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David J. Harris

David Harris’s Answers

21 total

  • If i cash in my 401k while i am in the process of fileing for bankruptcy will I loose that money?

    If I cash in my 401 k while i am in the process of fileing for bankruptcy will I loose that money?

    David’s Answer

    I highly recommend that you DO NOT cash in your 401(k).

    First and most important is that a 401(k) is generally protected from the reach of your creditors and from the reach of a bankruptcy trustee. Simply, funds in a 401(k) are exempt in a bankruptcy case, but not funds are withdrawn from it.

    Second, you will incur a non-dischargeable and unnecessary tax on the money that you withdraw from the 401(k).

    Third, if you are under age 59 1/2, you will incur an early withdrawal penalty unless the withdrawal is used for qualified expenditures.

    If you wish to learn more about bankruptcy as it affects Pennsylvanians in Luzerne County, please click on to my web site (below) and review some of my blog posts.

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  • Should I defend a hearing before district magistrate>

    I have joined a debt relief company. One of the companies I owe money has filed a civil complaint against me with the district magistrate. I fully acknowledge I owe the money they claim I owe. Can it benefit me in any way to defend myself at th...

    David’s Answer

    I practice in Luzerne County. My experience is that if you defend, the creditor's counsel will attend the hearing. At that time, you can discuss a settlement with him or her. It's much better to have this discussion face-to-face. Alternatively, you could call the attorney in advance and inform him or her that you do not dispute the debt and would like to get on a payment plan. With this said, if you have other debts, bankruptcy may be an alternative option. You can check out my home page below as well as my Blog that contains information that may be useful to you.

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  • Bankruptcy

    My ex fiannce claimed bankruptcy and put me down as a creditor and i was never notified now i am being sued for a bill he never paid me for do i have any legal rights and is this public information at the court house?

    David’s Answer

    Generally, a co-signer or guarantor may be liable for a loan or debt obligation if the primary borrower files for bankruptcy. The same may hold true for an authorized user or co-user of a credit card.

    The primary borrower’s bankruptcy filing does not result in a discharge of the debt of the co-signer or guarantor.

    There are exceptions, though!

    Please read more from my February Blog Post entitled:
    "Are Co-Signers Or Guarantors Responsible For A Loan Or Debt If The Primary Borrower Files For Bankruptcy." The link is below.

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  • As result of foreclosure, can mortgage company seize control of my equity in small company?

    After being unemployed for 8 months, finally landed new job with 5% equity in small company but salary still doesn't cover mortgage. House for sale for 6 months now, so worried about possible foreclosure...if foreclose, can mortgage company take ...

    David’s Answer

    The answer to you question will be state-dependent, but my response below is broad enough to address many contingencies, including what may apply in your state.

    In Pennsylvania where I practice, a foreclosing creditor has 6 months following a foreclosure sale to bring a deficiency action. If the creditor fails to do so, it is barred in bringing a deficiency action in the future.

    In Pennsylvania, I have found that banks rarely pursue a deficiency action following a residential mortgage foreclosure.

    Even if the creditor did so, the creditor would have to prove that the value of the foreclosed property was not sufficient to pay the mortgage debt in full.

    Further, it would be incline to seize your stock (if your business is incorporated) only if there was equity in the stock. Thus, if you had no equity in the stock or if the judgment was against you alone and the stock was owned jointly, the creditor could get nothing. If your business is not incorporated but owned by you as a proprietor, these concepts would apply to each of the assets of the business, where the mortgage creditor would only want to execute upon assets that had equity above and beyond any mortgage or security liens on those assets.

    From a practical point of view, it may not be worth the effort for the creditor to make the pursuit, but it is not out of the question. Moreover, a bank extending a commercial loan may have a road map of what you own by virtue of the financial statement that you provided to it to procure the loan.

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  • If i file bankruptry and i have a truck that is payed off can my creditors take it

    i need to file bankruptry because I lost my job three yrs ago and have been current on all my bills but I;m not able to do so any more and i have a truck thats payed off can my creditors take it

    David’s Answer

    The answer to your question will depend on:

    (A) the value of your truck,

    (B) the exemptions that are available to protect your truck, and

    (C) the chapter under which you file your bankruptcy case.

    Here in Pennsylvania (I'm in Wilkes-Barre), you can elect to use the Bankruptcy/Federal vehicle exemption of slightly more than $3,200.00 and, if you do not elect to use a real estate exemption because you do not own your residence or have no equity in your residence, you can also use the Bankruptcy/Federal "wild card" exemption of slightly in excess of $11,000.00 to protect the truck.

    If you own the truck jointly with your spouse and your unsecured debts are just yours and not joint debts of you and your spouse, you can getting greater protection by using the Pennsylvania tenancy by the entireties exemption, but you cannot use both the Bankruptcy/Federal exemption set and the Pennsylvania set. It's one or the other.

    If neither exemption set is sufficient to protect your truck, you can file a chapter 13 case and simply pay an amount equal to the non-exempt equity in your truck to a chapter 13 trustee, spread out over a period of 5 years!!! your truck will be protect and your unsecured debts will be gone when you conclude your case.

