HOW TO FILE FOR BANKRUPTCY AND GET TO DISCHARGE

CHAPTER 7 or 13

GETTING THE INFORMATION GATHERED

PREPARING YOUR DOCUMENTS

THE MEETING OF CREDITORS

DISCHARGE OF MY BANKRUPTCY

THE FOLLOWING INFORMATION IS NON-EXCLUSIVE TO ALL LEGAL PROFESSIONALS AND GENERAL INFORMATION. WHAT FOLLOWS IS LEGAL ANALYSIS OF AND FOR FILING BANKRUPTCY.

CHAPTER 7 or 13.

CHAPTER 7. Most people want to file for Chapter 7 and discharge their obligations. While it is the most common chapter to file under, there are those instances that filing for Chapter 7 relief is not the best solution. The pending changes in the bankruptcy laws will make it less common. Chapter 7 typically results in your ability to keep all of your property and discharge (wipe out) most or all of your debt. A Straight Chapter 7 takes an average three to four months to complete from filing the petition to discharge. Chapter 7 does not require that you make payments to court.

Tom S. Hyde will examine your situation and review your budget and income information with you at your initial no cost consultation. If your situation warrants Chapter 7 or 13, he will advise you. Chapter 13 means that you may have too much excess income in your budget after deducting your living expenses from net monthly income.

In the free information packet/questionnaire, you will see two pages for budget information. This is the most important information to provide. It impacts on your decision and the advice of Tom S. Hyde whether 7 or 13 fits your individual situation. Upon review of your budget, Tom S. Hyde will determine whether or not you have income not needed to make ends meet each month. Should your budget leave excess income, it will likely result in the filing for Chapter 13 bankruptcy. This will result in your employer turning over monies from your pay periods over a span of anywhere from 3 to 5 years to the Chapter 13 Trustee's office. They will then disburse partial payments to your creditors.

CHAPTER 13. While the impending changes in the Federal Bankruptcy Laws will favor more filings of Chapter 13 bankruptcies, it is not likely to change the analysis of determining what it your best decision of 7 v. 13. A Chapter 13 bankruptcy is more costly and complicated than most Chapter 7's. A Chapter 13 is a likely chapter to file under for the following situation: tax troubles, child support problems, pending real estate foreclosures, curing mortgage delinquencies and traffic ticket problems resulting in the suspension of driver's licenses.

With the new bankruptcy laws favoring debtors paying their obligations through Chapter 13 as opposed to Chapter 7, it will be more complicated and likely harder to confirm these plans. A Chapter 13 requires the attorney to prepare a plan. This plan outlines how much is available to pay creditors and how to pay creditors. Greater detail will determine how much to take out of each pay check and when. The plan determines the rank of how certain creditors are paid and how much per month. The attorney prepared plan is to lay out how to pay the car payment, the mortgage(s), taxes, child support, arrearages, etc. The plan can be rather simple or complicated depending on each situation. In either event, Chapter 13 is the likely Chapter for many debtors in the future because the Congress has determined that Chapter 7 should be harder to utilize and harder to obtain. The changes are not fully understandable at this point, but we expect sweeping changes in the near future.

A Chapter 13 proceeds exactly like a Chapter 7. You must still attend a Meeting of Creditors. However, at this meeting of creditors, it usually requires more information and questions from the trustee. Creditors as a rule do not usually attend these meetings. While they are permitted to attend and ask questions, many skip the meeting. It becomes more a question and answer session with the trustee. After the meeting of creditors, the trustee will likely refer your case to be confirmed by the Chapter 13 Bankruptcy Judge. If the Trustee has approved of the plan submitted, the Judge will sign the Order to confirm your Plan to repay creditors.

Chapter 13 does not always result in your paying back all of the debt to your creditors. It is based on your ability to pay and the amount of excess income. The job of the attorney is to assess your case and determine if you pay less than 100%. The Chapter 13 Trustee pays creditors claims after they submit a claim to the court. If the submitted claim is accepted, the creditor will either receive all or a prorated amount of their claim over time. If the creditor does not file a claim with the court, they are not paid, and they cannot demand payment for the debt you owe later. They are prohibited to demand payment if they do not follow the rules of the court. After you complete your Chapter 13 plan, the amount of the debts not paid through the plan are discharged with the exception of some debts which Tom S. Hyde will explain to you at your no cost consultation.

