help you catch up on payments over time and can keep the car. It’s likely the better option. If you can’t exempt all of the car equity, you still might be able to keep it. If little remains for creditors after deducting the sales costs and the trustee’s fee, the trustee will likely abandon (decide not to sell) the car. Also, some trustees will let you pay to keep your car. For instance, the trustee might agree to give you a few months to pay for the equity minus sales costs. Debtors usually use the income earned after the bankruptcy or get a loan from friends or family. Reaffirming Your Car LoanIn addition to making your regular car payments, your lender could require you to “reaffirm” your car loan. Even though the car lender’s security interest in the vehicle is unaffected by your bankruptcy, a Chapter 7 discharge eliminates your liability to pay the contract price. If the lender repossesses the car and doesn’t get enough at auction to cover the outstanding balance (deficiency), the lender can’t sue you for it. The downsides to not signing a reaffirmation are that your payments won’t show up on your credit report, and the lender can take the car back for any reason even if you’re current on the payments. The post Will I Lose My Car If I File Bankruptcy? first appeared on Ascent Law, LLC.via Ascent Law, LLC https://www.ascentlawfirm.com/will-i-lose-my-car-if-i-file-bankruptcy/
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If you fail to make your car payments or otherwise default on your loan, you risk having your car repossessed by your lender. Read on to learn more about how car repossessions work, how to avoid them, and what your options are if your car gets repossessed. When you finance or lease a car, you normally give the lender a security interest in the vehicle. Every state has its own rules regarding repossession, but having a security interest generally means your lender can repossess the car without notice if you default on the loan. Many things can constitute a default, but the most common reasons are not making timely loan payments or not having car insurance. How Do Car Repossessions Work?In most states, car lenders can seize your vehicle without prior notice if you’re in default. However, they can’t breach the peace while they do it. Breaching the peace usually means using or threatening to use physical force against you to take the car back. But it can also simply involve repossessing the car from your closed garage. If your lender commits a breach of the peace, you might be entitled to damages or use it to defend against a deficiency lawsuit. What Will the Lender Do After Repossessing Your Car?The lender can keep the car or sell it to satisfy your loan obligation. Each state has its own rules regarding sale procedures and notice requirements. However, you usually have a right to know when and where the sale will take place. Also, your lender must sell the car in a commercially reasonable manner. This generally means the lender has to follow standard sales practices, but it is not required to obtain the highest possible price. You might have a claim for damages or a defense against a deficiency if the sale wasn’t commercially reasonable. Deficiency BalanceRepossession is only one of the remedies available to your lender if you default on your loan. Having your car repossessed doesn’t get you off the hook for your obligation to pay the entire balance of the loan. If the proceeds from the sale of the vehicle aren’t enough to cover the balance of your loan, the remaining portion is called the deficiency balance. In most states, your lender can sue you to collect this deficiency. However, there are defenses to a deficiency action. The most common defenses are: How Can You Get Your Car Back?You might still be able to get your car back if the lender has not sold it yet. Below, we discuss some of the options available to you for getting your car back. Redeem the CarRedeeming essentially means buying back the vehicle. You can generally redeem your car if you pay the lender your entire loan balance, including all arrears and repossession costs. But most people usually don’t have the money required to redeem a car. Reinstate the LoanSome states allow you to reinstate your loan and get the car back if you can cure all of your arrears and pay for the repossession costs. After you reinstate, you must continue to make regular payments on the loan. (Learn more about the difference between redemption and reinstatement.) Buy It Back at the AuctionIf your lender sells the car at an auction, you can bid on the vehicle to try to buy it back. But even if you buy back the car, you’ll still remain liable for any resulting deficiency balance. File for BankruptcyIf you file for bankruptcy prior to the sale, the automatic stay will prohibit the lender from selling the car without obtaining court permission. Depending on the type of bankruptcy you file, this can buy you more time to gather the necessary money to get your car back or allow you to cure your arrears through the bankruptcy. How Can You Avoid Getting Your Car Repossessed?If you’re behind on your loan payments, the best thing to do is to communicate with your lender. Your lender might be able to offer you a solution such as a reduction in payment amount or interest rate that can help you catch up on your payments and avoid repossession. Loan deficienciesUnfortunately, the repossession process does not cancel your obligation to make payments under the loan or lease agreement. Once they seize the vehicle, the lender can sell it or put it up for auction. The proceeds of the sale will be subtracted from any balance that you owe. Repossession costs, interest charges, and late payment fees will be added. This deficiency in realizations is now an unsecured debt which you still owe to your auto lender. The lender will also report the late payments on your credit report, which will impact your credit score going forward. This note will remain as part of your credit history for up to seven years. Avoiding repossessionThe only way to avoid repossession is to make payment arrangements with your lender. Any payment plan will require you to catch up on all of your payment arrears and repay any repossession fees and recovery costs they may have incurred. Filing bankruptcy will not stop repossession because your auto lender is a secured lender. Secured creditors are not prohibited by the automatic stay in bankruptcy or consumer proposal from enforcing their security rights. However, if you are struggling with your car loan payments because of other unsecured debts like credit cards or high-cost financing loans, it may be possible to file an insolvency proceeding with a Licensed Insolvency Trustee to eliminate this debt, freeing up cash flow in your budget so you can afford to catch up and continue with your car loan or lease. Walking away after repossessionIf you decide to walk away from your car loan, or if your lender has already repossessed your vehicle, it is possible to file bankruptcy or a proposal to eliminate the unsecured deficiency. Car repossession does not have to lead to continued financial hardship. Private PropertyLenders can repossess a vehicle that is parked on private property, but state laws generally restrict them from “breaching the peace” while doing so. For example, repossession agents cannot damage your property to get access to a vehicle. They typically cannot destroy locks to get into your garage, nor can they use (or threaten to use) physical force when taking your car. Sales PriceIf your car is taken and sold, the lender needs to sell it for a “commercially reasonable” price. It doesn’t need to be the highest price possible, but the lender must make an effort to get fair market value out of the car. Why? The sales proceeds will go toward paying off your debt, so it would be unfair to repossess the vehicle and “give it away” to somebody else. DeficienciesThings don’t necessarily end after repossession. If your lender sells your car, the sales proceeds go toward your loan balance. In many cases, the car sells for less than you owe, so your loan is still not paid off. The amount you owe after the vehicle sells is called a deficiency. In addition to your loan balance, you also have to pay for costs related to repossession. Charges can include expenses for sending a repossession agent, storing the vehicle, preparing the vehicle for sale, and more. Those costs are all added to your deficiency balance. If you can’t pay the balance, expect your lender to send your account to a collection agency. At that point, you can negotiate a settlement, pay nothing, or set up a repayment plan. In some cases, your debt will be forgiven or charged off (possibly resulting in tax liability for forgiven debt). ReinstateWant to hit the “Reset” button? One option is to get current on your past-due payments and pay repossession costs, which will get your loan reinstated. You’ll get the car back, and you’ll be back in roughly the same position you were in before repossession (although your credit will still show the default). As long as you continue to meet the terms of your contract going forward, the car is yours. How many car payments can you miss before repossession?In many states, your lender has the right to repossess your car after you’ve missed only one payment. Many lenders will give you more time, though, and many states require detailed notice before your lender repossesses your car. If you think you’ll miss a payment, contact your lender before it happens. How long does car repossession stay on your credit?Repossession can stay on your credit report for seven years, beginning from the date of the first missed payment. Can you get a car loan after repossession?It’s possible to get a loan after your car has been repossessed, but it will be more difficult and you’ll likely pay higher interest rates. If you need a new loan before your credit has improved, consider asking someone with better credit to co-sign with you. Required Notices in Car RepossessionsNotice Generally Isn’t Required Before Repossession. Car loan agreements usually specify that the lender can repossess your car when you’re late making payments. Most states don’t require car loan lenders to give debtors any kind of notice before they repossess vehicles. And courts and law enforcement don’t normally monitor the repossession process as it’s happening. So, you might not even know when or where the car will be repossessed. But in at least one situation, you’ll get notice ahead of time. In a few others, the lender might be limited in when it can repossess your car. • The loan