WILL CREDIT COUNSELING LOOK BETTER ON MY CREDIT REPORT?

In many instances, No. It will cost you less money and you will rebuild your credit faster if you file for Bankruptcy.

 

WHAT HAPPENS TO MY SECURED DEBT IN A BANKRUPTCY?

A creditor whose debt is secured has a right to take property to satisfy a a secured debt. For example, most homes are burdened by a mortgage, which is a secured debt. This means that the lender has the right to take the home if the borrower fails to make payments on the loan. Another example is when a car is purchased, the purchaser usually gives the lender a security interest in the car if money is borrowed to purchase the car. This means that the debt is a secured debt and that the lender can take the car if the borrower fails to make payments on the car loan. Bankruptcy does not allow you to Discharge the secured debt and keep the security. This means that you cannot Discharge the mortgage, not pay for it and then keep the house. The same goes for your car or most other secured debt. In a Bankruptcy, you must indicate whether you wish to reaffirm your debt with the lender or surrender the security back to the lender. The experienced Bankruptcy Attorneys at FAMILYLEGAL will assist you in deciding what is best for you in determining what to do with a secured debt. 

 

WHAT IF I HAVE A FORECLOSURE SCHEDULED?

If you have a foreclosure scheduled and you have not paid your mortgage loan, you have the option of seeing whether the lender will take partial payments to reinstate the loan and the option of contacting HUD to see if HUD can afford you any mortgage assistance. If the lender is unwilling to cooperate with you and/or HUD will not provide you with any assistance, then you either have the pay the entire amount due to the lender prior to foreclosure or file for Bankruptcy protection to stop it, if you want to save your home.  In a Chapter 13 case, you can file a Chapter 13 Plan whereby you make regular monthly mortgage payments and then plan payments in which you pay back your mortgage arrearage over a period of 36 months (3 years) or 60 months (5 years).

 

WHAT IF I HAVE AN ATTACHMENT AGAINST MY HOUSE?

 

If you have a judicial lien placed on your home by a creditor, you can ask the Bankruptcy Court to remove the lien if it interferes with your homestead exemption. The experienced Bankruptcy Attorneys at FAMILYLEGAL can explain the formula utilized by the Court in considering removing a lien to determine whether the lien is removable in Bankruptcy. Many of them are able to be removed.

 

WHAT IF THE VALUE OF MY HOME IS LESS THAN THE AMOUNT DUE ON MY FIRST MORTGAGE AND I HAVE A SECOND MORTGAGE, CAN THE COURT DO ANYTHING ABOUT THE SECOND MORTGAGE?

In some instances, in a Chapter 13 proceeding, the Court can strip your second mortgage if the value of your home is less than what you owe on the first mortgage. The experienced Bankruptcy Attorneys at FAMILYLEGAL will explain to you the process involved in asking the Court for relief from that oppressive second mortgage on your home.

 

CAN MY BOSS FIRE ME FOR FILING FOR BANKRUPTCY?

No.

 

WHEN DO I NEED TO COMPLETE MY PRE-BANKRUPTCY/PRE-FILING COURSE?

You need to complete that course and obtain your Certificate of Completion prior to filing your Bankruptcy Petition.

 

DO I HAVE TO LIST ALL OF MY DEBTS AND ASSETS ON THE PETITION?

Yes. If you don't, you will be breaking the law and it is Federal crime. So, it is very important that you share all of the information on ALL of your debts and assets with your Attorney at FAMILYLEGAL.

 

WHAT HAPPENS AFTER I FILE BANKRUPTCY?

Upon our electronic filing of your petition with the Bankruptcy Court, the automatic "stay" immediately takes effect and prohibits all creditors from taking certain collection actions against the Debtor or the Debtor's property. Although the stay is automatic, creditors need to be advised of the stay. The Court issues a notice to all creditors advising them of the filing of the bankruptcy, the case number, the automatic stay, the name of the Trustee assigned to the case (if filed under Chapter 7, Chapter 12, or Chapter 13), the date set for the meeting of creditors (called the Section 341 Meeting of Creditors) and the deadline set for filing objections to the Discharge of the debtor and/or the Dischargeability of specific debts.