WHAT DOES A CHAPTER 13 DO THAT A CHAPTER 7 DOES NOT?

Chapter 13 can help with the IRS. If you have a tax bill that you are not able to manage or work out with the IRS, Chapter 13 can force the IRS to accept a payment plan that better fits your budget and ability to repay. In Chapter 7, you can discharge certain tax obligations without repayment solely if you meet very strict criteria. Tom S. Hyde will explain the difference to you at your consultation.

Many who file for Chapter 13 do so to stop a foreclosure on their real property. The Chapter 13 can allow you to stretch arrearages on a mortgage over 3-5 years while still making your monthly mortgage payments. Chapter 13 allows you to also wipe out debts you can't in Chapter 7. People who have lost their driver's licenses because of tickets and fines file Chapter 13. This allows them to get their licenses reinstated upon the filing of the Chapter 13. Without a drivers license, it is difficult to keep your employment without a valid license. To do that, the plan must include all ticket numbers, names and addresses of the courts or counties collecting on them. You can always get this information from the Department of Licensing.

INFORMATION GATHERING.

Filling out the free information packet/questionnaire is an investment in your time. What are you paying the lawyer for? Not to compile your creditors information that's for sure. If you want the attorney to compile the information for you, the fees would double immediately and therefore slow down the process of filing the petition with the court. Face it; you are saving money to simply take those bills out of the box, file folder or drawer. Do what is necessary to get Tom S. Hyde the information. Most of the questionnaire is simply checking the appropriate boxes to some questions. You will provide a budget and provide the information on your creditors. Providing the correct information allows Tom S. Hyde to properly advise you.

Disclosing the existence of all your property is imperative. Most people do not lose any assets upon filing for bankruptcy. It is those few individuals who do not disclose the existence of all their assets who do lose their assets and are subject to criminal prosecution and/or fines up to $500,000. So you can guess, full disclosure is IMPERATIVE.

I have had some potential clients in the past who have attempted to get me to pretend that they didn't list something, or they would say they would give it to a relative or friend for safekeeping. Upon that remark, I get up from my seat and show them the door. I have seen them at subsequent meetings with other lawyers. I can only guess what they did after meeting with me.

For a bankruptcy petition to be accurate you must correctly describe your property. Don't worry, you don't have to itemize everything, but you must use your best guesstimate of its fair market value. If you own a house, you can use comparables from your neighborhood, get a market analysis, recent appraisal, or most recent tax statement. For cars, you can use your best guess, Little Nickel comparables, etc. Since you are online, NAD and Kelly are online and have simple ways for you to determine the fair market value of your vehicles.

WHAT HAPPENS AFTER YOU MEET WITH TOM S. HYDE?

Preparing the Papers and the Notice of Meeting of Creditors. After you have met with the attorney, he will prepare your court papers. You will then be called in to review and sign your papers. Afterwards, he will file your court papers with the court. Upon filing your petition with the bankruptcy court, you are immediately protected under the Automatic Stay. This prohibits creditors from harassing you, garnishing your paycheck, foreclosure of real property and the repossession of your vehicle. Under the new procedures established by the bankruptcy court, soon it will be easy to file your case electronically. The bankruptcy court will then send out notices to you and all of your creditors. These notices inform you and the creditors of the date of your creditors meeting. A 341 Meeting of Creditors is typically scheduled for 30 to 45 days out from filing. Some dates are actually 60 days out from the time of filing. But don't worry. You are under the courts protection from start to finish. The notice will give you ample time to arrange to be at your meeting.

If creditors are still harassing you after we file your petition, you are to notify the creditor that your attorney represents you. Give them our name and phone number and tell the creditor to contact us. Hang up immediately. Do not try and engage your creditor. They are not working for your best interest. If they persist, give our office the name of the creditor and their phone number. We cannot get the creditor to knock it off unless we have that information. They can verify filing information through our office or through the bankruptcy court. Soon, all information will be accessible to creditors online if they are part of PACER, which compiles all case information.

