Bankruptcy issues

How Can I Make Sure my Case Goes Smoothly?

2012-03-04T14:37:00.000-08:00

I attended a seminar recently where a chapter 7 trustee indicated that he seems to get the blame whenever a debtor has to turn over property to him. This sort of blame is usually the result of communication problems between the debtor and her attorney, or due to inexperience on the part of the attorney.

You can make sure that your case goes smoothly and that you do not unexpectedly lose any assets to the chapter 7 trustee. This process can be enhanced by expressing any concerns to your attorney and being honest and providing full disclosure to your attorney. In some cases you will lose certain non-exempt property when you file bankruptcy. This may be avoided by careful pre-bankruptcy planning and discussion with your attorney. If you take action without knowing the law or discussing it with your attorney, you may open yourself up to liability, loss of money, loss of time, loss of discharge, and, in extreme cases, loss of your freedom.

Remember, the bankruptcy discharge can convey great benefits upon you. Follow the rules and talk to your attorney and you won't have any unexpected difficulties.

I received my discharge, but the trustee is still asking me for things.

2012-02-15T08:41:00.000-08:00

People often confuse discharge and case closure. The discharge is the document that eliminates your personal responsibility for your debts. It does not discharge your trustee from your case. Your trustee may hold your case open, if there are assets, or there might be assets. If there are no assets, or if the trustee has collected all assets from you and distributed them to creditors, then the trustee will file a final report. Once the final report is done the trustee will ask that the case be closed. In most cases, once your case is closed, the bankruptcy process is over for you.

What do you get to keep when you file bankruptcy?

2012-02-13T13:26:00.000-08:00

When you file a bankruptcy, a bankruptcy estate is created which consists of all of your assets. You may be able to exempt certain assets, depending on the chapter and what state you live in. To exempt something means to cite the law that allows you to retain it. In most jurisdictions you are able to retain a certain amount of equity in a home, equity in one or more vehicles, certain household belongings and other things. If you have assets that are of particular value, be sure to consult with a bankruptcy attorney about it BEFORE you decide to file bankruptcy.

Credit counseling

2012-02-10T13:22:00.000-08:00

Before you can file your bankruptcy case, you will have to obtain a certificate from an "approved" credit counseling agency. In order to get the certificate you generally go through an interview process with the repesentative of the counseling agency. The interview will relate to your income and expenses, and the obligations that you owe. The interview may be in person, by telephone, or on the internet. You will have to pay a fee, typically $ 50.00 or less for the agency to issue the certificate to you. You can see a list of government approved credit counseling agencies at
http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

What is a discharge and how does one get one?

2012-02-05T12:09:00.000-08:00

The "discharge" is what most people who file for bankruptcy are seeking to obtain. It eliminates a debtor's personal obligation to repay a debt or debts. Unless there are some problems with your bankruptcy, the discharge is normally entered automatically at some point after you have filed your financial management course certificate with the court. In chapter 7, the discharge is usually entered a few months after your creditor's meeting. In chapter 13, the dischare is usually entered after you have made all of your payments under the plan. A chapter 11 discharge is usually entered in accordance with directions in the confirmation order.

What is a bankruptcy trustee?

2011-10-22T13:27:00.000-07:00

The bankruptcy trustee is a person assigned to your case to review your petition, statements and schedules and compare them to various source documents for accuracy. A trustee's job is to administer your case, prevent fraud, and to collect assets and distribute money to your creditors.

There is always a trustee assigned to your case in chapter 7 and chapter 13.
In a chapter 11, you may serve as your own trustee.

The trustee presides over your meeting of creditors, which is usually held about four to eight weeks after your case is filed. At that meeting, you are required to appear with picture id and original proof of your social security number, usually a social security card. Its rare for creditors to actually appear at this meeting.

The trustee will also as you a variety of questions. The questions can vary depending on the trustee, but they usually ask the same base questions.