There are many exceptions to the automatic stay, including but not limited to:

 

• Termination of the stay against the Debtor on the 30th day after the filing of a new case if the Debtor had a prior case dismissed within One (1) year of filing the present case. (The stay can be extended by the Court with a showing of good cause).

• Commencement or continuation of a civil proceeding regarding child custody or visitation, domestic violence, alimony or the dissolution of marriage, but not division of property.

• Continuation of an eviction or unlawful detainer action involving a residential lease. However, there are ways to allow for you to stay in your apartment for a short period of time if your landlord has a judgment against you. Please be sure to raise this with an experienced Bankruptcy Attorneys at FAMILYLEGAL during your Consultation.

 

The Court's notice will specify a time and date for you to appear at a Section 341 Meeting of Creditors, in which you and one of our experienced Bankruptcy Attorneys will meet with your Chapter 7 Trustee.

 

In a Chapter 7 case involving an individual Debtor, the creditors generally have sixty (60) days from the first date set for the Section 341 Meeting of Creditors to object to the Discharge of the debtor and/or the Dischargeability of a specific debt. If the deadline passes without any objections to the Debtor's Discharge being filed, the Court will issue the Discharge Order. If any objections to the Dischargeability of specific debts are filed, they will be heard by the Court. If there are no assets from which a dividend can be paid to Creditors, the Trustee will prepare a report of no distribution and the case will be closed. If there are assets that are not exempt, funds will be available for distribution to Creditors. The Court will set claims deadlines and notify all creditors to file their claims. The Trustee will proceed to collect the assets, liquidate them and distribute the proceeds to creditors. When the assets have been completely administered, the Court will close the case.

 

In a Chapter 13 case, Creditors are given an opportunity to object to the Plan. If no objection is filed by Creditors or the Trustee, the Plan may be confirmed as filed. Once the Plan is confirmed, and the Claims Bar Date has passed and claims are allowed, the Trustee will distribute the proceeds of the Debtor's plan payments to Creditors until the Debtor completes the Plan or the Court dismisses or converts the case. The Creditors generally have sixty (60) days from the first date set for the Section 341 Meeting of Creditors to object to the Dischargeability of a specific debt. Upon completion of the Chapter 13 plan, the Court will issue a Discharge Order, the Trustee will prepare a Final Report, and the case will be closed.

 

IF I HAVE A COURT CASE PENDING WITH A CREDITOR WHEN I FILE, HOW DO I TELL THE COURT THAT I FILED?

 

The experienced staff and Attorneys at FAMILYLEGAL take care of that for you, so be sure to provide them with all information on any Court actions for which you are a party when you file for Bankruptcy

 

WHO IS THE BANKRUPTCY TRUSTEE?

 

In all Chapter 7, Chapter 12, and Chapter 13 cases, a Trustee is assigned. The name and address of your Trustee will appear on the notice we receive from the Court relative to your Section 341 Meeting of Creditors. The Trustee's job is to administer the Bankruptcy estate, to make sure Creditors get as much money as possible, and to run the Meeting of Creditors, (Section 341 Meeting of Creditors). The Trustee either collects and sells non-exempt estate property, as in the case of a Chapter 7, or collects and pays out money on a Repayment Plan, as in the case of a Chapter 13. They are appointed by the United States Trustee. The Trustees report to the Court, but their fees come out of the Bankruptcy filing fees or as a percentage of the money distributed to creditors in the Bankruptcy.

 

WHO IS THE U.S. TRUSTEE?

 

The United States Trustee's Office is part of the U.S. Department of Justice, and is separate from the Court. The United States Trustee's Office is an overseeing agency, charged with monitoring all Bankruptcies, appointing and supervising all Trustees, and identifying fraud in Bankruptcy cases.

 

DO I HAVE TO ATTEND MY 341 MEETING?

 

Yes.

 

WHAT HAPPENS AT THE 341 CREDITORS' MEETING?

