You must remember that although you have hired an attorney to help you with your bankruptcy, you are ultimately responsible for the success of your case; therefore, it is important that you take the process seriously and give your
NOTE: BEFORE YOU CALL YOUR ATTORNEY WITH A QUESTION ABOUT YOUR BANKRUPTCY, READ THIS DOCUMENT FIRST. THE ANSWER TO YOUR QUESTION IS MORE THAN LIKELY ANSWERED IN HERE.
WHICH BANKRUPTCY IS BEST FOR ME?
The three most used bankruptcies are Chapter 7, Chapter 13 and Chapter 11. The other two bankruptcies are Chapter 9 and Chapter 12. Only municipal corporations (towns and cities) are eligible for a Chapter 9 and in order to qualify for a Chapter 12 you must earn your living by farming. We will, therefore, concentrate on the first three chapters.
A Chapter 7 is called liquidation. Generally, you would file a Chapter 7 if you are unable to meet your regular financial obligations on a timely basis and you can no longer tolerate the collection calls or you are being sued by creditors. You will find more information on Chapter 7's later in this writing.
A Chapter 13 is commonly referred to as a wage earner's reorganization and is designed to aid individuals in catching up their mortgage on their home and/or paying for cars or trucks the debtor has fallen behind on payments, thus preventing foreclosure and/or repossession by the lender.
A Chapter 11 is reorganization for corporations or individuals with large estates (large amounts of personal and/or real property). An in depth explanation of Chapter 11 is beyond the scope of this writing; therefore, it will be necessary to contact the office for a free office consultation if you feel a Chapter 11 is the bankruptcy best suited for you or your business.
INFORMATION NEEDED TO PREPARE YOUR BANKRUPTCY PAPERS.
In order to prepare and file your bankruptcy, you will be required to provide all of your financial information to our office. You are required by law to list the name, address including zip code, account number, amount you owe and other important information concerning your creditors. A creditor is a person or company you owe money to on an ongoing basis. There are generally three types of creditors which are discussed later in this information sheet. A secured creditor is such as your Mortgage Company, banks or loan companies you financed cars, furniture, major appliances, electronic equipment, campers, lawn equipment, computers, stereo systems, and etc. with, credit card companies, charge cards with merchants. Someone who has a court judgment against you is secured and known as a judgment creditor. Judgment creditors may require special attention in your bankruptcy case; therefore, it is very important you notify your attorney of any judgment creditor and provide the attorney with all documents you may have concerning the law suit filled against you. If you no longer have the documents involved in the judgment, go to the court where you were sued and get a copy of the complaint, answer and the judgment. If you can not provide this important information about the debt you owe as a result of the judgment, the debt may not be discharged.
You must also provide this office with detailed information concerning your financial affairs for the past several years. You will be required to provide this information in great detail; therefore, it is most important you provide all information requested on the forms we ask you to fill out. Remember, if it is discovered by the Court or trustee that you have not provided the information required, you may not be granted a discharge or your case may be dismissed. You are also required to list all of your real property (houses and land) and personal property in your schedules. Again, if the Court or trustee discovers you failed to list items of value in your schedules, you may not be given a discharge and/or you may lose the property you failed to list. We prefer you give us the most recent statement, invoice, contract, coupon book, copies of law suites and judgments, any documents served on you by a law enforcement officer, foreclosure notice, notices and letters from collection agencies or lawyers rather than handwritten or type written notes.
It is suggested you acquire a current credit report to use as a check system in determining you have listed all of your creditors. We will not, however, use your credit report in preparing the bankruptcy petition and schedules. The credit report is strictly for your use in determining who you owe money. Remember, as a general rule utility companies (gas, electric and phone companies) may not report to credit reporting agencies; therefore, you should not rely on the credit report to determine this type of creditor. Additionally, you may have had a contract or lease agreement you breached that has not been reported to a credit reporting agency.