agreement. Your loan agreement should spell out what happens if you fall behind on payments and how far behind you have to be before the lender can repossess the car. Many loan agreements let creditors repossess a car if you’re just a month late on payments. You might even be one payment away from paying off the loan, but the lender can still repossess if you’re late. Other agreements will give you more wiggle room with payments before a bank can declare you in default and repossess the car. Notices After Your Car Is RepossessedIn most states, the bank must notify you, in writing, of the following matters within a short time, usually five days after repossessing the car, but before it is sold or auctioned: Notice of Default and Right of Redemption/Right of ReinstatementThe lender must provide you written notice of your right of redemption and (or) right of reinstatement. It must tell you: Notice of SaleIf you don’t reinstate the car loan or redeem the car, the lender is also required to send you written notice if it intends to sell the vehicle. This notice may be combined with the first notice discussed above. Usually, the notice must contain the following information: If the sale amount doesn’t cover the loan balance and costs. If the amount of the sale isn’t sufficient to cover all of these items, then you owe what’s called a “deficiency balance.” The creditor must notify you of the amount of that deficiency. Typically, if you don’t pay the deficiency, the creditor may take further action, such as suing you for the balance. If the sale results in a surplus: If the creditor recovers more than what you owed, the extra money is called a “surplus balance.” The creditor must give you an accounting of the surplus and pay it to you, subject to one exception: If you have a co-signor and the loan agreement gives the co-signor rights to the excess, the creditor must pay the surplus to the co-signor. But surpluses aren’t common in car repossession sales because a vehicle is typically worth much less than what’s owed on the loan contract. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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Your Guide To Selling Your House Under PCS Pressure Will You Pay Capital Gains On The Sale Of Your Second Home? Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/will-they-repossess-my-car-if-i-am-one-payment-behind/ Once you have successfully negotiated the purchase of your first home, it’s easy to dream of owning a second home. Maybe you’ll buy it in your favorite vacation spot and own your little slice of paradise there. Or you can treat it as an investment property that you rent out. Ideally, you can do both rent it out part of the year, and then use it as your “home away from home” when you vacation. However, there may come a time when you find it necessary or desirable to sell that second home. When that happens, you may count on those profits to fund another dream: retirement, college for the kids, travel. Unfortunately, not all of those profits will be yours to keep. The IRS will ask for its share through the capital gains tax. Capital Gains TaxWhen you sell property at a profit, the IRS considers that profit to be part of your taxable income. A capital gains tax is levied on any profit (gain) that you made due to the appreciation of the property you sold. For example, if you bought a $300,000 home, and later sell it for $400,000, your taxable capital gain on that transaction is the $100,000 profit. That is the amount that the IRS will tax. Just like with income tax, the capital gains tax is not a flat fee. Rather, it is a percentage of the profit. The percentage will change based on your tax bracket. Some states also have their own state capital gains tax. Selling a Primary Residence Vs. Selling a Second HomeIf the property you sold is your primary residence, you will most likely pay very little or no tax. That is because the IRS has primary residence exclusion for capital gains taxes. If you are single, you can exclude as much as $250,000 in profit from the sale of your primary residence. If you’re married and filing jointly, that amount is $500,000. However, a second home, whether it is a vacation home or rental property, is not excluded. Here, you’ll have to pay a capital gains tax on the sale of your second home. Depending on how long you’ve owned your second home, your taxes will be a short-term capital gains tax or a long-term capital gains tax. Short Term Capital Gains TaxIf you sell an investment property that you have owned for less than a year, it will be subject to the short-term capital gains tax. It will be taxed at the same rate as the rest of your annual income. Depending on your tax bracket, this can be as high as 37% of the gains. Long Term Capital Gains TaxOn the other hand, if you are selling a second home that you have owned for over a year, the capital gains tax will be lower than your income tax bracket. Long term capital gains in 2021 are taxed at 0%, 15%, or 20%, depending on your income. 2021 Long Term Capital Gains Tax Rates Per BracketYour long-term capital gains tax rate will depend on both your income and filing status. Minimize Your Net ProfitIf you bought your second home for $200,000 and sold it for $300,000, then your taxable capital gain is $100,000, right? Not necessarily! The key here is that the capital gains tax on the sale of the second home applies to the net profit, not the difference in purchase price and sale price. Any money you invested to renovate or repair your second home can be deducted from the profit. If you put in a new roof for $10,000, then your taxable gain is down to $90,000. You can also deduct costs associated with the purchase and sale of your second home. Realtor commissions, inspections, origination fees, etc. Say you spent $5,000 in acquisition fees to purchase the home, and paid $20,000 in agent commissions and other fees at the sale. Then you can deduct another $25,000 from your profit. Your taxable capital gain is now down to $65,000. How Do I Calculate My Capital Gains Tax Liability?You do not pay Capital Gains Tax on the entire sales value of the property, only on the amount that is counted as gains. You are permitted to deduct certain expenses from your gain to reduce your tax liability. These include estate agent’s fees, solicitor’s fees and the cost of any improvement work. You cannot deduct the costs of decorating or maintaining the property. Gains = Purchase Price – (Sale Price + Buying & Selling Costs + Improvement Costs) Add you capital gain to your taxable income to determine whether you pay the lower or higher rate of CGT. The government has provided an online capital gains tax calculator, which will help you assess your liability. ExampleFor a second home or buy to let property sold on 7 April 2021, the GCT return will need to be submitted and paid by 6 May 2021. The capital gains calculations will be included in the self-assessment tax return due by 31 January 2022. Should any further tax be payable or refund due, it will be calculated at this point. Any additional tax must be paid by 31 January 2022. Changes To Private Residence ReliefIf you have lived in the property as your main residence for the entire period of ownership, private residence relief means that any gain you make is exempt from CGT. Special rules govern partial private residence relief if you have lived in the property for some of the time. These rules changed in April 2020. Before April 2020, if the property had been your home at some point in the 18 months prior to the sale this part of the gain would be exempt from tax. For sales on or after 6 April 2020 this relief period is reduced to 9 months. This change affects people who are purchasing a home before selling their old one. They now have just nine months to sell their old property to avoid a potential CGT charge. Changes To Lettings ReliefUnder the old rules, if you sold a residential property that was once your main residence but had then been rented out, it was possible to deduct lettings relief of up to $40,000 from any capital gain. However, from April 2020, lettings relief is now only available for people in shared occupancy with their tenant/tenants, so is no longer available to the vast majority of people. First, How Much Is Your Gain?Many people mistakenly believe that their gain is simply the profit on the sale: “We bought it for $100,000 and sold it for $650,000, so that’s a $550,000 gain, and we’re $50,000 over the exclusion, right?” It’s not so simple a good thing, since the fine print can work to your benefit in such instances. Your gain is actually your home’s selling price, minus deductible closing costs, selling costs, and your tax basis in the property. (Your basis is the original purchase price, plus purchase expenses, plus the cost of capital improvements, minus any depreciation and minus any casualty losses or insurance payments.) Deductible closing costs include points or prepaid interest on your mortgage and your share of the prorated property taxes. Examples of selling costs include real estate broker’s commissions, title insurance, legal fees, advertising costs, administrative costs, escrow fees, and inspection fees. So, for example, if you and your spouse bought a house for $100,000 and sold for $650,000, but you’d added $20,000 in home improvements, spent $5,000 fixing the place up for the sale, and paid the real estate brokers at least $25,000, the exclusion plus those costs would mean you’d owe no capital gains tax at all. If You Don’t Meet the Use TestNow let’s say that you still have some capital gains that don’t seem to fall under the exclusion. Even if you haven’t lived in your home a total of two years out of the last five, you’re still eligible for a partial exclusion of capital gains if you sold because of a change in your employment, or because your doctor recommended the move for your health, of if you’re selling it during a divorce or due to other unforeseen circumstances such as a death in the family or multiple births. In such a case, you’d get a portion of the exclusion, based on the portion of the two-year period you lived there. To calculate it, take the number of months you lived there before the sale and divide it by 24. For example, if an unmarried taxpayer lives in her home for 12 months, and then sells it for a $100,000 profit due to an unforeseen circumstance, the entire amount could be excluded. Because she lived in the house for half of the two-year period, she could claim half of the exclusion, or $125,000. (12/24 x $250,000 = $125,000.) That covers her entire $100,000 gain. Nursing Home StaysFor people who’ve