Have you taken the oath I administered?
How long have you lived in this jurisdiction/state?
Have you ever filed bankruptcy before? If so, when and where.
Have you ever filed a bankruptcy using a different name or social security number?
Did you read your petition, statements and schedules?
Did you sign your petiton, statements and schedules?
Was the information in your petiton, statements and schedules true and correct?
Did you list all of your assets?
Did you list all of your debts?
Do you owe child support or spousal maintenance to anyone?
Have you repaid any family member loans in the year prior to filing your case?
Did you receive a tax refund in the last tax cycle, and if so, how much and what did you do with it?
Are you expecting to receive a tax refund this next tax season?

What is Chapter 9 Bankruptcy?

2011-06-06T07:42:00.000-07:00

Chapter 9 is the municipal bankruptcy. The term "municipality" is defined in the Bankruptcy Code as a "political subdivision or public agency or instrumentality of a State." See 11 U.S.C. § 101(40). This definition is broad enough to allow municipal bankruptcy filings by cities, counties, school districts, townships, public improvement districts and the like. It can also included organizations that provide services which are paid for by users rather than by general taxes. These include bridge authorities, highway authorities, and gas authorities.

Chapter 9 bankruptcy filings are rare. The most recent notable chapter 9 filing was by Orange County, California in 1994. Although chapter 9 is similar to other chapters in many ways, in one notable way it is quite different. There is no provision in chapter 9 for the liquidation of the assets of a municipality and distribution of the proceeds to creditors. Like the other bankruptcies, the goal is to resolve outstanding debt issues.

What is Chapter 12 Bankruptcy?

2011-06-02T04:57:00.000-07:00

Chapter 12 is a bankruptcy for farmers. It is not often used, and you will be hard pressed to find an attorney with experience in chapter 12. However, chapter 12 is similar to chapter 13. Whereas a chapter 13 is for folks with regular income and requires monthly payments, chapter 12 is geared to payments which come due when the crop comes in. Payments can be quarterly or semi-annual depending on the type of farm. Chapter 12 is intended to assist the distressed farmer cope with his debt obligations and keep his farm at the same time.

What is an asset?

2011-05-29T08:08:00.000-07:00

Often people are confused about what an asset is for purposes of bankruptcy. In initial consultations, potential clients often tell me that they have no assets. However, they are either mistaken or do not understand the concept. An asset is anything you own, or that you have a right to. Your bankruptcy schedules must reflect all of your assets. So, whether it is your home, a timeshare, a bank account, or the clothes on your back, its an asset. Depending on which type of bankruptcy you file, and what assets you own, you might be able to file bankruptcy and keep all of your assets.
Something is an asset whether you owe money on it or not. If you might possibly lose
an asset in your bankruptcy, you could lose it to a secured creditor, or you could lose it to the bankruptcy trustee who will sell it and give some money to your creditors.

Be sure to disclose all of your assets to your attorney before you file your case, so you can
be well informed on how your assets are to be treated.

Do all creditors have to be listed in the bankruptcy?

2011-05-20T11:17:00.000-07:00

People often tell me that they have a debt that they wish to continue to pay and that
they do not want to list it in their bankruptcy. This is not possible. Regardless of which
type of bankruptcy you file, you have to list all of your debts, whether you
desire to continue to pay them or not. If you are filing a chapter 7, it may be possible
to "reaffirm", or agree to continue to pay the debt. This is fairly common with cars.

When you sign your bankruptcy schedules you will be signing under oath, under penalty
of perjury, that the documents are true, correct, and complete. If you intentionally
leave a debt off of your schedules, you are violating this oath and could subject yourself
to criminal or civil penalties, or as they say at the U.S. Trustee's offices, possibly jail time.

If you want to keep a debt, discuss it with counsel and we will advise you whether that is
possible, and how it works. Don't put yourself in jeopardy by swearing your documents
are true and correct when they are not.

What is Chapter 11 Bankruptcy?

2011-05-14T11:07:00.000-07:00

Chapter 11 Bankruptcy can be filed by an individual, married couple, corporation, or llc. Chapter 11 is ideal if you do not qualify for chapter 7 or chapter 13, or if you are trying to retain property that you cannot retain in chapter 11. Chapter 11 is a type of reorganization or repayment plan. It is possible to strip liens or to modify mortgages in a chapter 11. In most cases the chapter 11 debtor will greatly reduce its unsecured debt.