Many people ask AI do not want to bankrupt against my house and car, do I have to list my mortgage company and car finance company? Yes, you do. You must list all companies and people, including family and friends; you owe money to at the time of your filing. If you are in a Chapter 13, your house and car are generally protected from foreclosure and repossession respectively unless you chose to surrender either or both of them. You must remember, however, a Chapter 13 is generally filed to stop foreclosures and repossessions. If you file a Chapter 7, your mortgaged home or financed cars and other financed possessions may be exposed to foreclosure or repossession if you are not current when you file and remain current during the pendency of your bankruptcy.
Generally speaking, in a Chapter 7, if you are current with your mortgage payments, car payments, and the payments to other secured creditors when your case is filed and remain current throughout the pendency your bankruptcy, you probably will not have any problems reaffirming those debts and keeping your house, cars and other secured items. Secured creditors do not want your house, car and other secured items - they want your monthly payment. Therefore, it is very important to be current and remain current on the secured debts you wish to keep during the bankruptcy process. If you are not current with your secured payments prior to filing and/or you fall behind in your secured payments prior to your discharge, you may be assured the secured creditor will file a motion for relief from the bankruptcy stay. With very rare exceptions, the Court will grant their motion and the creditor will foreclose or repossess the secured house, car or other secured item. Remember, if a secured creditor files a motion for relief and you request your attorney get involved in negotiating a settlement with the creditor, an additional fee will be required. Generally, creditors will require you make up all payments missed plus pay their attorney fees, if any, before they agree to dismiss their motion for relief.
WHAT YOU
In
1. $10,000 in real estate equity of your principal residence (the amount of property value in excess of liens on the real property);
2. Social Security benefits, unemployment compensation, veteran benefits, disability benefits, and alimony;
3. $3,500 in equity in vehicles;
4. $300 in each of various items of household furnishings and wearing apparel, up to a total value of $5,000;
5. $500 in jewelry;
6. $1,500 in professional implements, books and tools of the trade; and
7. $600, plus $5,000 of the unused portion of the principal residence exception as a wildcard
8. Pre tax IRA'S, 401K'S and most other pre tax savings and retirement' accounts no matter how much money you have in the account.
There are other less common exemption rights. In addition, if the creditor holding a lien on a particular item of property consents, and the Bankruptcy Court finds that it is in your best interest, you may retain additional property by reaffirming the debt with the creditor and paying the creditors claim pursuant to which you had previously agreed. It is important to remember that in a Chapter 7 the creditor does not have to let you reaffirm the debt and keep the secured property.
HOUSE - YOUR HOUSE
Chapter 13 - Selling or Refinancing
Selling Your Home
You must contact the attorney's office in writing and inform them you wish to sell your home and that you have a buyer. Along with your written notification, you must provide a valid sales contract signed by the buyer and provide a good faith HUD-1 Statement. This office will then file a motion to sell with the court. Keep in mind, if the sale of the home produces net cash to you which exceeds your exemption ($10,000.00 for an individual and $20,000.00 for a joint filing) after all liens and mortgages are paid, the trustee will want the net cash to fund your plan. For example, if your home sells for $100,000.00 and after the mortgage and other costs and expenses of sale have been deducted you are to receive $30,000.00, you and your spouse, if applicable, may each keep $10,000.00. The trustee will require you pay the rest over to him/her for funding of the plan.
Refinancing Your Home
You must contact the attorney's office in writing requesting the forms required by the Chapter 13 Trustee's office to be filled out by you and the financing company. We will mail you the forms. When the forms have been filled out completely, make an appointment to see your attorney for the purposes of reviewing the documents. Remember, the documents will not be sent to the trustee until you have meet with the attorney and discussed the documents thoroughly. The attorney will then complete his portion of the form and send the form to the trustee's office. The trustee will either approve or deny the refinancing. Remember, if you are going to take cash out on a refinance, the trustee may require you fund your plan with the cash. Additionally, if your monthly mortgage goes down, the trustee will require that you pay the monthly reduction of your mortgage as an additional plan payment.
Chapter 7 - Refinancing and selling
It is not necessary you get permission to refinance or sell your home from the Chapter 7 Trustee. However, prior to the actual closing of the sale or refinancing, you are required to provide the trustee a copy of the sales and closing documents. Depending on the circumstances, you may be required to turn over to the trustee any net proceeds of the sale exclusive of your exemptions. See the example of Selling Your Home above.