moved to a nursing home, the ownership and use test is lowered to one out of five years in your own home before entering the facility. And time spent in the nursing home still counts toward ownership time and use of the residence. For example, if you lived in a house for a year, and then spent the next five in a nursing home before selling the home, the full $250,000 exclusion would be available. Marriage and DivorceMarried couples filing jointly may exclude up to $500,000 in gain, provided: Separate residences. If each member of a married couple owns and occupies a separate residence and files jointly, each may exclude up to $250,000 in gain when they sell. Also, if it’s a new marriage and one spouse sold a residence within two years before the marriage (thereby disqualifying him- or herself from the exclusion), the other spouse may still exclude up to $250,000 in gain on a residence owned before the marriage. A new marriage may also double the tax break in some circumstances. Suppose a single man sold his principal residence on October 1 and gained $500,000 in profits. Let’s also say that he and his girlfriend had been living in the house for two years (but her name wasn’t on the title), so they both satisfy the use test. If they get married by midnight December 31 of the same year, they can file a joint return for that year and exclude the entire $500,000. Divorce and the tax break. Divorced taxpayers may tack on the ownership and use of their residence by their former spouse. For example, say that upon divorce, the wife is allowed to live in the husband’s residence until she sells it. He has owned the residence for 18 months. Once the sale occurs, the couple will split the profits 50-50. If the wife sells the home nine months later, she may tack on her ex-husband’s ownership to meet the two-year ownership test. Also, the husband may tack on his ex-wife’s continued use of the residence to meet the two-year use test. Each one is entitled to exclude $250,000 of profits from the sale. Widowed taxpayers may also tack on the ownership and use by their deceased spouse. Reduced Exclusion for Second Home Also Used as Primary HomeIf you sell a home that you sometimes used as a vacation or rental property and sometimes as your primary residence, you’re eligible for only that portion of the capital gains exclusion that corresponds to the amount of time you actually lived there as your primary residence. (The rest of the time is called “non-qualifying use.”) Note that the calculation is made over more than a mere five-year period — it applies right back to January of 2009. What’s more, if during the five years before the sale, you never actually made the home your primary residence, you’re likely disqualified from using the exclusion. (You won’t be surprised to hear that this new rule was meant to generate additional tax revenue to offset some other tax cuts.) Home Offices: A Tax DrawbackThe exclusion does not apply to depreciation allowable on residences after May 6, 1997. If you are in a high tax bracket and plan to live in your home for a long time, taking depreciation deductions for a home office is quite valuable right now. But if not, you might want to reconsider using a portion of your home as an office, because all depreciation deductions you take will be taxed at 25% when you sell the house. Example: A married couple sells a home with an adjusted basis (purchase price plus capital improvements) of $100,000 for $600,000. Over the years, they had taken $50,000 in depreciation deductions for a home office. Sales Price: $600,000 Of that gain, $450,000 is tax-free; the $50,000 taken as depreciation deductions is subject to 25% capital gains tax. Splitting Up Big GainsIf you expect huge gains from selling a house — more than can be excluded from tax — you should consider ways to divide ownership of the house. For example, say a couple owns their residence together with their adult son (perhaps because they’ve given him a share). If he meets the ownership and use tests as to one-third of the property, the son may sell his share for a $250,000 gain without incurring a tax. His parents could simultaneously sell their share for $500,000 without tax, sheltering the entire $750,000 gain. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
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Objections To The Bankruptcy Discharge Your Guide To Selling Your House Under PCS Pressure Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/will-you-pay-capital-gains-on-the-sale-of-your-second-home/ When you show your home, you’re trying to present it in the best-possible light so buyers will be able to imagine themselves living there and be eager to buy it. Since buying a home can be a decision based more on feeling than on logic, try to make your home appealing to potential buyers by engaging all five senses. In many markets, it is customary for the buyer’s agent to tour a listing without the listing agent present, and they’ll expect the seller to leave the house. If you are selling your home as a For Sale by Owner transaction, though, you will need to show the home yourself. Clean (and Clear) the HouseBefore you open your doors for an open house or a showing, be sure to clean your home from top to bottom. It’s cheaper to do the work yourself, especially since you’ll want to keep the house in tip-top shape for as long as you have it on the market, but hiring a cleaning company can take the load off if there’s too much on your plate. • Clear the clutter: The first thing your buyers should see when they walk in the front door should not be piles of papers or possessions. Leave tabletops, counters, and other flat surfaces clear or tastefully styled (with a vase of flowers, perhaps). Set a Comfortable TemperatureYour goal is to create a welcoming atmosphere, so pay attention to your climate systems. A cold house on a cold day, or a stuffy house on a hot day, won’t paint the picture you want buyers to see—it’ll leave them uncomfortable, not to mention wondering whether your heating or cooling systems are in disrepair. • Pay attention to the weather: Showing your home is not the time to worry about your utility bill. If it’s cold enough to wear a sweater to stay warm, turn on the heat. If you’re known for leaving your thermostat at sub-Arctic temperatures, this is one time when you’ll want to dial it up a few degrees. You can always turn it back down again when buyers leave. Turn the Lights UpBrighten up your home inside and out so buyers can clearly see your house’s features. • Turn on every light: Overhead lights, lamps, even appliance lights and closet lights. Be sure the porch light is on, especially after dark; solar lights along your walkway are a nice touch as well. Create a MoodStaging your home for buyers’ means setting a tone, creating an atmosphere they want to be a part of. Play up your home’s best features by setting the mood, whether it’s romantic, relaxing, or exciting. Help your potential buyers envision themselves living their ideal life in your house. • Put the fireplace to good use: Light a fire, even if it’s the middle of summer. Use Scent SparinglyA thorough scrubbing should be all you need to ensure a fresh fragrance in your home. Provide Additional InformationYou have so little time to make an impression. If there’s extra information that a buyer might miss or be unaware of, you can provide nicely printed cards or notes to let them know. Top It Off With FoodThe best way to entice buyers to linger and notice even more details about your home is to offer them food. You don’t need to cater a lunch, but finger sandwiches, cookies, soft drinks, and bottled water are all welcome. Buyers who are nibbling on snacks are not that eager to leave and might notice more of what your home has to offer. Encourage Buyer FeedbackFeedback from visitors can be extremely helpful when trying to sell a home, especially if they let you know something that would be an easy change before the next buyer stops by. Ensure that buyers can leave prompt, anonymous feedback it will be invaluable as you tailor your offering going forward, and anonymity makes it more likely that a potential buyer will offer their thoughts. Negotiating a BuyoutThe owner who wants to sell can try to buy out the other owners and take full possession of the property. Alternatively, the co-owner who wants to sell can negotiate with the other co-owner(s) to buy them out instead. This tends to be the most desirable option as it allows the seller to sell their share and it allows the co-owner who didn’t want to sell to keep the property. Note that buyouts are only possible if one co-owner is able to secure the funds necessary for the transaction. Selling A Property Share to a Non-OwnerAs with any asset that is co-owned, each owner has a share of co-owned property. Shares of a home can be sold even if owners disagree about selling. Yes, this means shares of a home can be sold to strangers. However, most strangers don’t want to co-own a home together. So selling property shares like this isn’t a feasible option unless the co-owner knows and likes the new co-owner. However, in some cases– such as within a marriage –the right to sell co-owned shares of property is suspended. Getting the Court to Force a SaleYou can obtain a court order to sell a co-owned property if the court finds you have a compelling reason to sell. This is called a partition action. Actual acreage of a property is easy for a court to divide up to co-owners– like with farmland. But when it’s more complicated when it comes to dividing up houses. The court can’t divide a house in half, so instead, it can force owners to sell, even if they’re unwilling. Profit or loss from the sale is divided among the owners based on their stake. But again, in the case of a married couple, the laws are different. Be Sure to Address the MortgageIt’s important to note the legal difference between property deeds and mortgages. Just because a homeowner transfers property ownership to another owner– thus removing themselves from the deed –doesn’t mean the mortgage transfers over too. After forcing a home sale, it’s necessary to also address the mortgage. A home seller can use the proceeds from the sale to pay off the mortgage. Otherwise, one in this position must ensure that the new owners who are being transferred ownership are able to refinance the loan without you. If the new owners can’t finance it, you might be on the hook to pay for a home you don’t own anymore. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
The post Your Guide To Selling Your House Under PCS Pressure first appeared on Ascent Law, LLC.