Unlike chapter 13, chapter 11 does not have a bankruptcy trustee assigned to the case to collect money. The Office of the United States Trustee will review the case but will not intervene unless the debtor or "debtor-in-possession" performs activities that endanger the estate or violate fiduciary responsibilities. In chapter 11 a plan to repay creditors is proposed, and hopefully approved by the court. The plan sets forth how creditors will be paid. The debtor-in-possession will pay creditors directly in accordance with the plan.

Chapter 11 is more expensive than Chapters 7 or 13 and it has requirements to file monthly reports with the court and to pay quarterly fees to the Office of the United States Trustee.

Chapter 11 can be filed by large companies or by mom and pop wage earners, or anywhere in between. If you do not qualify for chapter 7 or chapter 13, you should seriously consider chapter 11.

What is Chapter 13 Bankruptcy?

2011-05-05T21:33:00.000-07:00

Chapter 13 Bankruptcy is for folks with some sort of regular income who do not qualify for chapter 7, or cannot accomplish what they need to accomplish in chapter 7.
Only individuals or married couples can file a chapter 13 case. Companies cannot file for chapter 13.
Chapter 13 is often referred to as the "wage earner plan", but your income does not have to be wages in order to file. It could be retirement income, social security, self-employment income, rent, or even unemployment. Your income has to be enough to accomplish the goals of the chapter 13 plan.
Common goals of filing a chapter 13 are 1) to stop a foreclosure and force your mortgage company to accept payments, 2) to strip off second or third mortgage liens, 3) to stop a vehicle repossession, 4) to stop lawsuits or wage garnishments, 5) to stop IRS or state tax levies, garnishments, or actions, 6) to stop high credit card interest, 7) to keep property that you might otherwise not be able to keep if you filed a chapter 7.
Chapter 13 requires you to make monthly payments to a chapter 13 trustee based on a plan created by your bankruptcy attorney.
Keep in mind that not everyone qualifies for chapter 13. If you do not have enough income to accomplish your goals, you may not be able to fund a chapter 13. There are secured and unsecured debt limits.

What is Chapter 7 Bankruptcy?

2011-04-28T19:04:00.000-07:00

Chapter 7 is the basic bankruptcy. It is sometimes referred to as the "fresh start" bankruptcy or the "liquidation" bankruptcy. Chapter 7 bankruptcy does not reorganize or restructure your debt, it eliminates your debt. Depending on your situation, you may be able to keep homes or cars, but you will still have to pay any secured debts associated with those assets. Whether you can keep them or not will depend primarily on whether you are current on the payments, how much equity is in the asset, and what your exemption is.

In order to file a chapter 7 bankruptcy you must "qualify" on the Means Test. Whether or not you will qualify depends on what your gross income has been for the six months before you file, and your household or family size. If you do not qualify on the first test, you might qualify on the second test. The second test is much more complicated and requires a review of your mortgage statements, secured car statements, whether you have back taxes, child support, spousal maintenance, child care, and the like.

Most chapter 7 cases last about four to six months and remain on your credit report for ten years after filing. The goal is to get a discharge order, eliminating as much of your debt as the law allows. Certain debts cannot be discharged. These may include certain taxes, child support, certain marriage dissolution obligations, student loans and judgments resulting from drunk driving actions.

If you qualify for chapter 7, it may be the best way to get a "fresh start", put most or all of your financial problems behind you, and start over.

What is bankruptcy?

2011-04-24T12:10:00.000-07:00

If you cannot pay all of your bills on time, and you are being harassed by creditors or collectors, you may be asking "What is bankruptcy?" Bankruptcy comes in different chapters. Chapter 7 is the fresh start or liquidation bankruptcy. Chapter 11 is a large scale reorganizing bankruptcy for individuals or companies. Chapter 12 is the farmer's bankruptcy. Chapter 13 is a personal reorganizing bankruptcy and cannot be used by corporations or llcs.

In the United States bankruptcy is authorized by federal laws under 11 United States Code.
Bankruptcy can assist an individual or company to reorganize or liquidate debt.
Bankruptcy is a creature of law, created by congress for the express purpose of resolving
debt problems that cannot otherwise be resolved.

If you cannot handle your debt, you should consider bankruptcy. We do not have debtor's prison in the United States so, if you need it, you should consider bankruptcy.