NOTE: Your attorney or any personnel in his office will not communicate with anyone other than you in the refinancing or sales process of your home. Please, do not ask the buyer, closing attorney or the sellers or buyer's agents to communicate or send documents to the attorney's office. We simply will not reply to any written communications nor will we return calls from any of those entities. All communications and documents concerning the sale or refinancing of your home will be handled exclusively with you by your attorney's office. Also, depending on the particular circumstances of the sale or refinance, the attorney may require an additional fee for dealing with the sale or refinancing. You are encouraged to consult with your attorney prior to entering into sales or refinancing agreements.
Chapter 7
After you file a chapter 7, you may do with your car or truck whatever you choose if the vehicle has been completely exempted or, if not completely exempted, when the trustee informs you he has no interest in the vehicle. Your attorney will give you a good idea of the status of the vehicle after he has analyzed the financial and other circumstances applying to the vehicle. If you wreck the vehicle while you are in the Chapter 7, it will be up to you, your insurance company and the other person involved, if any, to deal with the situation. Unless the trustee has expressed an interest in the vehicle, it will not be necessary to contact your attorney. If however you have reaffirmed the obligation to pay the financing institution and the value of the vehicle is less than what is owed on it, the financing institution will expect you to pay the difference. NOTE: Reaffirmation Agreements below, apply to this situation.
Chapter 13
If you are in a Chapter 13 and you wreck your vehicle and the insurance company is going to pay for the damages, it is not necessary to notify the Chapter 13 Trustee or your attorney. If, however, the car is totaled you must contact your attorney's office. Prior to contracting the attorneys office you will need to have in your possession copies of the accident report, a copy of the declaration page of your insurance, the amount the insurance is going to pay in writing, and, if you plan to replace the vehicle, a written quote from a car dealer containing the price of the vehicle and the monthly payments. The attorney will then provide you with any further instructions as required.
FILING THE BANKRUPTCY DOCUMENTS
After you sign your petition and schedules, your attorney will file them with the clerk of the Bankruptcy Court. Generally we file them electronically over the internet; however, on some occasions we will file them through the mail or by hand delivery to the clerk's office. If you are filing within one to three days prior to a foreclosure you are attempting to stop, you or a courier may be required to hand deliver the petition, plan and schedules to the court. It is, therefore, incumbent on you to be in a position to file your bankruptcy documents timely.
SAVE YOUR DOCUMENTS
In the event you need to provide proof of filing or proof of your discharge to a new creditor considering whether or not to issue credit after your discharge, and you no longer have copies of your petition or discharge notice, you will need to obtain copies from either the court or our office. Both my office and the court will charge a fee for the copies. The reason our office charges a fee is that after the discharge we send the file to storage and it requires time of our staff to retrieve the documents. Also, if you have given us copies or originals of documents you wish to have returned to you, please come to our office and retrieve the documents. We request you call ahead in order that we may have the documents ready when you arrive. If you do not request the documents be returned to you, we will assume you no longer want the documents and we will destroy them when we close your file. We generally close files within days of receiving notices of the discharge and closing of the estate.
The clerk of court (not your attorney) will send out notices of the bankruptcy to all listed creditors, you and your attorney. The mailing generally occurs in a week to ten days following the filing. The notice will contain vital information; therefore, it is important you watch the mail for your copy of the notice. Additionally, you must supply this office with a mailing address that you generally receive your mail. If you have not received a copy of the notice of filing bankruptcy within three weeks of signing your petition and schedules, please call the office and notify us. You should also receive a letter from our office reminding you of the meeting of creditors. The notice you receive from the court will contain the following information concerning the meeting of creditors; 1) the date of the 341 meeting; 2) the location of the meeting; 3) the time of the meeting; 4) the room number of the meeting. If you are in a Chapter 13, the notice will also contain the date of your confirmation hearing.