 

A Meeting of Creditors is the hearing all Debtors must attend in any Bankruptcy case. It is held about Four (4) to Six (6) weeks after you file your Bankruptcy Petition. You will be required to attend the Meeting of Creditors. An Attorney from FAMILYLEGAL will attend the Meeting of Creditors with you. What happens is that a bunch of people will have the same date and time for their meeting. So you might be first or last, we never know. Once the Trustee calls the case, the Debtor and their Attorney go up to the Trustee's table. The Trustee will put the Debtor under oath and generally asks the Debtor the following questions:

 

• The Trustee will ask for a picture identification and something with the Debtor's social security number on it. The Debtor needs to bring those things with them to the Meeting;

• The Trustee will ask the Debtor whether they rent or own where they live. If the Debtor owns their real estate, the Trustee will ask how the debtor came up with the value. We always think its a good idea for the Debtor to have a market analysis done on their property prior to filing;

• The Trustee will ask the Debtor if they paid any one Creditor more than $600.00 within the 90 days before Bankruptcy. If that occurred and it was not an ordinary payment, the Trustee can seek to avoid it. What that means, if is that if the Debtor made a large payment to a Creditor prior to filing, the Trustee can say that the Debtor preferred that Creditor over all of the others and seek to get that payment back and distribute it fairly amongst everybody that is a Creditor of the Debtor;

• The Trustee will ask the Debtor if they transferred any assets to anybody within the last 4 years. If they did, the Trustee can examine whether it was for fair market value. If not, the Trustee can have that transfer set aside and resell the property for fair market value for the benefit of Creditors;

• The Trustee will ask the Debtor if they gave any money or property to a family member within the one year before Bankruptcy. If they did, the Trustee can go after that and again, use any money that he gets for the benefit of Creditors and pay them so much on the dollar;

• The Trustee will ask the Debtor if they have any business interests. If they do, he/she will want to know if there are any assets, accounts receivable, etc;

• The Trustee will ask the Debtor if they have any claims against anyone. If the Debtor has anything like that, then they can no longer pursue it, unless the Trustee abandons it. The only one with standing is the Chapter 7 Trustee (unless he/she abandons it) & he/she can settle the case for whatever he/she thinks is fair use the money from same to pay Creditors so much on the dollar;

• The Trustee will ask the Debtor if they are the settler or beneficiary of any trust. If there is a spendthrift provision, then in many instances the Trustee cannot take it, if not the Debtor loses the money they would get from it;

• The Trustee will ask the Debtor whether they took any cash advances off of their credit cards within the one (1) year before the Bankruptcy. If they did, the Trustee will want to know what happened to the money;

• The Trustee will also ask the Debtor whether they did any balance transfers within the 1 year before the filing;

• The Trustee can ask anything else they want as well if it pertains to the Debtor's financial situation, and;

• Creditors can appear and ask the Debtor questions about his/her financial situation, but most of the Creditors do not appear.

 

 

WHAT CHOICES DO I HAVE RELATIVE TO A SECURED DEBT, LIKE A CAR LOAN OR A MORTGAGE?

• You can surrender the security back to the lender and Discharge the debt.

• Or, you can reaffirm the debt. If the Debtor would like to keep a debt, the Debtor can reaffirm the debt obligation. What that means, is that if you would like to keep a debt, the experienced Bankruptcy Attorneys at FAMILYLEGAL will write to the creditor when the Petition is filed to tell them that the Debtor would like to keep a debt and request a Reaffirmation Agreement. The creditor will then generally send a Reaffirmation Agreement. They are not required to do so, but usually do. In that case if the Debtor signs the Reaffirmation Agreement, it is like they never filed for bankruptcy on the debt which means that if they are not able to pay it, the Creditor will be able to take their property (as applicable) and collect on the debt, so if you want to reaffirm a debt obligation you have to make really sure that you can make the required payments.

• If the security is personal property, the Debtor can redeem the property. The other option is to redeem property from a secured debt. What that means is that if you own a car or some other sort of personal property and the value of the property is less than what you owe, you can pay the creditor a lump sum payment to keep the security. In order to redeem, the Court will require a Motion To Redeem for the judge to decide whether it is fair. The loan has to be at least 910 days old in order for you to redeem.

 

CAN I KEEP ANY OF MY CREDIT CARDS?

 

You can inform the staff and lawyers at FAMILYLEGAL as to whether you wish to reaffirm your debt with any credit card companies. However, it is totally up to the credit card company as to whether they want to reaffirm with you and provide you with a new line of credit. Most credit card companies will shut off your line of credit once they receive notice of the Bankruptcy filing. Even if you do not have a balance on a credit card, they might cancel your card upon their discovery of your Bankruptcy filing.

