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Can I keep a piece of property and agree to pay the debt in a Chapter 7 case?

In some circumstances, a debtor may choose to keep an asset, such as a car, and agree to pay some or all of the debt. This is called reaffirming the debt and in such circumstances, the creditor agrees not to repossess the asset.
This has to be done before a discharge is entered and involves an agreement between the debtor and the creditor concerned. In order to reaffirm a debt, the creditor must sign and submit a reaffirmation agreement to the court. A reaffirmation agreement must contain certain disclosures, including the amount of the debt and how that has been calculated. Additionally, the debtor is required to file a financial statement showing how the debt will be paid and showing that the payments are feasible.
If the debtor is represented by an attorney, the attorney must submit a written certification that the debtor was advised of the consequences of the reaffirmation and that repayment will not represent an undue hardship. If the debtor does not have an attorney, the bankruptcy judge must approve the reaffirmation.

Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

Our bankruptcy law firm is located in Augusta, Georgia. Our Georgia bankruptcy lawyers represent clients in Augusta & throughout the CSRA, including Columbia County, Richmond County, Lincoln County, McDuffie, Jefferson and Burke Counties, Evans, Appling, Waynesboro, Louisville, Thomson, Lincolnton, Girard Georgia & Aiken, South Carolina & North Augusta SC.

PART I—COMMENCEMENT OF CASE: PROCEEDINGS RELATING TO PETITION AND ORDER FOR RELIEF

Rule 1002. Commencement of Case

(a) Petition.

A petition commencing a case under the Code shall be filed with the clerk.

(b) Transmission to United States trustee.

The clerk shall forthwith transmit to the United States trustee a copy of the petition filed pursuant to subdivision (a) of this rule.

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Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

United States Bankruptcy Courts

Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court. Bankruptcy cases cannot be filed in state court. Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan.

Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. These procedures are covered under Title 11 of the United States Code (the Bankruptcy Code). The vast majority of cases are filed under the three main chapters of the Bankruptcy Code, which are Chapter 7, Chapter 11, and Chapter 13.

Filing for Bankruptcy

Watch the videos at http://www.uscourts.gov/bankruptcycourts.html
Bankruptcy Basics provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of the federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

In 2005, the Bankruptcy Code was amended to require that most individual debtors complete a special briefing from an approved credit counseling agency before filing a bankruptcy case. In most states, the United States trustee is responsible for approving the providers that offer this special pre-bankruptcy briefing, and in the six districts located in Alabama and North Carolina, the bankruptcy administrator assigned to those districts approve them. The United States trustee and the bankruptcy administrators maintain a list of approved providers.

Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

It looks like Lear in next in line for a bankruptcy filing. The recession has hit all levels of the transportation industry. Here is an recent article that discusses the news.

Lear In Debt-Restructuring Pact, Plans Bankruptcy Filing

By Jeff Bennett and Kate Haywood
Of DOW JONES NEWSWIRES

Lear Corp. (LEA), a maker of automotive seats and interior electronics, reached a tentative agreement with lenders to restructure its debt and said it plans to file for Chapter 11 bankruptcy protection shortly.

While Lear is the latest supplier to succumb to falling worldwide auto sales, its fate is being closely watched for possible knock-on effects in the global supply chain and as a test of lender sentiment in the sector.

The company is one a handful of large seat suppliers, with more than two-thirds of its sales outside the U.S., and analysts said any interruption in production could hit a swathe of auto manufacturers.

The Southfield, Mich., supplier received commitments from a syndicate of secured lenders, led by JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), for $500 million in new debtor-in-possession financing. That financing will convert into exit financing with a three-year term upon Lear’s emergence from bankruptcy protection.

JPMorgan declined to comment. A Lear spokesman declined to say where the company will file for bankruptcy protection.

“We want to assure everyone – customers, suppliers, employees, and the communities of which we are a part – that Lear is committed to positioning our business for sustainable success,” Lear Chief Executive Officer Robert Rossiter said in a written statement. “We believe that the agreement in principle with the steering committees of our secured lenders and bondholders to support our plan of reorganization will enable us to emerge expeditiously.”

Lear’s units outside the U.S. and Canada won’t be part of the bankruptcy filing. It said its operations outside the U.S. and Canada are well-capitalized, well-positioned and have a strong backlog of new business.

Lear would be the eighth major supplier to seek Chapter 11 protection since 2005 and the third parts maker to file in the past month. Visteon Corp. (VSTN) and Metaldyne Corp. entered bankruptcy May 28.

The U.S. company has been on bankruptcy watch since missing a coupon payment on June 1 amid an ongoing restructuring and efforts to repair its balance sheet and secure alternative debt and equity funding. Lear had 30 days to make the $38 million payment.

Lear prospered during the 1990s as the U.S. market for pickup trucks and sport-utility vehicle expanded, boosting interior, seating and electronics content.

The market changed in mid-2005 as skyrocketing raw-material prices combined with overcapacity in the industry to erode Lear’s profit margins. The company’s interior’s division, which produced plastic products such as door trims, was the hardest hit. The company later divested itself of the unit.

Still, Lear couldn’t sidestep the slide in global auto sales and the tougher contract terms sought by manufacturers. The company’s revenue dropped 44% to $2.2 billion in the first quarter of 2009.

In 2007, billionaire investor Carl Icahn offered to buy out the company for $37.25 a share. Investors, who said Lear was worth double that amount, rejected the offer and Icahn walked away from the deal.

-By Jeff Bennett and Kate Haywood, Dow Jones Newswires;
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Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

What is a discharge in bankruptcy?

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.

Although a debtor is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

http://www.uscourts.gov/

Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

When does the discharge occur?

The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 (liquidation) case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting). Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court. In individual chapter 11 cases, and in cases under chapter 12 (adjustment of debts of a family farmer or fisherman) and 13 (adjustment of debts of an individual with regular income), the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a chapter 12 or chapter 13 plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing. The court may deny an individual debtor’s discharge in a chapter 7 or 13 case if the debtor fails to complete “an instructional course concerning financial management.” The Bankruptcy Code provides limited exceptions to the “financial management” requirement if the U.S. trustee or bankruptcy administrator determines there are inadequate educational programs available, or if the debtor is disabled or incapacitated or on active military duty in a combat zone.

http://www.uscourts.gov/

Gonzalez & Waddington are Augusta GA bankruptcy lawyers and GA bankruptcy attorneys that assist our clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.

Our bankruptcy law firm is located in Augusta, Georgia. Our Georgia bankruptcy lawyers represent clients in Augusta & throughout the CSRA, including Columbia County, Richmond County, Lincoln County, McDuffie, Jefferson and Burke Counties, Evans, Appling, Waynesboro, Louisville, Thomson, Lincolnton, Girard Georgia & Aiken, South Carolina & North Augusta SC.