Bankruptcy filers receive a number of protections in Section 525. Governmental entities may not discriminate in a wide variety of ways including denying or failing to renew licenses.
 
Especially those in the military and others with security clearances are almost always better off filing, because they are perceived as less of a risk without debt. The UCMJ (Uniform Code of Military Justice for those not familiar) has an offense for dishonorably failing to pay a debt. Bankruptcy protects service members from prosecution for this as you no longer owe the debt. Private employers may not terminate employment or any anyway discrimate against an employee for being in bankruptcy. The open question however is whether they can refuse to hire a person initially. The law is not clear. Courts have ruled differently on this issue. I am taking a case up the appellate process right now on this very issue. It involves a company who refused to hire an applicant with stellar credentials and impeccable character becasue of a bankruptcy.
 
I think it is very short sighted of employers to do this. The good news is that this is an exception rather than the rule. Most employers acknowledge that bankruptcy is the honest and responsible way to handle being over-indebted and respect those who do so. The one client I am suing for is the only one I have ever heard of who has been denied a job because of a bankruptcy.

Business Week reports that commercial mortgage defaults are on the rise and could be the next default wave. According to the editorial the default for commercial mortgages hit 2.25 percent – a fifteen year high. They go on to say that this will worsen even if the economy as a whole improves, with a peak by 2011.
 
I find this prediction very credible. There are a lot of other reports who claim the economy is getting better and I do not believe them. This is the first realistic one in a while.
 
Regardless, bankruptcy rates are going to rise. Uncertainties in the world economy, such as the election in Iran will cause continued turmoil in the world markets and in return consumers will continue to feel the squeeze resulting in more bankruptcies. The commercial mortgage crisis about to hit will certainly contribute to this increase.

In addition to advising my clients to stop charging in preparation for their bankruptcy filing – once I meet with them, I have to advise them that in some rare cases a creditor will object to the discharge of certain recently incurred charges.
 
The creditors have 60 days from the date first set for the meeting of creditors, to object to the discharge of specific debts in your bankruptcy.
 
One such ground for objection is that the debt was incurred by fraud or misrepresentation other than a misreprentation of your financial condition.
 
The hardest way for a creditor to prove such a misrepresentation is to prove that you did not intend to repay the debt when you incurred it. This is not easy.
 
A simpler way is through the use of a presumption of which there are two in that section of the Bankruptcy Code. The first is if you charged more than $500 in luxury goods or services with 90 days of the filing. If they can prove this than the burden of proof shifts to you to prove the absence of fraud or that you intended to pay in order to rebut this presumption. The second presumption of fraud applies if you have taken out more than $750 in cash advances within 70 days of filing. Again this presumption can be rebutted, but the burden of proof shifts to you if the creditir can prove up the facts giving rise the predumption.
 
The best thing to do is to avoid charges especially cash advances soon before you file. Even where you had no choice all is not lost. The number of challenges are few, but it can happen to you. A worst case scenario is just that the particular debt is not discharged. Also if the creditor loses the challenge they have to pay your attorneys fees for defending you.

Bankruptcy is as American as apple pie. Our constitution gives the federal government the power to enact uniform bankruptcy law which is the law we now file bankruptcyn well at least its successor.
 
Robert Morris one of our founding fathers who helped finance the American Revolution apparently got a lot of debt discharged in a bankruptcy. I like to think of bankruptcy as a patriotic American thing to file bankruptcy. You are just exercising your constitutional right to use the laws that Congress has provided to orderly dispose of your debts.

Bankruptcy attorneys have struggled to explain the logic to their clients why the U.S. Trustee takes the position that you cannot deduct the ownership expenses for vehicles unless you owe debt or a lease payment on it.
 
The Fifth Circuit Court of Appeals whose rulings apply to Texas, Louisiana, and Mississippi has ruled in the Tate case No. 08-60953, that you can deduct ownership expenses in the means test on a vehicle even if you do not have a debt payment or lease payment on it.
 
This means that many bankruptcy attorneys need to advise their clients who have fewer than two cars to go out and buy one or two old cars. The attorneys should encourage the client to pay cash, because we are prohibited from advising clients to incur debt.
 
The cars should also be at least 6 years old by model year or have at least 75,000 miles so you can get the additional $200 per vehicle deduction per vehicle. This is per the IRS manual 5.85. Some bankruptcy courts may not allow this deduction, but they should!
 
In short where the vehicle expense is $489 per vehicle with the additional $200, a debtor with only one vehicle could get an additional $689 deduction on the means test. In Chapter 7 it might make you pass easier and avoid a dismissal and in Chapter 13 it might save you money you would otherwise have to pay to the unsecured creditors.
 
I am not telling consumers themselves to go out and buy the additional car, talk to your attorney first and make sure it helps in your case.

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As a bankruptcy attorney I am often alone among my colleagues in recommending good resources on how to rebuild your credit and finances after bankruptcy.
Stephen Snyder has gotten together with some former Bradley Ross employees who are starting a new credit repair service.  Snyder puts out the Life after Bankruptcy email list and the After Bankruptcy Foundation’s seminar.
Snyder has a record of altruistically helping those who have filed bankruptcy.

The new credit repair service opens Monday, June 15, 2009 at 11 am central time to 2500 charter members.  I recommend signing up now at www.allenmichael.com to get a chance to become a charter member before they open to the general public.  I warmly recommend this service and wish that other bankruptcy attorneys would join me in recommending the service.

Chapter 7 bankruptcy may still be an option for you even if you do not pass the means test.  If you have primarily business debt or other non-consumer debt or certain active duty military are exempt from the means test as we know.  But even if you are subject to the means test that does not mean that your case will be dismissed if you do not pass.

The United States Trustee, who oversees bankruptcy filings and makes sure no one who is not entitled to it receives a Chapter 7 discharge, will sometimes decline to file a motion to dismiss if they think it is appropriate.  Common reasons for declination are significantly reduced income, severe medical conditions, or other compelling reasons.  Someone who just lost their job will not have the same level of income in the furture.

Additionally, Section 707(b) of the Bankruptcy Code makes dismissals discretionary for the judge.  The judge is not required to dismiss the Chapter 7 even if the presumption of abuse is not rebutted.  You may be able to persuade the judge if there are good reasons.

There are times when it is hard to keep a Chapter 13 bankruptcy case going. If you can’t make the payments it can sometimes be hard to catch up. One advantage of a dismissal and a refile is that you might have had a car for more than 910 days before the filing of the second case, then you can cram it down and pay only the vale of the car, even if it a lot less than what is owed.
 
Just make sure the dismissal is without prejudice so that you are allowed to file again. If dismissal is due to your inability to make payments that is usually without prejudice.
 
In the new case you will have to file a motion to extend the automatic stay or impose one if you had two cases pending within the previous year. It is always best to talk to your attorney and weigh the options very carefully, but a lot of times it is better if the case is dismissed and you get to start over.

If you live in a state that allows you to use the bankruptcy code exemptions, such as Texas, or you are otherwise eligible for the bankruptcy code exemptions, you can keep up to about $11,000 for single filers or $22,000 if married filing together.
 
This is because of the Section 522(d)(5) wild card exemption which allows you to use the unused portion of the homestead exemption for any type of property. The wildcard is very handy and you can use it in combination with other of the bankruptcy code exemptions, as well as tenancies by the entirety and the special retirement exemptions which apply regardless of which exemption scheme you choose.
 
The bottom line is that if ýou are eligible to use the bankruptcy code exemptions, you can keep a lot of cash.

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