4.9 stars – based on 67 reviews
Living Together And Property Agreements Objections To The Bankruptcy Discharge Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/your-guide-to-selling-your-house-under-pcs-pressure/ If you’re going through a divorce and you have children, there’s no doubt that you’re overwhelmed with emotions and tasks. One of the most critical items on your to-do list must be to work with your spouse to create a parenting agreement that works for your family. Regardless of how you feel about each other, parents must communicate. After all, you’re going to be involved in each other’s lives for at least 18 years, and frankly, if you can’t bridge your communication gap, you’ve got a long way to go before you reach peace after the divorce. A parenting plan is a perfect way to negotiate the best arrangement for your family after your divorce. But, where do you start? A parenting agreement (or parenting plan) is a written document that you and your ex-spouse create together to outline how you will handle the care of your children after your divorce. Creating an agreement helps both parents understand what the other expects of them and can alleviate conflict that often comes with separation. What Should My Parenting Agreement Include?Each state has its requirements for a parenting plan, and because every family is different, no parenting plan is the same. Most importantly, you must include details on how you will handle the following: Child CustodyThere’s no doubt that custody is one of the most contentious and hot-button issues in divorces with children. But, if you can set aside your emotions about each other and put the children first, custody shouldn’t be too difficult. It’s most important to determine who will have physical custody of the children, meaning where the child will live most of the time and who will provide day-to-day care. If you can’t decide who should have physical custody, the court will decide for you using your state’s best interest factors. Keep in mind, the judge doesn’t know you or your family as you do, so it’s always best if both parents can work together to formulate the best plan for the children. VisitationOnce you determine who will have physical custody, you’ll need to create a parenting time (or visitation) schedule for the non-custodial parent. In most cases, children will benefit from having a regular and continuous relationship with both parents, so if only the child lives primarily with one parent (the custodial parent), you must create a schedule that allows visitation between the child and the noncustodial parent. Typically, the child will visit the noncustodial parent on weekends, extended vacations from school (like summer and spring break) and will split holidays between both parents. The children are used to seeing both parents on a regular basis, so it’s essential to create a schedule that will minimize the disruption to the children after divorce. Your visitation agreement should also clearly lay out which parent is responsible for transportation during parenting time. Legal CustodyIn most states, the court will award both parents joint legal custody of the children. Legal custody will allow both parents to have an opinion on major decisions that impact your child’s life, including decisions about medical care, religious upbringing, and education. Your parenting agreement should explain whether legal custody is shared or sole (awarded to one parent) and what will happen in the event of a disagreement. Child SupportThere’s no doubt that child support can be a touchy subject. That said, the law is clear that your children are entitled to financial support from both parents, regardless of custody. Your parenting agreement should include details on which parent will pay child support and how much. You can ask your attorney to determine your child support obligation by inputting your information (and your ex-spouse’s income) into your state’s child support formula. What Steps Should I Take to Create a Parenting Agreement?The first step to developing your parenting plan is to open the lines of communication between you and your ex-spouse. You’re not going to get anywhere if neither of you is willing to negotiate and sacrifice for your child’s benefit. Try to put yourself in your child’s shoes. Traveling between two homes isn’t ideal, nor is it easy for children, especially those who are school-aged. Before you decide how you’ll handle custody and visitation, think of the best way to ensure your children get what they need from both parents. If you hire an attorney, you should be honest about what you want and what you’re willing to sacrifice for your children. Be sure to provide any documents, including pay stubs, tax returns, and work schedules to your attorney promptly. If you participate in mediation, you should attend the session with an open mind, but more importantly, you should come prepared with your work and social schedule, your child’s schedule, and your ideal parenting plan arrangement. You’ll also need to provide any financial documents that the mediator requests. Once you and your spouse agree on the terms of your parenting plan, you’ll need to present a signed copy to the court. Although most courts believe that parents know best, you’ll still need to get the judge’s signature for the agreement to become a valid, court order. Be Sure Not to Violate the Court OrderParenting agreements are legally-binding documents once the judge signs it, which means if you violate any provision, you’ll be subject to court fines or other penalties. If your arrangement no longer works for you, or you need to change the terms, you’ll need to follow your state’s procedure for modifying a court order. Physical and Legal Custody in UtahParents can work out their own custody arrangements or go to Utah family court and have a judge decide their case. In either situation, a custody order must address both physical and legal custody and meets a child’s needs. “Legal custody” refers to a parent’s right to make major educational, medical, religious, legal, or cultural decisions on the child’s behalf. Like physical custody, parents can share legal custody or one parent may have sole decision-making power over the child. In situations where parents share legal custody, the custodial parent will still have the final say on decisions where the parents can’t agree. Establishing Visitation SchedulesUnder Utah custody laws, your custody order must set forth a visitation schedule covering weekly, monthly, holiday, and summer visits. Both parents are entitled to regular time with their child and neither parent can prevent visits. Even in cases where a parent has struggled with substance abuse or physical violence, a judge may award that parent visitation usually supervised. A noncustodial parent without joint custody is entitled to minimum visitation under Utah’s custody laws. Generally, this equates to one weeknight per week with the child and overnight visits every other weekend. A judge can award a parent additional visitation time, but not less. The Utah Courts website provides more information on child custody and parent-time in Utah. In limited circumstances where a child’s safety and well-being at issue, a judge may grant one parent only supervised visits. Supervised visits take place at a designated location or agency. A parent will be required to have his or her visits supervised until a judge can be sure a child is safe in that parent’s care. Best Interests of the Child Factors in UtahUtah courts decide child custody whenever parents can’t come to an agreement on their own. Yet even in cases where parents agree on custody and visitation, a judge will review a custody agreement to ensure it serves a child’s best interests. Utah family courts must consider several factors when deciding child custody in Utah, including: When Will the Utah Family Court Consider a Child’s Preference?A child’s preference is one of several factors a judge will weigh in a Utah custody case. The child’s age and maturity matters. Specifically, a judge will give more weight to an older child’s preference, such as a child over 14. Generally, a judge won’t give much consideration to a child’s wishes if the child is under 10. In one Utah family court case, an 11-year old boy stated a preference to live with his father, but the judge said that an 11-year old shouldn’t have control over where he lives. Judges will also look at the reasons a child prefers to live with one parent over the other. In one case, a father with custody of two boys moved them from their hometown and away from their school, friends, and other family members. The children wanted to live with their mother to be close to friends and family, and to continue going to the school they knew. The court found that these were valid reasons to want to live with their mother and gave the children’s preferences significant weight in the custody decision. On the other hand, if a child’s reasons for wanting to live one parent are immature, for example, because one parent is more lax with discipline or gives them lavish gifts, the judge won’t give the child’s preference much weight. Do Children Have to Testify About Their Custodial Preferences in Court?In Utah, children can’t testify in court unless there are extenuating circumstances, and there’s no other way to obtain their testimony. Instead, judges usually interview children in court chambers to determine their custodial preferences. Normally, the court will ask the parents for permission to interview a child, but parental consent isn’t necessary if the judge decides that an interview is the only way to figure out the child’s custodial desires. Parents can’t attend the in-chambers interview. The judge may or may not allow the parent’s attorneys to be present. Often, a court reporter will record the interview. Courts can determine a child’s preference in other ways as well. In one case, the judge deciding custody considered letters written by two boys to their mom, stating that they wanted to live with her. Courts may also allow custody evaluators or mental health professionals to testify about what children have told them regarding their custodial preferences. When Can I Modify Child Custody in Utah?Life is full of changes, and after a few years your custody order may need an adjustment. Utah custody laws allow either parent to file a custody modification request if there’s been a material change in circumstances affecting the child or parents or more than 3 years have passed since entry of the previous custody order. In either situation, the parent requesting a custody change must show that the modification would serve the child’s best interests. When considering whether a modification is appropriate, a judge will consider the same best interests factors as listed above. A judge will hold a court hearing to consider all the evidence. A child’s needs not a parent’s wishes—will determine the outcome of your case. For example, a parent’s desire to relocate for a new job might not be enough to justify a change in custody. However, a custodial parents’ medical crisis might warrant switching custody to the other parent. Do I Need an Attorney?You can develop a parenting agreement with your spouse, and once you put the terms in writing, you can submit it to the court. Or, if you can’t resolve all the issues on your own, you can participate in mediation, which is where a neutral third-party will help you solve your conflicts in a confidential environment. If you aren’t sure that mediation is for you, and you can’t negotiate an agreement on your own, it would be best for each of you to hire an attorney. Keep in mind, even if you and your spouse agree on all the terms in your agreement, it would be smart for each of you to have an attorney review it before you sign. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
The post Parenting Agreements In Utah first appeared on Ascent Law, LLC.
