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“Real Housewives” Bankruptcy Highlights Chapter 13 Issues in Louisville

The Star-Ledger in New Jersey reports that “Real Housewives” star Joe Giudice has withdrawn a bankruptcy petition after taking the Fifth Amendment in consultation with a criminal lawyer. E! Entertainment reports the petition was withdrawn after the filer became uncomfortable answering questions from a bankruptcy trustee. 1064586_time_is_money_2.jpg

The media does not say whether Giudice was filing for Chapter 7 or Chapter 13 bankruptcy but a withdrawn petition is not at all uncommon in Chapter 13 filings. Typically, in a Chapter 7, few creditors bother to show up at the hearing or contest the discharge.

In other words, this is most common when assets are at stake. In most Chapter 7 bankruptcies, the petitioner seeks debt forgiveness with few assets. An upside down mortgage or car loan, are not considered assets, after all. And retirement funds are protected.

Questions more often arise in Chapter 13 filings. In Chapter 13, a debtor discloses assets and sources of income and establishes a repayment plan in an attempt to satisfy most debts presented to the court. The plan lasts 3-5 years. In an increasing number of cases — particularly those involving bad real estate debt — a Louisville bankruptcy attorney may suggest filing for Chapter 13 to see who shows up with their hand out.

For instance, say a homeowner who lost several properties in foreclosure is being chased for $50,000 on a second mortgage. By filing Chapter 13, you force the banks and collection agencies to stop hounding you, and you see who shows up in court. If you get tagged for the $50,000 and two other banks show up with $500,000 in deficiency judgments, you dismiss the Chapter 13 to avoid establishing the payment plan.

If no one shows up, or if you are prepared to make payments to those who do, you enter into the plan.

Chapter 13 bankruptcy — bankruptcy protection — is a court action brought by the consumer. The consumer is not obligated to go through with the filing. There can be many legitimate reasons to dismiss a bankruptcy case. Perhaps the debtor has obtained employment or his or her financial picture has changed substantially. Perhaps he or she received an inheritance.

At the same time, good legal advice is critical. Lying to trustees or misrepresenting assets can result in serious legal trouble — even when done unintentionally. As the case of former major league baseball player Lenny Dykstra illustrates, not properly disclosing assets can lead to disaster. Dykstra is facing federal charges after being investigated for grand theft. The bankruptcy trustee in his case accused him of improperly hiding and selling assets. He faces 80 years in prison if convicted of charges related to bankruptcy fraud, embezzlement and obstruction of justice.

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Help with bankruptcy in Louisville and for a free consultation, contact the Schwartz Bankruptcy Law Center today. Call 1-866-270-4495 or contact us through this website.

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