COLLECTION LETTERS OR PHONE CALLS AFTER THE FILING OF YOUR PETITION
If you receive any collection letters after your bankruptcy has been file with the Court, do the following: Make a copy of the letter you received from the creditor or the creditor's collection agent or attorney and make a copy of the Notice of Filing of Bankruptcy you received from the Court, and mail both copied documents to the return address shown on the collection letter. If the creditor or collector continues to send you statements or collection letters, make a copy of both collection letters or statements you received and mail them to your attorney's office. Include in your mailing to the attorney a note stating that you have sent a copy of the Notice of Filing of Bankruptcy to the collector or creditor and they continue to send you collection notices.
If a creditor or its collection agent or attorney contacts you by phone, tell them you have filed bankruptcy, give then your attorney's name and phone number wish them a good day and hang up the phone. Usually this information is enough to stop the creditor or collector from calling you. Do not let them engage you in a conversation! If they continue to call, get the name and phone number of the person calling and, if they will give you the information, their supervisor's name and phone number. And, as in the collection letters situation, mail or fax the information to your attorney's office
MEETING OF CREDITORS
The law requires that you attend a meeting of creditors. The purpose of the meeting of creditors is to give your creditors and the trustee an opportunity to ask you relevant questions concerning the reasons you filed the bankruptcy and what your intentions are concerning secured creditors. Secured creditors are those creditors you either, borrowed money from to purchase things such as a home, a car or truck, furniture, household appliances, computer and etc., or you borrowed money and gave the creditor a security interest in items you owned prior to borrowing the money. Generally the answers to the questions asked are contained in your petition and schedules; therefore, you should be familiar with the information contained in the petition and schedules. You are encouraged to review the petition and schedules before attending the meeting. Additionally, you should bring your copy of the petition and schedules along with any other documents you received from this office, the court or any of the creditors to the meeting of creditors. I recommend you keep all the documents related to your bankruptcy in a large envelope in a safe place for at least seven years.
It is important you show up at the meeting of creditors on time. You should allow yourself twice the amount of time than it would normally take you to travel to the courthouse where your meeting is to be held. If it normally takes you one hour travel time, allow two hours. You must bring with you a photo id issued by a governmental unit and proof of your social security number. Driver’s license, passports, id cards issued by the state, military id card, governmental employee id card and etc. are examples of acceptable photo id's. Social security card, letter from the social security administration containing your social security number, letter from the
The creditors’ representatives and trustee are permitted to ask reasonable questions about your bankruptcy and what caused you to file. They will not be permitted to abuse you or be rude to you. Usually the questions they ask are answered in your petition or schedules. However, secured creditors often want to know if you wish to reassume the debt you owe them. If you do not want to reassume the debt and the creditor is a secured creditor you will be required to return the secured item or items to the creditor. This is generally true with purchase money security interests (NPMSI).
CHAPTER 7 MEETING OF CREDITORS
You will be required to provide your photo id and social security id before the meeting starts. If you do not have both id's with you the meeting will probably not be held and you will be required to attend another meeting of creditors at a later date. The type of questions you will be asked by the trustee are: have you filed bankruptcy before; what happened to cause you to file bankruptcy; did you meet with the an attorney to discuss your bankruptcy; was all of the information true and correct at the time you signed them; is the information true and correct today; have you read the U S Trustee's Information Sheet; how did you arrive at the fair market value of your home; have you sold any property including real property in the last few years; do you have the right to sue anyone either for a personal injury or money they may owe you; do you have a worker's compensation claim for an on the job injury; what are your intentions concerning your secured creditors; have you listed all of your creditors?
AFTER THE CHAPTER 7 MEETING OF CREDITORS
Generally, very little happens after the meeting of creditors if you are in a Chapter 7. If you have not done so yet, this is the time in which you sign reaffirmation agreements. You may be required to sign reaffirmation agreements for property that is subject to a
CHAPTER 13 MEETING OF CREDITORS
Generally, you will be asked the same questions as at the Chapter 7 Meeting of Creditors plus some additional questions such as: are you contributing to a 401K or other retirement plan; have you read the Rights and Responsibilities document; have you filed all of your tax returns (your plan will not be confirmed unless you have filed all of your tax returns); are you expecting a tax refund; how long did you meet with your attorney;
AFTER THE CHAPTER 13 MEETING OF CREDITORS
The meeting of creditors for a Chapter 13 is just the beginning of a Chapter 13 Case. Two to four weeks after the meeting of creditors a confirmation hearing is held. Whether or not you will be required to attend the meeting depends on whether or not all required documents have been filed and all objections made by the Chapter 13 Trustee have been satisfied.