 

WHEN DO I NEED TO COMPLETE MY PRE-DISCHARGE COURSE?

 

You must complete a Pre-Discharge course and file the Certificate of Completion of the Section 341 through your Attorney with FAMILYLEGAL within 45 days after the date first set for the Meeting of Creditors. In Chapter 13 cases, the Certificate of Completion must be filed no later than the date of the last payment made under the Plan or the date of the filing of a Motion for a Discharge prior to completion of the Plan. If the Debtor fails to file the Certification of Completion, their case can be closed without Discharge. The Debtor may later reopen the case in order to file the Certificate and receive a Discharge, but there will be additional fees to the Court.

 

WHAT IS A DISCHARGE?

 

The Discharge Order is issued by the Court and permanently prohibits Creditors from taking action to collect Discharged debts against the Debtor personally. In a Chapter 7 case, the Bankruptcy Court will Order that the Debtor be Discharged of all dischargeable debts once the time for filing complaints objecting to Discharge has expired unless:

 

• The Debtor is not an individual; or

• A complaint objecting to the Debtor's Discharge has been filed; or

• A Motion To Extend the time for filing a complaint objecting to the Debtor's Discharge is pending; or

• The Debtor has filed a waiver of Discharge; or

• A Motion To Dismiss the case for substantial abuse is pending; or

• A Motion To Extend the time for filing a Motion To Dismiss the case for substantial abuse, is pending; or

• The Debtor has not filed their require Debtor Education Certificate.

In Chapter 13 cases, the Debtor will be granted a Discharge of dischargeable debts after completing all payments under the Plan, or prior to Plan completion, after notice and hearing, provided the Debtor has completed the Debtor Education course and obtained a Certificate, and has otherwise filed all necessary and appropriate documents with the Court.

 

WHAT DEBTS ARE DISCHARGEABLE?

 

In an individual Debtor's case, all debts are dischargeable except for those listed below, such as:

 

• Debts not listed on the Debtor's bankruptcy schedules;

• Certain taxes and fines;

• Debts created through fraudulent conduct or by providing false information to a creditor;

• Alimony, child maintenance or support, and certain debts arising out of a divorce decree or separation agreement;

• Debts from willful or malicious injury to another;

• Most student loans;

• Debts caused by the death or personal injury related to the operation of a motor vehicle while the Debtor was intoxicated;

• Post bankruptcy condominium or cooperative owners' association fees;

• Credit card charges of $500.00 or more for luxury goods or services within 90 days prior to the Bankruptcy filing, and;

• Cash advances of $750.00 or more within 70 days of the filing of the Bankruptcy Petition.

• Some debts such as those based on fraudulent conduct, embezzlement or willful and malicious injury to another, are discharged unless a complaint to deny discharge of that debt is timely filed with the Bankruptcy Court. Ordinarily, these complaints must be filed within sixty (60) days of the first date set for the Section 341 Meeting of Creditors.

• Additionally, certain debts that were not listed on your bankruptcy schedules or that were incurred after you filed Bankruptcy are generally not discharged.

 

AFTER MY CASE IS CLOSED BY THE COURT, CAN IT BE REOPENED?

 

Yes. The case can then be reopened for 3 reasons:

 

• If the Debtor fails to list an asset, anyone can tell the Bankruptcy Court. In some instances, the Bankruptcy Court can then set aside the Debtor's Discharge. The Debtor can then be prosecuted for Bankruptcy crimes and can go to jail. Bad things happen if you are not truthful on your Bankruptcy schedules so it is very important that you share all information with your Attorney at FAMILYLEGAL and make sure all of your Bankruptcy schedules are accurate and complete before they are filed;

• If the Debtor fails to list a debt, the Debtor can ask the Court to reopen their case, but the Court will charge a reopening fee of at least $260.00, plus we have fees so the Debtor should list all of their debts the first time around on their Bankruptcy petition, and;

• If the Debtor gets the right to receive an inheritance, the proceeds of a life insurance policy or a property settlement from a divorce within 6 months from the date that they filed for Bankruptcy that will jump back to their Bankruptcy estate and be used to pay debt. So if that happens, it is very important that you share the information with the staff and Attorneys at FAMILYLEGAL so that they can inform the Court. If the Court is not informed, the Court may revoked your Discharge and refer you for criminal prosecution.