4.9 stars – based on 67 reviews
Living Together And Property Agreements Objections To The Bankruptcy Discharge Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/parenting-agreements-in-utah/ A bankruptcy discharge is an order that wipes out qualifying debt, such as credit card balances, utility bills, and medical debt. You’ll receive it toward the end of your Chapter 7 or Chapter 13 bankruptcy, and for most bankruptcy filers, the bankruptcy discharge is the most important part of a bankruptcy case. Once entered, the filer is no longer responsible for the discharged debt. A creditor can’t call, send demand letters, report nonpayment of the debt to credit reporting agencies, file a lawsuit, or take other actions to collect the discharged debt. When To Expect the Bankruptcy DischargeIf your bankruptcy chapter proceeds as planned; you satisfied all requirements and no one successfully objects to your filing—you’ll receive the discharge at the end of your matter after you’ve done the following: Will the Discharge Order List Discharged Debts?No—and many find this fact surprising. Instead of listing the wiped-out debts, the order will provide general information about debt categories that don’t go away in bankruptcy or “nondischargeable debt.” For instance, it will explain that you’ll likely remain responsible for paying: Liens Remain on PropertyAlthough a discharge relieves you of your responsibility to pay a debt, it won’t get rid of a lien that a creditor might have on your property. A lien allows the creditor to repossess and sell the collateral to recover at least some of the money you borrowed if the debt remains unpaid even if the court discharged the debt in your bankruptcy case. Some liens can be removed, however, even after the closure of the bankruptcy case. A local bankruptcy lawyer will be able to advise you about your options. After the court issues the discharge, creditors holding nondischargeable debts can continue collection efforts. Although the order doesn’t provide the clarity that many debtors desire, it might be helpful to understand that creditors are expected to know whether a particular debt is dischargeable. Protections exist, too. A creditor that attempts to collect a discharged debt wrongfully is subject to paying for any resulting losses. The Court Can Deny or Revoke a DischargeIf you fail to cooperate with the court or the trustee, are not truthful on the paperwork or in your testimony, fail to turn over assets, or are otherwise undeserving of a discharge, the court can deny your discharge. Likewise, if the court learns that you committed some act that would have caused the court to deny your discharge, the court can revoke it. Keep Your Discharge Order after BankruptcyIt’s not a bad idea to keep your discharge paperwork somewhere you can easily find it because you might need it in the future. For instance, a lender might ask for a copy if you apply for credit or a home mortgage. Also, you’ll want to be able to provide the following to any creditor that calls to collect a discharged balance: Types of Bankruptcy DischargesIndividual debtors can file for Chapter 7 or Chapter 13 bankruptcy protection. The trustee will liquidate your nonexempt assets and divide the proceeds among your creditors in a Chapter 7 bankruptcy. Any debt that remains will be discharged or erased. You’ll enter into a payment plan over three to five years that repays all or most of your debts if you file for Chapter 13 protection. Any debt that remains at the end of your repayment plan will be discharged. A Chapter 13 bankruptcy allows some debts to be discharged that can’t be discharged in Chapter 7 proceedings. This includes marital debts created in a divorce agreement, although not spousal support or alimony, as well as court fees, certain tax-related debts, condo and homeowners’ association fees, debts for retirement loans, and debts that couldn’t be discharged in a previous bankruptcy. Limitations of Chapter 7 DischargesSection 523(a) of the Bankruptcy Code describes the types of debt that can’t be discharged in Chapter 7 proceedings, including: Limitations of Chapter 13 DischargesSome debts can’t be discharged under Chapter 13 bankruptcy, including: Disadvantages of a Bankruptcy DischargeYour bankruptcy protection doesn’t extend to joint account holders or cosigners on any of your debt obligations. Your personal liability for the debt is removed when you receive your bankruptcy discharge, but your cosigner remains on the hook for the entire balance of the debt. Creditors can still collect from or even sue—cosigners and joint account holders for discharged debts. Your bankruptcy discharge will additional appear on your credit report and affect your credit score for seven years after you file for Chapter 13 protection, and for 10 years from the date you file for Chapter 7 bankruptcy. How Long Does It Take to Get a Bankruptcy Discharge?Discharge for a Chapter 7 bankruptcy usually occurs about four months after the date you file your bankruptcy petition.14 The discharge occurs after all the payments under the repayment plan have been made in a Chapter 13 bankruptcy, typically three to five years Ways to Object to a Bankruptcy DischargeA bankruptcy discharge cancels your obligation to pay back qualifying debts after your bankruptcy case ends. Creditors cannot legally collect a discharged debt from you. If you’d like to dispute the debtor’s right to a discharge, you’ll need to file either an adversary proceeding (a type of lawsuit) or a motion, depending on the type of debt involved. Types of Objections Raised in an Adversary ProceedingA creditor will usually object to the discharge of its particular debt when fraud or an intentional wrongful act occurs before the bankruptcy case. For instance, examples of nondischargeable debts, if proven, could include: What Debts are Not Qualified to be Discharged in Bankruptcy?There are some debts that are not eligible to be discharged in a bankruptcy case. According to the Bankruptcy Code, some types of debt that may not qualify to be discharged include: Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
The post Objections To The Bankruptcy Discharge first appeared on Ascent Law, LLC.
4.9 stars – based on 67 reviews
How To Value Personal Property In Banktuptcy Living Together And Property Agreements Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/objections-to-the-bankruptcy-discharge/ A contract is no more than an agreement to do (or not to do) something. Marriage is a contractual relationship, even though the “terms” of the contract are rarely stated explicitly, or even known by the marrying couple. Saying “I do” commits a couple to a well-established set of state laws and rules governing, among other things, the couple’s property rights should one spouse die or should the couple split up. Unmarried couples, on the other hand, do not automatically agree to any state-imposed contractual agreement when they start a relationship. The couple may have a joint obligation to a landlord or to a mortgage company if they rent or buy a place together, but that obligation is no different than if they were roommates. Living together, in and of itself, does not create a contractual relationship, nor does it entitle you to a property settlement (or inheritance) should you split up (or should one of you die). A typical unmarried couple buys property, mixes assets, and invests together, often without writing down how they intend to share the property if they split up. Then, if problems about money and property come up, they usually try to reach an understanding or a compromise. If they split up, they quietly divide their possessions and go their separate ways, and they are not required to follow the legal rules that apply to marriage and divorce. But some couples’ relationships don’t end so well. They don’t quietly divide the property and move on, but instead bring their battle to court. Courts in most states have responded to these claims by trying to figure out what the couple had agreed to during the relationship and dividing their property accordingly. In doing so, courts have ruled that unmarried couples generally have the right to create whatever kind of living together contracts they want relating to financial and property concerns. As a result, if an unmarried couple chooses to make an agreement together, or in some states if they act as though an agreement exists, that agreement will often be considered an enforceable contract—a “non-marital agreement” in legal terms, or what we call a living together contract or agreement. Among other things, an agreement can help avoid problems when you commingle money and property; make clear what your intentions and expectations are regarding property ownership, caring for children, and covering household expenses; and ease the division of property during a breakup. What to Include in a Living Together ContractA living together contract can be comprehensive, covering every aspect of your relationship, or it can be specific, covering only one transaction (such as a new house purchase). Your contract should say exactly what you both want, and how much sharing (if any) you want to do of property and finances. Here are the issues that couples most often include in a living together contract: Living together agreements do not usually cover personal aspects of your relationship, such as who does the cooking, feeds the dog, or cleans the house. In fact, agreements on nonmonetary issues are unlikely to be enforced in court. Who Needs a Living Together Contract?Sometimes living together contracts are made to protect each partner in case the relationship ends. But more often, couples enter into them to communicate their needs and expectations, define their rights, and enhance one or both partners’ peace of mind at either the start of the relationship or when the couple makes a major purchase. Creating a well-crafted agreement not only helps you figure out how you really want to own your property, but also serves as a useful reminder if misunderstandings develop later or one of you dies without a will. Another important benefit of a living together agreement is that if one partner is supporting the other, or if one partner has given up a career in order to take care of the home or raise children, the agreement will protect the dependent partner by ensuring that issues of support and compensation are stated in writing. Otherwise, the dependent partner can be left with nothing after having given up a lot. Obviously, you don’t need a contract if you are in a brief relationship. But in a long-term and serious partnership, whether you’re basking in the glow of having just “joined forces” or you’ve been together 20 years, you should consider the legal consequences of dealing with money and property. If you are planning to mix assets or share expenses, you should most definitely put your agreement in writing, especially if a significant amount of money is involved. If you’re both stone-broke, with no property and little prospect of getting any soon, you can still benefit by deciding how you will handle money and property if it ever arrives. Also, you can put more emphasis on the practical issues of day-to-day living together, such as how expenses will be paid. Even though some courts will enforce an oral agreement or even an implied one a written agreement is essential, though it’s surely no substitute for trust and communication. A contract won’t enable an unmarried couple to continue loving one another or prevent them from splitting up; but if times get hard, a written agreement can do wonders to reduce paranoia and confusion and help people deal with one another fairly. There are no national statistics on how many unmarried, cohabiting couples enter into living together contracts, but some lawyers say such contracts are on the rise as a result of more couples living together and new legal rulings that support the validity of living together agreements. Legal Rules Governing Living Together ContractsFor the most part, courts and judges not legislatures have made the legal rules governing living together contracts. First, the court ruled that marital property laws do not apply to couples who are not legally married. Then, the court recognized that unmarried couples are here to stay. Finally, the court declared