The trustee may raise one or more objections to the confirmation of your plan for any number of reasons. Most of the objections are minor in nature and may require amending your plan or schedules. The trustee will mail you and your attorney a document outlining the objections. You should receive the document within several days of the meeting. It is most important you start working on satisfying the objections as soon as possible. Even though your attorney will assist you in curing the trustee's objections, it is ultimately your responsibility to see that the objections are satisfied; therefore, you must cooperate with your attorney and his or her staff and respond to their requests timely.
SECURITY INTERESTS
A
A NPMSI is security interest where you borrowed the money from a creditor and gave the creditor a security interest in things you already own. Usually you and the attorney have discussed his situation and made a determination to file documents with the court to cancel the NPMSI. This simply means you will get to keep those items you put up for security. However, there are some instances in which you will be required to pay to keep the items subject to a NPMSI. For instance, if you gave a car title to a pawn shop when you borrowed money, you will be required to pay the pawn shop in order to keep your car. Another example is when you borrow money and give the creditor a deed to secure debt on your home to secure the debt. Your attorney will tell you if any of your NPMSI creditors fall within this category. So, it is important you point out to your attorney or his staff any creditor you gave a security interest in property you owned prior to making the loan.
UNSECURED CREDITORS
An unsecured creditor is a creditor that does not have a security interest in your real property or personal property. Generally speaking, credit card companies are unsecured creditors. However, there are exceptions to this general statement. If you visit a store and set up a purchase on credit and they issue you a credit card, even though the credit card is issued by a bank, your purchases, including the one made a the time the credit account was set up, on that credit card are more than likely secured by a
THE CHAPTER 13
The heart of a Chapter 13 Bankruptcy is the funding of the plan. Simply put, the funding of the plan is paying money to the Chapter 13 Trustee and he in turn pays those creditors designated in the plan to receive that money. The plan is in a form required by the Court and it contains important information on how you are going pay certain creditors and whether or not you intend to surrender or keep certain secured debts. The plan also sets out in detail the way in which your attorney is to be paid.
FUNDING YOUR CHAPTER 13
The plan must be funded (payment made to the trustee) within 30 days and each 30 days thereafter of the filing of your Chapter 13 with the Court. There are basically two ways in which the plan will be funded. You pay the trustee directly from your earnings or your employer withholds the money from your pay check and sends it to the trustee. Direct payment to the trustee is very seldom approved; therefore, the most probable method of trustee payment is by Employee Deduction Order (
More than likely your first plan payment will become due (payment due within 30 days of the filing of the bankruptcy petition) before the
We suggest you do not purchase those cheap money orders from the convenience stores as it is very difficult to have the money order traced in the event the trustee claims he or she has not received your payment. It is important to remember to keep copies of all documents relating to any plan payment.
You may stop making payments to the trustee when your employer starts taking money from your pay check to fund the plan. You should inspect your pay stub carefully each pay period to determine whether or not your employer has started taking out the plan payment. If your employer has not started taking out your plan payment after the
If you plan on paying all of your creditors all of the money you owe then, the plan length will be determined by the amount you owe them plus your attorney's fees to be paid in the plan and the trustees fees divided by your monthly plan payment. If you propose to pay any of your creditors less than you owe, your plan must be no shorter than 36 months. In either event, your plan can last no longer 60 months. Your attorney or a member of his or her staff will go over the plan throughly before filing it. It is important to keep in mind the length of your plan is subject to a number things including the amounts of the creditor's claims: therefore, it may become necessary to recalculate the number of months required to complete your once all claims have been filed with the Court.
