Bankruptcy laws have existed since way before crypto burst onto the scene. However, courts can still apply old rules to new technology. When someone files for Chapter 7 bankruptcy, the court may claw back certain transactions, especially if they look like an attempt to hide assets.
If a person transferred or withdrew crypto before filing, those funds could be pulled back into the bankruptcy estate. Courts can use blockchain records to find hidden funds and recover money for creditors.
In Chapter 7 cases, courts focus on transactions made before bankruptcy. If a debtor moved assets within 90 days of filing, the court may deem it a preferential transfer under Section 547 of the Bankruptcy Code. If the transfer was done to cheat creditors, it could be labeled a fraudulent transfer under Section 548.
Since crypto transactions are recorded on the blockchain, financial experts can trace where the money went. Courts then decide if those assets should be returned to the bankruptcy estate.
Crypto clawbacks aren’t as simple as recovering cash. Some of the legal questions include:
If you are facing a clawback claim, your defense might include:
If you’re involved in a bankruptcy that includes digital assets, please consider getting legal help. Contact O’Brien Law Firm, LLC, today to discuss your case and protect your financial future.
When a Mississippi resident is facing overwhelming debt, options start to dwindle. Financial problems may have a single cause, such as an illness or job loss, or might be the result of several years of financial bad luck or mismanagement. However, the associated costs of bankruptcy may prove burdensome for a debtor and may even make filing for bankruptcy protection difficult.
Financial counselors indicate there are three categories of costs an individual filing for bankruptcy must consider: court filing fees, mandatory education classes and attorney fees. The minimum total for these is a little under $1500 while the maximum can be closer to $4000, depending primarily on whether Chapter 7 or Chapter 13 bankruptcy is involved. It is possible to have fees on filing and classes waived based on income as compared to federal poverty guidelines, in consideration of family size and state of residence.
Legal representation is not a guaranteed right, and it is possible to represent oneself in a bankruptcy proceeding. There are legal clinics that do not offer representation but can be of assistance with filling out the appropriate paperwork and legal forms. The question becomes whether it is worth the risk to file in pro per, that is, acting as one’s own counsel. Statistically, it is extremely difficult to successfully discharge debt through self-representation as compared to the success rate when represented by legal counsel.
Bankruptcy is governed by federal law, and procedures must be followed precisely. A consultation with an experienced bankruptcy lawyer might be helpful in determining if either Chapter 7 liquidation or Chapter 13 reorganization is appropriate under the specific circumstances of the case.
Financial challenges and overwhelming debt are problems for many Mississippi residents. Struggling with debt may lead to physical and emotional exhaustion, especially if the person has to moonlight. Paying back creditors is a weary task. However, many people choose to go this route because they think filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy may cause additional financial struggles.
Some debtors do not realize that choosing a route other than bankruptcy could mean losing funds in a retirement account because of the need to pay back creditors. In most cases, a bankruptcy filer does not need to relinquish assets held in an Individual Retirement Account (IRA) or a 401(k) plan. These types of funds are typically protected by bankruptcy regulations. Consulting with a bankruptcy attorney can help clarify the pros and cons.
Legal counsel may also help a client get a better settlement with creditors. It’s important to understand that debtors opting for debt settlements may need to pay taxes on the forgiven amounts. A debtor facing serious financial challenges may not have the money available to pay back the Internal Revenue Service. Furthermore, IRS debts generally cannot be forgiven in a bankruptcy. This makes obtaining good debt forgiveness terms all the more important.
An individual contemplating filing for Chapter 7 bankruptcy first needs to pass a means test. A bankruptcy attorney can help a client fill out the legal paperwork required to determine if the debtor qualifies. Setting up an appointment with a bankruptcy lawyer is the best way to make a wise decision.
For many people in Mississippi, there can be a close relationship between divorce and financial problems. Existing financial difficulties can lead to tension and distress in a marriage. In addition, the extra challenge of property division can be devastating for people with little income and substantial debt. Therefore, a number of people decide to file for bankruptcy at the same time that they file for divorce. They may wonder whether it is better to make a bankruptcy filing before or after the divorce is finalized.
Some divorcing couples may want to file jointly for bankruptcy because they can discharge both of their debts before proceeding to the divorce. If they are filing for Chapter 7 bankruptcy, the entire process can be finalized in a few months. On the other hand, people filing for a Chapter 13 bankruptcy, often because they bring in over the median income in their area, may want to wait until after the divorce. This type of bankruptcy involves a years-long repayment plan, and it can be challenging to divorce while handling the plan as well. For example, the final property division outcome of a divorce can be delayed extensively.
Filing for bankruptcy jointly can help people deal with property like a home. When spouses file jointly, they have increased exemptions for property. People with income at or below their state median may benefit from a joint filing, especially if they are still on good terms. Those with high incomes, on the other hand, may wish to pursue bankruptcy separately.
The process for seeking debt relief and divorce can differ for each couple and each person. A bankruptcy attorney may provide detailed guidance and advice on how filing for personal bankruptcy might affect a divorce and potentially help people achieve a new financial future.
People in Mississippi may be aided in finding relief from overzealous creditors by a U.S. Supreme Court ruling. The high court ruled on June 3 that creditors can be held in contempt of court if they continue to pursue debts that were clearly discharged in a bankruptcy. Previously, the Ninth Circuit court had found that creditors should be cleared of sanctions in these cases, even if they should have reasonably known that the bankruptcy discharge applied to their debt.
The Supreme Court said that other courts can use civil contempt penalties against creditors that fail to follow a bankruptcy discharge order if it can be shown that the creditor should not have had any doubts that the order barred their activities. The case came about after the Sherwood Park Business Center continued to attempt to collect debts from a man who had filed for Chapter 7 bankruptcy, eliminating the debt. The bankruptcy court imposed sanctions on the creditor, saying that it was aware of the man’s bankruptcy order and the debt’s discharge. However, other courts overturned the contempt order on the basis of the creditor’s statement of its good faith in the legitimacy of its collection attempt.
Bankruptcy lawyers said that the high court’s ruling provides a higher level of protection for debtors. It uses an objective standard of reasonableness to assess a creditor’s actions and beliefs rather than relying on a subjective assessment of good faith. They said that the bankruptcy code provides detailed provisions and that creditors should generally be very clear on whether the bankruptcy discharge applies.
One reason why many people file for bankruptcy is to put an end to phone calls, letters and other forms of ongoing creditor demands. People who are facing an insurmountable debt burden might opt to consult with a bankruptcy attorney about their options for relief.