The Automatic Stay stops collection efforts, garnishments and foreclosures. Under Chapter 7, the stay is in effect until discharge, typically 3-4 months. Under Chapter 13, it lasts until the completion of your plan. That means several years. Imagine, not hearing from your creditors from up to 3-5 years!

Creditors who willingly violate the Automatic Stay can be sued. The person who calls you can be sued. Believe me, they will stop harassing you if they have to be reminded. They understand that the law is clear on this subject. Let them explain to a Federal Bankruptcy Judge why an act of Congress does not apply to them. Remember, if you don't list a creditor or provide us with correct address information that creditor can still demand you pay even if you filed for bankruptcy!

THE MEETING OF CREDITORS.

Everyone who files for bankruptcy relief under Chapter 7 or 13 must have a 341 Meeting of Creditors. This sounds more formidable than it is in reality. I have been attending these meetings for years. Yes, some are filled with some fireworks. Most are simply routine. To you it may be nerve-wracking. It really is not all it is cracked up to be. Remember, this is the government running a meeting. How exciting can that be! In the space of an hour for Chapter 7 or an hour and a half for Chapter 13, the trustee in charge of the meeting has to run a docket with up to 20 or more cases. You can imagine that in the space of that time, some will go extremely fast and others will take some time. Do not stress yourself out waiting for this meeting. Believe me when I say, you will spend more time parking and waiting in the audience than it takes to do your individual meeting with the Trustee. An average meeting can take from 3-5 minutes depending on your case. Most are routine and take only several minutes. Creditors have become a rarity. In the past, you could count on three or four per meeting. It is rare for even one creditor to show up at most meetings. It is a meeting of creditors, but most do not show up.

Unless you are the first party called, you will notice that those ahead of you are answering the same questions each time. Sometimes the trustee varies with their additional questions if you have assets they wish to ask you about. At the meeting, you will be sworn in. You will state your name and address. Then you answer several questions about whether you listed all of your debts and assets under penalty of perjury and whether or not you have had a change in your job or income since the petition was filed. They typical last question is whether or not you have read a bankruptcy information statement. If Tom S. Hyde represents you, his office will have already provided you with this document weeks before the meeting. The trustee may inquire about other matters, then inquire if any creditors are present. They have a chance to ask you questions. But again, their appearances are rare. Tom S. Hyde is there to help you if you do not understand any questions from the Trustee or a potential Creditor. Other less prepared attorneys can prolong a meeting of creditors. However, the main source of delay is those who represent themselves without an attorney. Their documents tend to be less prepared or incomplete. Trustees typically spend more time inquiring from pro se debtors. Most trustees in the past few years will schedule pro se debtors at the end of their calendar and allow attorney represented cases to proceed ahead of them.

WHEN DO I GET THE DISCHARGE OF MY BANKRUPTCY?

Discharge Orders under Chapter 7 usually take 60 to 75 days after your meeting of creditors. The discharge means your case is done and complete. All dischargeable debts have been discharged or wiped out. Those that are not are those of the type Tom S. Hyde explained to you at your initial consultation or those you have agreed to reaffirm. As explained in the questionnaire, most taxes, child support, student loans, tickets etc. are not discharged. It is rare to be denied a discharge. However, there are those events that can delay or interfere with your discharge.

The most common type of interference with your discharge is what is called in bankruptcy an "Adversary Proceeding". This is just another word for lawsuit. An Adversary Proceeding results from a creditor filing a lawsuit against you for the debt you owe them because they believe you did something wrong. Usually it is because a debtor charged over $1,000 on the account less than two months prior to filing or provided false information on a credit application. If that was the case, they allege you knew that you could not repay the debt or that you intentionally mislead them to obtain the credit. By filing this separate lawsuit, they have to prove the allegations against you. If successful, then they obtain a judgment against you to pay that creditor. The court likely will still issue a discharge from your other obligations. That is why is important to disclose all information to Tom S. Hyde when he meets with you.

Another interference is if the trustee comes into information that you may have not disclosed all of your assets or that you have taken steps to hide them from creditors and the court. Remember, Karma will find you. If you think nobody will find out, think again. Then you have caused greater harm to you and others.