REAFFIRMATION AGREEMENTS (Not applicable in a Chapter 13)
It is important to remember that you have 60 days after the reaffirmation agreement is filed with the court or before the case is discharged, whichever is later, to change your mind and reject the agreement and no longer be responsible to pay the debt you reaffirmed. In order reject the agreement you must notify the creditor of your intentions within the 60 day period noted above or prior the discharge, whichever is later. You may do this by writing the creditor and notifying them of your intention to reject the agreement. However, the best way to reject the agreement is to file your notice with the bankruptcy court where you filed your case and send a copy to the creditor. If you want your attorney to notify the court and the creditor of your wishes to reject the agreement, a fee is involved. Since there is no way your attorney can tell in advance of your intentions to reject the agreement, he did not include the preparation of the notice in his fee. To have your attorney file and serve the rejection notice, within 40 days of the filing of the reaffirmation agreement do the following: 1) make a copy of the agreement; 2) write a note or letter to the attorney which says that you want to reject the agreement; 3) make a check or money order in the amount of $75.00 payable to Jerry A. Daniels, LLC; 4) mail the copy, note and check or money order to the offices of Jerry A. Daniels, LLC. If you are not certain of the date on which the agreement was filed with the court, start counting the days from the date on which you signed the agreement. Also, if you do not have a copy of the agreement you must make an appointment with this office to come in to make arrangements to reject the agreement. Please bring the fee with you as we require payment before we file the rejection notice. NOTE: Since it is difficult to determine when the discharge will occur, we strongly recommend you use the 60 day period in which to reject the agreement. Reaffirmation agreements are not applicable to Chapter 13's; therefore, you will not be required to sing one to keep your secured property.
CREDIT REPORTS
Remember your credit reports will report the fact that you have filed bankruptcy for no less than seven years and up to ten years. If you file a Chapter 13, the bankruptcy will remain on your report for the longer time of ten years. You may get free credit reports from the credit reporting agencies. Generally, if you call them they will take your name and address and mail the report to you within several days. We strongly recommend you get a credit report around three months after you file your case and check it for accuracy. If you find inaccuracies in your credit report, we encourage you to purchase a product from Office Depot called EZ Credit Repair. This kit contains easy to follow instructions, form letters and the law pertaining to credit reporting. Our office generally does not become involved in credit reporting issues; however, if you request we become involved, we will charge fee for this service at our hourly rate in effect at the time the services are rendered. You may also obtain your credit report on line; however, the way in which to do that is beyond the scope of this writing.
THE DISCHARGE
If you filed a Chapter 7 Bankruptcy, you should receive a discharge in six to eight months after you file. What is a discharge? A discharge is an order entered by the Court essentially relieving you of your debts and making them go away forever. There are, however, certain debts that will not be discharged. It is not the intent of this writing to cover all of those debts which are not dischargeable in bankruptcy; however, a few of the most common non-dischargeable debts are; student loans guaranteed by a governmental unit or nonprofit corporation; taxes not mentioned in the taxes section below; debts that have been determined to be incurred by fraud; alimony and child support; restitution for criminal acts; most criminal fines; personal injury and property damages caused by accidents while under the influence of drugs or alcohol.
If you file a Chapter 13 Bankruptcy, you should receive your discharge after completing your plan. The plan payments should include the payment of those non-dischargeable items mentioned above as well as arrears on your mortgage payment and the payment of car notes which do not exceed a payment period of 60 months. I should be noted that student loans may or may not be paid in the plan depending on the circumstances of the pay back period. It should be noted that interest on unsecured debts being paid in the plan stops upon filing the Chapter 13 Bankruptcy; however, secured debts, student loans and a few other debts continue accumulating interest after the filing.
LIFE
It goes without saying; the ability to acquire credit after filing any form of bankruptcy is difficult. Generally, auto dealers will arrange the financing of a car when you present them with your discharge document. You will, however, expect the interest rate to be in the high teens or low twenties. Most mortgage institutions will no longer consider your bankruptcy as a negative when qualifying you for a mortgage when two and one-half years have past since the filing of your bankruptcy. There are several good books containing good information on how to reestablish your credit after bankruptcy. You are encouraged to purchase one at your local book store or on the internet or check one out of your local library and read it.