four contract principles: Why You Need to Put Your Living Together Agreement in WritingYou can avoid a host of legal problems by putting your living together agreement in writing. A written contract covering who owns what is the only way to protect yourself and honor your collective intentions whether you want to keep all your property separate or share some or all of it. Without some type of written agreement, you may face serious and potentially expensive battles if you separate and can’t agree on how to divide what you have acquired. Putting your contract in writing needn’t be time-consuming or dreary (and it’s certainly better than having a judge write one for you as part of an expensive court fight). Approach the task in the spirit of clarifying your understanding and preserving the shared memory of two fair-minded people. Sometimes one or both partners can be reluctant to sign a contract, believing it demonstrates a lack of trust in the other partner’s word. To the contrary, it’s a healthy dose of realism, recognizing that over time memories fade and feelings change, and a written contract can make you feel secure that your intentions at the time you made it won’t be forgotten. Without a written contract, it is almost impossible to enforce a claim of an oral contract in court. If your partner isn’t willing to sign an agreement, don’t rely on the oral promise—it’s best to consider yourself to be without a contract at all. Cohabitation AgreementsUnmarried couples who are living together have the option of creating a number of legal documents (often called “cohabitation agreements”) that can help protect their rights as a couple, while at the same time safeguarding their individual interests and assets. Since unmarried couples who live together may one day split up, especially outside of the legal bonds and social institution of marriage, it makes sense to plan ahead in order to avoid future conflicts. This sub-section includes information about when you might need a cohabitation agreement, what it can do for you, the different ways they can be drafted, and related matters such as wills and durable power of attorney. Legality of Cohabitation AgreementsUnmarried couples have not always had the option to enter into contracts to provide some of the protections of marriage without actually getting married. After some litigation on the matter it has become fairly well established that there are three legal bases by which non-marital agreements can be established. • Unmarried couples can enter into both written and oral contracts covering rights normally associated with marriage, such as the rights to property acquired during the relationship. Cohabitation Agreements vs. Prenuptial AgreementsPremarital and cohabitation agreements are apples and oranges. If you marry your partner when you previously had a cohabitation agreement, it will not be in effect after the marriage. In contrast, the whole purpose of the prenup is to determine what happens after marriage, in case the couple divorces. All states enforce at least some prenups and almost all states recognize cohabitation agreements. Subject Matter of Cohabitation AgreementsThe legal requirements for a valid cohabitation contract are much like the requirements for any valid contract. A valid agreement will be comprehensive to avoid dispute relating to an aspect of the couple’s life together unaddressed by the contract. Some of the aspects of the couple’s life together a cohabitation agreement might cover include: Wills and Durable Powers of AttorneyTwo documents that may be used in place of, or in addition to, a cohabitation agreement are wills and durable powers of attorney. These documents, like a cohabitation agreement, can help ensure that the individual’s wishes are carried out in the event that they die or become incapacitated. Wills direct how a person’s estate will be distributed after they die. This is important because an unmarried partner is usually not entitled to anything at all under the laws of intestate succession that control how property is inherited when someone dies without a will. Durable powers of attorney allow someone to act and make decisions on your behalf if you become legally incompetent to manage your own affairs through illness or accident. Unmarried partners typically have no right to decide important health or financial matters in such situations without a power of attorney. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
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How To Get And File The Bankruptcy Forms How To Value Personal Property In Bankruptcy Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/living-together-and-property-agreements/ Bankruptcy doesn’t just help those in debt—it protects creditors, too. One of the powers given to creditors is the ability to force an unwilling debtor into involuntary bankruptcy. Involuntary bankruptcies don’t occur frequently, and creditors usually bring them against a business organization rather than an individual. Creditors follow a procedure that includes filing a bankruptcy action on behalf of the person or company that owes the money. Creditors Target Assets for Involuntary BankruptcyCreditors want to get paid and forcing the bankruptcy of a person or business without any assets can be a bad move. So it shouldn’t come as a surprise that the focus of involuntary bankruptcy will likely be either on: When an individual or business doesn’t own much, a creditor is better off trying to grab all of whatever money and property might be available outside of the rules of bankruptcy. Once a debtor is in bankruptcy, the automatic stay—an order prohibiting collection activities—stops creditors from attempting to collect the debt on their own, leaving the creditor to share whatever gets recovered by the bankruptcy trustee appointed to the case. How Involuntary Bankruptcy WorksAn involuntary bankruptcy starts when one or more creditors file a petition with the bankruptcy court. A creditor can file an involuntary bankruptcy case under Chapter 7 or Chapter 11. Cases under Chapter 13 and Chapter 12 cases aren’t permitted. The bankruptcy petition must indicate which of two circumstances justifies the involuntary bankruptcy: Once filed, the debtor can respond to the petition. If the debtor fails to do so, the court will allow the matter to move forward, and the debtor will have to participate in the bankruptcy. If the debtor responds, the court will set a hearing and decide whether the bankruptcy should go forward. A judge who finds in favor of the debtor will dismiss the case. The judge might also require a filing creditor to pay the debtor’s costs and fees. (You can find the official forms for involuntary petitions (individual and non-individual) on the Utah Court’s bankruptcy form page.) Involuntary Bankruptcy LimitationsMost involuntary bankruptcies are a collaboration between several creditors. In fact, if the debtor has more than 12 unsecured creditors, at least three of these creditors must join the petition, and the three must have, altogether, at least $15,775 in unsecured debt outstanding from the debtor. A solitary creditor can only file an involuntary petition if that creditor is owed at least $15,775 (as of April 2016) and if the debtor has fewer than 12 unsecured creditors total. The creditors’ claims for debt cannot be disputed, and they cannot be contingent—that is, the amount of the debt must be known and not conditioned on some future event, such as a lawsuit judgment. Involuntary bankruptcies can’t be filed against banks, insurance companies, not-for-profit organizations, credit unions, farmers, or family farmers. How Involuntary Bankruptcy WorksNot all entities can be put into an involuntary case. Involuntary bankruptcy is off limits if the borrower is a bank, insurance company, not-for-profit organization, credit union, farmer, family farmer, municipality, or other government unit. The majority of involuntary cases are filed against business borrowers. Involuntary cases against individuals are rare. Unless the individual is well off and has lots of unprotected assets, an involuntary bankruptcy won’t be worthwhile. Involuntary bankruptcies against businesses are much more likely to bring satisfaction to creditors because businesses cannot exempt property. Creditors with “standing” can file an involuntary bankruptcy. To have standing, the creditor’s debt must meet certain criteria: How Many Creditors Are Necessary?If the borrower has 12 or fewer creditors, the involuntary petition can be filed by one creditor with a debt of at least $16,750. The creditor cannot be an employer, insider, or the transferee of an avoidable transfer. If the borrower has more than 12 creditors, three creditors with an aggregate of $16,750 in debt can file the petition. If the borrower is a partnership, there are additional criteria for bringing the involuntary action. Can the Borrower Oppose the Involuntary Petition?The borrower can oppose the petition. Once the creditors have filed, the borrower has 20 days to respond. The borrower will often attack the creditors’ standing to bring the petition, claim that the debts are subject to dispute or would otherwise not be eligible, attempt to bring evidence that they are paying their debts, or that the petition was brought in bad faith. Borrowers can also choose to convert the petition from an involuntary case to a voluntary one, or negotiate with the creditors to allow the case to move forward as a Chapter 11 reorganization if the creditors filed it as a Chapter 7. Alternatives to Involuntary BankruptcyBorrowers can choose to convert the petition from an involuntary case to a voluntary one, or negotiate with the creditors to allow the case to move forward as a Chapter 11 reorganization if the creditors filed it as a Chapter 7. The bankruptcy court can find that the involuntary case was not properly brought and can dismiss it. The court has the authority to enter a judgment against the petitioning creditors for the borrower’s costs and attorney’s fees. If the court finds that the filing was made in bad faith, it can also award compensatory or even punitive damages. Requirements for Involuntary BankruptcyInvoluntary bankruptcy can only be filed under Chapters 7 or 11 of the Bankruptcy Code. Involuntary bankruptcy is not available under Chapter 12 which pertains to family farmers or family fishermen with regular income, or under Chapter 13, which is available to individuals with regular income and often characterized as a “wage earner’s plan.” Involuntary bankruptcies cannot be filed against banks, insurance companies, not-for-profit organizations, credit unions, farmers, or family farmers. A petitioning creditor is qualified to file an involuntary petition if they hold a claim against the debtor that is not contingent as to liability or the subject of a bona fide dispute regarding the liability or its amount, according to the Bankruptcy Code. The debt must be at least $16,750 and the creditor must demonstrate that the debtor is generally not paying debts as they become due. If the debtor has fewer than 12 qualifying creditors, an involuntary petition can be filed by a single qualifying creditor. If a debtor has 12 or more creditors, at least three creditors must join an involuntary petition. When a Creditor Forces You Into Bankruptcy InvoluntarilyIf this happens to you, you have options. Contest the Involuntary BankruptcyYou’ll start by checking that the creditors filed the involuntary bankruptcy properly. Here are the requirements: Creditors often do worse in bankruptcy than if they pursued their debts outside of bankruptcy which is why it’s rare for creditors to file an involuntary bankruptcy. So if you’re struggling to pay your bills, a Chapter 7 bankruptcy might not be a bad option. The automatic stay will prevent creditors from collecting outside of the bankruptcy action. If you’re an individual, you’ll likely be able to protect at least some property using bankruptcy exemptions. But Chapter 7 works differently for individuals and businesses, so if a company is involved, you’ll want to explore the effects of Chapter 7 bankruptcy on small businesses. And keep in mind that small businesses other than sole proprietors aren’t entitled to a Chapter 7 debt discharge. If you personally guaranteed business