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B is for Bifurcate

Posted by Melinda Dionne | Mar 11, 2012 | 0 Comments

 

B is for Bifurcate, which is a complicated word for a simple process.

When you bifurcate a claim, you split it into a secured portion and an unsecured portion.  Unsecured creditors in Chapter 13 are not paid interest.  By bifurcating a claim, you can substantially reduce the amount you have to pay for certain items.

Here is an Example of Claim Bifurcation

Let's look at an example.  You are filing a chapter 13 case.  You purchased a vehicle and financed it more than 910 days ago.  The debt owed on the vehicle at the time you file your case is $20,000.  The vehicle has been wrecked, has high mileage, and some mechanical problems.  The NADA retail value for the vehicle is $10,000.  In your chapter 13 case, you can split the claim into a $10,000 secured portion and a $10,000 unsecured portion.  Only the secured portion will receive interest.  The unsecured portion will be discharged at the end of your case with the remainder of your unsecured creditors.

Interest Rate set by the Court

The interest rate that you will have to pay is determined by the Bankruptcy Court.  Most Bankruptcy Courts add 2 points to the prime lending rate at the time of the filing of the case.  For Bankruptcy Debtors who have high interest rate loans, the ability to split the claim and pay a lower interest rate allows them to experience significant savings through their Bankruptcy Case.

Only Certain claims can be bifurcated

Not all secured claims can be bifurcated.  For instance, you cannot bifurcate a claim secured only by real estate that is your primary residence.  Additionally, you cannot bifurcate a creditor's claim if you have not had the vehicle for more than 910 days unless the loan is a refinance of the vehicle.  With a vehicle loan, you can reduce the interest rate even if you cannot bifurcate the claim.   Bifurcating a creditor's claim, when it is an available option, can substantially benefit you in your case.  Your Tuscaloosa and Birmingham Bankruptcy Lawyer can help you determine if bifurcating a creditor's claim is an available option and how much it can help you in your case.

More Information about “The ABC's of Bankruptcy.”

Attorneys from around the United States are taking part in “The ABC's of Bankruptcy.”  Check out these other blog posts for the letter “B.”

Bad Faith Filing by Miami Bankruptcy Attorney, Dorota Trzeciecka 

Bank Account by New York Bankruptcy Lawyer, Jay S. Fleischman

Bank Account by Daniel J. Winter, Chicago Bankruptcy Attorney

Bank Account Levy by Philadelphia Bankruptcy Lawyer, Raymond Kempinski

Bank Tips by Wisconsin Bankruptcy Lawyer, Bret Nason

Bankruptcy by Taylor Michigan Bankruptcy Lawyer, Christopher McAvoy

Bankruptcy Abuse Prevention and Consumer Protection Act by Livonia Michigan Bankruptcy Attorney, Peter Behrmann

Bankruptcy Estate by Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein

Bankruptcy Mill by Chicago Bankruptcy Attorney, Kyle A. Lindsey

Bankruptcy Petition Preparers by Colorado Springs Bankruptcy Attorney Bob Doig

Bankruptcy Petition Preparers by Los Angeles Bankruptcy Law Monitor, Christine Wilton

Bankruptcy Timeline by Pittsburgh Bankruptcy Attorney Shawn N. Wright

Bar Date by Ormond Beach Bankruptcy Attorney, Lewis Roberts

Benefits of Chapter 13 by Vermont-New Hampshire Bankruptcy Lawyer, Michelle Kainen

Best Efforts Test by St. Louis, Missouri Bankruptcy Attorney, Nancy Martin

Best Interest of Creditors by Honolulu Bankruptcy Attorney, Stuart Ing

Beware of these Credit Card Offers by Marin County Bankruptcy and Consumer Attorney, Catherine Eranthe

Borrow by San Francisco Bankruptcy Attorney, Jeena Cho

Budget by Columbus, Ohio Bankruptcy Attorney, Athena Inemboildis

Budget by Birmingham Bankruptcy Attorney, Elizabeth Johnson

Budget by Charlotte Bankruptcy Attorneys, Collum & Perry

Business by Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Business by Northern California Bankruptcy Lawyer, Cathy Moran

Business & Individuals by Philadelphia Suburban Bankruptcy Lawyer, Chris Carr

Business bankruptcy by Los Angeles Bankruptcy Blog, Mark J. Markus

Businesses and Business Debt by Newnan Georgia Bankruptcy Lawyer, Rick Palmer

Buy Low and Sell High by Cleveland Area Bankruptcy Lawyer, Bill Balena

Bad Credit by Houston Bankruptcy Attorneys, Busby & Associates

Bruce Wayne Bankrupt? by Detroit Michigan bankruptcy lawyer Kurt OKeefe

Bank Statement by Westlake OH bankruptcy Attorney William Balena

About the Author

Melinda Dionne

My name is Melinda Dionne.  For over 35 years, I have been helping people find a way to deal with overwhelming debt.  I have never represented a deadbeat because the vast majority of people having financial problems are anything but deadbeats.

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