Bankruptcy Basics

Today, the Fourth Circuit Court of Appeals ruled that undervaluing your assets in a bankruptcy case can be grounds to deny a debtor a discharge of his debts.  The case is In re:  Worley (link here). 

A diamond engagement ring can be a symbol of love and devotion.  It can also be a potential problem in a bankruptcy proceeding.  Ever since the DeBeers Organization began an aggressive marketing campaign for diamonds during the depression years of the 1930’s, diamond rings have become common place as in engagement arrangements.  They can be valuable, and exemption laws often cover only limited amounts for jewelry.

 “Why should I pay money I don’t have to a lawyer to file for bankruptcy? Isn’t it just filling out a few forms!”

Do not count Social Security Income or Supplemental Security Income when calculating disposable income for debt repayment.

Bankruptcy requires an evaluation of one’s ability to pay existing debt. This article discusses why Social Security Income and Supplemental Security Income is not used for repayment of debt in Chapter 7 and Chapter 13 forms of bankruptcy.

Despite a lengthy delay in her chapter 7 proceeding, amounting to nearly two years, the fact that her chapter 7 case was still open prevented a West Virginia woman from filing a chapter 13 case.  In re Lynch, Nos. 5:14-bk-50001, 5:16-bk-50272 (S.D.W.Va. Dec. 2, 2016) (Volk, J.).

The debtor filed a chapter 7 case on January 7, 2014.  The trustee had filed a no-asset report on June 25, 2015, but the case remained open and no discharge of debts had been granted.