debts, your assets might be at risk. Convert the Involuntary Chapter 7 Bankruptcy to Chapter 13 BankruptcyChapter 13 works well for people who want to keep property they’d lose in Chapter 7 bankruptcy. If you’re an individual or sole proprietor, you can convert to Chapter 13 if you think it would be a better choice. But you’ll need enough income to support a Chapter 13 repayment plan. And this chapter isn’t available to businesses other than sole proprietors. If you are a sole proprietor, be sure to review the differences between Chapters 13 and 11. Voluntary BankruptcyVoluntary bankruptcy occurs when someone petitions the court to declare bankruptcy. This is different from involuntary bankruptcy, wherein a creditor or a group of creditors petition a court to declare bankruptcy on a debtor due to their inability to pay. The Process of Filing for Voluntary BankruptcyBefore a person can file for bankruptcy, they’ll need to receive credit counseling within 180 days prior to submitting a petition. This gives the bankruptcy court a chance to review your finances and see if you’ve exhausted all your options before getting a fresh start. Once a person files for bankruptcy both with Chapter 7 and Chapter 13—they’ll need to prove to a court that they don’t have the means to pay their outstanding debt. To do so, they must provide: Once a voluntary bankruptcy is filed, most debt collection will stop due to an automatic stay until the bankruptcy process is complete. At this point, the bankruptcy court or designated trustee will appoint an impartial case trustee to administer the case. Under Chapter 7, the debtor can keep certain exempt assets, but the trustee then liquidates the remaining assets. In this case, the trustee will sell (or liquidate) the debtor’s property, if applicable, to pay off the qualifying debt. While Chapter 7 liquidates, Chapter 13 rearranges, as previously noted. With Chapter 13, people who own assets like a home or car won’t lose their belongings. But the process takes much longer to complete and there are debt restrictions. For instance, unsecured debts must be less than $394,725 and secured debts need to be less than $1,184,200. These limits are changed periodically to reflect adjustments in the consumer price index. The process is complete when a discharge releases a debtor from personal liability for most of their debt. That means creditors can’t go after people who have had a successful bankruptcy discharge, although this varies based on each person’s individual bankruptcy discharge. Note that there are some cases where a discharge is denied. Because the scope of Chapter 13 bankruptcy is so complex, debtors should seek legal counsel before reaching that point of the process. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
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How To Establish Paternity In Utah? How To Value Personal Property In Banktruptcy Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/involuntary-bankruptcy/ When completing the bankruptcy forms, you must provide the value of each item of your personal property, such as cars, furniture, jewelry, and the like. You will list these values on Schedule A/B of the bankruptcy forms, as well as a few other forms. The standard you use in valuing your personal property is the current value. Read on to learn the various methods you can use to get this value for each of your personal belongings. Current ValueWhen you list all of your property on Schedule A/B, you’ll be asked to provide the “current value” of your personal property, which includes everything other than real estate. Another term for current value is the “fair market value.” Fair market value is the price that a willing seller and buyer would agree that the item is worth assuming that there is no particular pressure to conclude the sale. It’s not the cost of replacing your items with new items. The value will likely represent the amount you paid for the item, minus deductions for wear and tear. The current or fair market value will be what a reasonable person would be willing to pay for your items. You’ll list the current value as of the date you file for bankruptcy. Valuation MethodsThe best method for determining the current value for your property will depend on the property type. Motor VehiclesYou’re likely familiar with valuing a car or truck. It’s not much different in bankruptcy. • Trade publications. If the vehicle is only a few years old or there is still a high balance owed on the auto loan leaving little or no equity in the car, looking up the retail value in a trade publication or its online version might be all you need to do. Household GoodsYou can use different methods for valuing your household goods, including furnishings, clothing, and electronics, depending on what best fits your situation. • Comparable sale prices. A reasonable way to value your household items would be to visit various thrift stores, or local flea markets and garage sales, to see what comparable goods are selling for. Keep a record of the dates and locations you visit to support your valuation. You can also check online sales or auction sites. Wherever you find your values, make sure to list the age and condition of the property to give the trustee a better idea of what you are valuing. Jewelry, Furs, Artwork, and CollectiblesThese types of items could need an appraisal. Make clear to the appraiser that you are looking for a current sale value appraisal and not an appraisal for insurance. The valuations may be different. Pawnshops might give you the lowest appraisal value, but because they have a reputation for undervaluing property, the appraisal would likely draw an objection by the trustee. A reputable dealer in estate property may be the best source for appraisals on these items. Bankruptcy Appraisal on Personal PropertyPart of the filing process in bankruptcy includes listing personal property and its value. In bankruptcy you refer to the replacement value or the amount it would be worth if sold by a retail merchant based on the condition and age of the property. Depending on the item itself, you’ll get an idea on how you should determine its value. Supporting documentation related to property values may be reviewed by the trustee upon request. Household furnishings such as televisions, computers, video equipment, etc. are likely to have a value similar to items found in consignment shops or online auctions. Compare your findings and keep a record by noting the date and source you got your estimated amount from. Items that are really old and worn may have little or no value. Personal property such as jewelry, furs and artwork may need an appraisal from a licensed appraiser or auctioneer. You can obtain a written appraisal for bankruptcy purposes from most dealers. Mention to the appraiser you want the current market value amount. Failure to properly disclose assets and their respective values could jeopardize your case. You may not be granted discharge of debts and could face penalty fines. Being honest is an important factor; items need to have an accurate value to be eligible for protection through state and federal exemptions. Plus, appropriate documentation helps support values placed on property were made in good faith. The three types of assets when filing bankruptcyTo understand which assets are at stake for liquidation under Chapter 7, it’s helpful to know the types of assets that can be included in a bankruptcy estate. There are three types of assets in bankruptcy: Exempt and Nonexempt AssetsSome assets are exempt from bankruptcy proceedings. Federal exemptions exclude certain assets from being liquidated, and many states have their own exemptions. These exemptions can include clothing, tools needed for work or health-related purposes and other assets. As a part of the liquidation process, a court-appointed trustee is assigned to a bankruptcy estate to gather and oversee the debtor’s nonexempt assets. Nonexempt assets aren’t protected under the Bankruptcy Code and are sold for cash. The cash is then redistributed to creditors. When listing assets in bankruptcy, debtors must file a full record of all asset types they own. As part of the bankruptcy filing procedure, debtors are required to provide the court with a list of their assets, also known as a schedule of assets. Secured and unsecured assets must be reported when filing a schedule of assets. Examples of assets in bankruptcy filings include: If a debtor is claiming any of the listed assets as exempt, they need to file a separate schedule listing the assets for exemption. The court relies on the debtor to file a complete schedule of assets so the trustee can administer and liquidate the estate as needed. Only assets that are owned by the debtor at the time of filing are included in the bankruptcy estate and considered for liquidation. Those who hide or deliberately fail to report assets from the bankruptcy case risk having their bankruptcy discharge petition denied or revoked. What Is A No-Asset Bankruptcy Case?In a no-asset bankruptcy case, an estate doesn’t have nonexempt assets that can be liquidated. According to the Administrative Office of the U.S. Courts, most Chapter 7 bankruptcy petitions have this designation. In this situation, the trustee files a “no asset” report with the court. Since the estate doesn’t own unprotected assets that can be sold, unsecured creditors won’t receive distributions from the bankruptcy case. Nonexempt assets that are later uncovered by the trustee can still be recovered and then sold from the bankruptcy estate, however. The debtor’s unsecured creditors are notified by the court and must file proofs of claim within a specified time frame to secure sale proceeds. Key considerationsDebtors who are listing assets in bankruptcy should be aware of a few details that can affect the value of their estates and the assets they can claim as exempt. • Each state has its own asset exemption list. States can enforce their own list of exempt assets in addition to federally exempt assets. Household Goods and FurnishingsHousehold goods and furnishings include furniture, electronics (including computers, TVs, and audio and video equipment), silverware, and other miscellaneous items found in your home. A good way to arrive at the replacement value of these items is to use the secondary marketplace value. You can get these from a thrift shop, Craigslist, or eBay. Look for the average cost of items that are similar in age and condition to your own. Keep records of the dates and places from which you arrived at these values, in the event that the trustee asks for documentation supporting your numbers. As a practical matter, very old and worn-out household items generally have little value. Furs and JewelryThe best way to value furs and jewelry is to get a written appraisal from a licensed appraiser. Many dealers of estate property are licensed and qualified to appraise assets for bankruptcy purposes. Trustees often request documentation supporting your values, and written appraisals will help insure that you have valued your property accurately and in good faith. Tell the appraiser to assess the property based upon today’s market value, given the age and condition of the property. It is usually not a good idea to get appraisals from pawn shops or use appraisals written for insurance purposes. Pawn shop values tend to be low, and appraisals for insurance purposes tend to be high. This means they may not accurately reflect the Bankruptcy Code’s standard for replacement value. Works of ArtThe value of art work can range from very valuable to little or no value. Often, you can determine this based on the amount that you paid for the item. If you are unsure of its value, it is best to have it appraised by a reputable art dealer, auctioneer, or licensed appraiser. Your Duty to DiscloseWhen you include your personal property and replacement values on your bankruptcy schedules, you do so under penalty of perjury. This means that you have a duty to disclose all of your assets and their respective values, truthfully and honestly. Failure to do so may result in fines, penalties, a loss of your discharge, or all of the above. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
The post How To Value Personal Property In Bankruptcy first appeared on Ascent Law, LLC.