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  • I filed chapter 7 and got a final decree and was without a discharge

    they said i did not complete my personal financial management which i did and mail to them within the time aloud. the code they used was F.R.B.P. 4004(c)(1)(H). BUT I DID FINISH THAT COURSE WHAT CAN I DO REFILE OR APPEAL I DID ALL THIS WITHOUT A L...

    David’s Answer

    • Selected as best answer

    Here in Pennsylvania, the filing fee to re-open your case will be $260.00.

    The bankruptcy court in your district (same as mine) rarely objects to a case being re-opened to enable one to file a Certificate of Financial Management.

    Your motion can be three or four sentences. Just explain it all in plain English, indicating that you filed your case on your own and were not aware of this final requirement.

    If you had reasonable cause for not filing the Certificate, sometimes the court will waive the filing fee.

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  • How much equity are my wife and i are allowed on a home appraised at 195,000 and we owe 162,00

    how much are we allowed in chapter 7 bankruptcy

    David’s Answer

    If you elect to use the federal exemption set, the two of you can exempt a combined $40,400.00 ($20,200.00 each) on the equity of your residence.

    If you elect to use the state exemption set, you can exempt the entire equity of residence, if you have no joint unsecured debts (i.e., the debts are just in your name or your spouse's name). The state exemption set is would be useful if the equity in your residence was larger than $40,400.00 (which it is not here).

    Your choice of one set over the other will depend on the nature of your other assets and the extent of the equity in those assets.

    Please link to my web site and blog to learn more about bankruptcy laws in Wilkes-Barre and in Pennsylvania.

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  • Will inheritance be protected from BK trustee’s seizure if more than 6 months after filing but less than 6 mos since discharge?

    My mother passed away 5 months after our Ch7 bankruptcy case was discharged and 10 months after filing date of BK petition. The bankruptcy case, to our knowledge, is not closed yet. Will the inheritance (shared proceeds from the trust and upcomi...

    David’s Answer

    For Chapter 7 cases, Section 541 of the Bankruptcy Code only brings in inheritances where the person passed away within 180 from the date of the filing of the bankruptcy petition. Therefore, if your mother passed away more than 180 days from your filing, any inheritance will be protected from the trustee. Note: the 180-day rule does not apply in a chapter 13 case.

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  • Is Ch 7 BK trustee entitled to any of the excess proceeds from lender’s foreclosure of home that sold for more than mortgage?

    Is our Ch 7 bankruptcy trustee entitled to any portion of the $65k in excess proceeds obtained from lender’s foreclosure of our home that sold at a trustee’s auction for more than the balance owed 1st mortgage? Lender obtained Relief from Stay an...

    David’s Answer

    It depends on whether you have an exemption to protect the proceeds.

    In Pennsylvania where I practice, a debtor can elect to use the "Federal" bankruptcy exemption set. Thus, for jointly held real estate, a husband and wife can exempt $20,200.00 each in that real estate if it served as their principal residence on the date of their bankruptcy filing. Thus, they would be able to protect $40,400.00 of proceeds if their home were sold or liquidated (e.g., by foreclosure).

    For real estate that was not their principal residence on the date of the bankruptcy filing, they may each have an exemption that is slightly in excess of $10,000.00. This is known as the "spillover" or "wild card" exemption and can be used only when the homestead exemption of $20,200.00 is not fully consumed.

    The foreclosure should be viewed no different than a sale. Thus, one of the two exemption options summarized above should be available to serve your need here. However, the "spillover" or "wild card" exemption will not be available if you have elected to use it on other property. Also none of the exemptions mentioned above will be available if your state has opted out from using the "Federal" bankruptcy exemption set. Nevertheless, Arizona may have a state exemption set that could work.

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  • Can I put Tax debt in filed the CH 7?

    We filed CH 13 bankruptcy January 2008 include 2008 tax owe but the case dismiss by non-payment last year so not any longer CH 13 plan. Now I receive the letter from IRS owe 2008 Tax and also I owe 2009 tax. I divorce last year. Can I put Tax debt...

    David’s Answer

    First, all debts must be listed on your bankruptcy schedules, whether they are dischargeable or not.

    Second, some kinds of taxes are dischargeable in a bankruptcy case and and some are not.

    For the most part, excise, sales and withholding taxes are not dischargeable.

    A person's income taxes can be dischargeable if:

    (A) the taxes became due more than 3 years prior to the bankruptcy filing (e.g., 2009 taxes are due on April 15, 2010 and can therefore be discharged no earlier than April 16, 2013);

    (B) the taxes were assessed more than 120 days prior to the bankruptcy filing;

    (C) returns were filed more than 2 years prior to the bankruptcy filing;

    (D) the non-payment of the taxes and the non-filing of tax returns were not willful or intentional;

    (E) there were no offers in compromise pending with the IRS during the above periods unless the above timeframes are met after subtracting out the time the offer in compromise was pending plus 30 days.

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