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Grandparent And Caretaker Visitation Rights How To Establish Paternity In Utah How Do Get And File The Bankruptcy Forms Divorce Lawyer and Family Law Attorneys Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Ascent Law, LLC https://www.ascentlawfirm.com/how-to-value-personal-property-in-bankruptcy/ When you file for Chapter 7 or Chapter 13 bankruptcy, you must fill out a packet of forms. These consist of a voluntary petition, several other forms called “schedules,” and some additional forms. Often the whole packet is referred to as the “bankruptcy petition.” These forms are issued by the federal government and are referred to as the “official” bankruptcy forms. Where to Get the Official FormsYou can find copies of the official bankruptcy forms on the United States courts’ website at www.uscourts.gov/forms/bankruptcy-forms. From the website, you can print out blank copies of the forms. Starting in 2015, the consumer bankruptcy forms began undergoing revisions to make them more consumer-friendly. As of December 1, 2017, all of the revised forms have been released, including a new Chapter 13 Plan (Form 113). (Keep in mind that newer versions are released periodically.) Local Forms and RequirementsIn addition to the official forms that every bankruptcy court uses, your local bankruptcy court might require you to file additional forms that it has developed. Your local bankruptcy court might also have special requirements or rules for filing your petition. You can also get these forms and requirements from the bankruptcy court clerk or a local bankruptcy attorney. You might also find local forms and requirements on the particular bankruptcy court’s website. Filing the FormsIf an attorney represents you in your bankruptcy case, the attorney will prepare these forms (most likely using software) for your review and signature and then file them electronically with the court. If you are representing yourself, you must file the bankruptcy forms in person at the bankruptcy court. There is one exception to this procedure: Several courts have a pilot project which allows debtors without attorneys to file their forms electronically. More courts may be adding this feature in the future. Check with your local court as to how many copies you’ll need to file (usually it’s an original and one copy), the order the forms should be in, and other requirements (such as staples, hole punching, etc.) Filing in the Right Bankruptcy CourtThere are federal bankruptcy courts all over the country. The courts are divided into judicial districts. Every state has at least one judicial district; most have more. You can file in either: You might have additional filing options if you own a business or have substantial assets somewhere other than where you live. In both situations, you’ll want to consult with a local bankruptcy attorney. Your local bankruptcy court may require you to file a few additional forms. We don’t provide a list of those here, since they vary widely. And many local courts don’t require any forms other than the official bankruptcy forms. To learn where to find local forms, see How to Get and File the Bankruptcy Forms. Forms You Need to File in Chapter 7 BankruptcyHere’s a list of the forms most people need when they file for Chapter 7 bankruptcy. Some of these, however, may not apply to your case. For example, if you are not requested a filing fee waiver, you won’t need to fill out Form B 3BA Application for Waiver of Chapter 7 Filing Fee. • B 101 Voluntary Petition for Individuals Filing for Bankruptcy Forms Required in BankruptcyEach form includes instructions that tell you what to put on the form, but the forms don’t explain the legal consequences of your disclosures. You must do the appropriate research or hire a knowledgeable bankruptcy attorney in Ascent Law Firm. • Voluntary Petition for Individuals Filing for Bankruptcy The Petition (Bankruptcy Form 101)The Voluntary Petition for Individuals Filing for Bankruptcy (voluntary petition) is the introductory form where you disclose your personal information such as your name and address. This is also where you indicate your intention to file for Chapter 7 and provide information about the nature of your debts (such as consumer or business), estimated amount of creditors, assets, and liabilities, and any prior bankruptcies filed within the last eight years. Before you can file for Chapter 7 bankruptcy, you must also complete a credit counseling course with an approved agency. You’ll indicate that you’ve done so in your petition and attach a copy of the completion certificate. Your Property (Bankruptcy Form 106A/B)Schedule A/B: Your Property is where you disclose any ownership interests you have in both real property and personal property. Real property includes your house, condominium, land, or any other type of real estate you own. When you complete Schedule A/B, provide the description and location of the property, the nature and value of your interest, and the amount of secured claims (such as mortgages or other liens) encumbering the property. List All Personal PropertySchedule A/B contains an extensive list of the types of assets that should be included on this form. Be sure to include all of your personal property even if you think it is worthless. If you intentionally omit an asset, you may be denied your discharge and even prosecuted for bankruptcy fraud. Valuing Your Personal PropertyWhen determining the value of your personal property in Schedule A/B, use the property’s replacement value. Replacement value is the amount of money it would cost to purchase an item similar in age and condition (what a retail merchant would charge for a similar item). Your Exempt Property (Bankruptcy Form 106C)Schedule C: The Property You Claim as Exempt is where you list the property you can protect in bankruptcy. If you file a Chapter 7 case, you are allowed to keep a certain amount of property, called “exempt” property. If an asset is exempt, it is safe. However, the appointed bankruptcy trustee has the power to sell your nonexempt assets to pay back your creditors. Each state (and the federal system) has a unique set of bankruptcy exemptions (and a few states allow their citizens to use the federal exemptions). The amount of property you can keep in Chapter 7 bankruptcy depends on the exemption laws of your state. Schedule C is where you list and claim your exemptions for each of the assets listed in your petition—it is arguably one of the most important forms in your bankruptcy petition. To fill out Schedule C, you must determine what bankruptcy exemptions are available to you and research them thoroughly. If you are unsure about whether your property is exempt, talk to a bankruptcy attorney in your area. Debts Secured By Property (Bankruptcy Form 106D)Schedule D: Creditors Who Have Claims Secured by Property is where you include a secured claim—a loan or obligation for which you have pledged a piece of property as collateral. If you fail to pay the obligation, called “defaulting,” the creditor typically has a right to take back the property through foreclosure or repossession. The most common examples of secured claims include your mortgage and car loan. When you fill out Schedule D, include the creditor’s name and contact information, the nature and amount of the lien, date it was incurred, and the description and value of the property subject to the lien. If the lien amount exceeds the value of the property, list the difference in the unsecured portion column. Unsecured Debts (Bankruptcy Form 106E/F)Schedule E/F: Creditors Who Have Unsecured Claims is where you list remaining debts, such as credit card bills, personal loans, and medical bills. You also list claims which are not dischargeable in bankruptcy, called “priority claims.” Common examples include certain taxes and domestic support obligations, such as alimony or child support. Make Sure to List All Remaining DebtsYou must disclose all of your debts in your bankruptcy schedules even if you want to repay them. If you forget to list a debt, it may not get discharged in your bankruptcy. So you should carefully review all of your debts to make sure they are included. It is typically a good idea to obtain a copy of your credit report and compare it against your other bills so that you don’t miss anything. Deficiency Balances After Foreclosure or RepossessionIf a secured lender forecloses on or repossesses your property, it will typically sell it at an auction to satisfy its debt. If the sale proceeds are not enough to cover the balance of your loan, you may be on the hook for a deficiency balance (whether you can be held liable for a deficiency depends on the type of property and your state’s deficiency laws). If you have a deficiency balance, you will list it on Schedule E/F because, after foreclosure or repossession of the property, it isn’t a secured debt any longer. Executory Contracts and Unexpired Leases (Bankruptcy Form 106G)Schedule G: Executory Contracts and Unexpired Leases is where you list contracts into which you and a lender have entered and to which both parties are still obligated. Common examples of contracts and leases that should be disclosed on Schedule G include: What Happens to Executory Contracts and Unexpired Leases in Bankruptcy?When you file for bankruptcy, your rights under the contract become the property of the bankruptcy estate. The trustee has the power to assume your contract or lease if it will generate value for your creditors. But unless you are paying below-market rates or the trustee can otherwise profit from your contract or lease, he or she will not assume it. If you want to continue with your lease or contract, you can assume it on your Statement of Intention for Individuals Filing Under Chapter 7 form. If you want to get out of the lease, you can reject it. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
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