WHAT IS A BANKRUPTCY   Personal bankruptcy is a way of getting protection from your creditors either permanently or while you make a payment plan. Bankruptcy has been around since biblical times and has been used as a means for people to obtain relief from burdensome debts.

The U.S. bankruptcy laws are formulated to give the "honest" debtor a "fresh" start. Bankruptcy is intended to level the playing field between people who owe money and the people to whom they owe money.

WHAT IS A CHAPTER 7 BANKRUPTCY?   Chapter 7 Bankruptcy is called a “liquidation” bankruptcy.   Chapter 7 bankruptcy is designed to help people who are unable to pay their existing debts.   When you file for Chapter 7 bankruptcy you can wipe out most debts with the exception of student loans, taxes, domestic support obligations and court fines.  Even taxes are sometimes dischargeable.  In a Chapter 7 bankruptcy, a trustee takes possession of your property that is not considered "exempt."    In most cases, all of your property will be exempt.  For example, a car with equity of up to $3,225 is exempt ($6,450 for married couples), as are your clothing and household goods valued up to $10,775 ($21,550 for married couples) and jewelry up to $1,350 ($2,700 for married couples), retirement accounts, equity in your home up to $125,000. 
  WHAT IS A CHAPTER 13 BANKRUPTCY?   Chapter 13 bankruptcy, nicknamed the "Wage Earner Plan" is designed for people who have excess income in their budget and can use those funds to repay a portion of their debts over time. Most individuals who seek protection under Chapter 13 of the U.S. Bankruptcy Code are those who:

•	own property that would not be considered exempt under Chapter 7;
•	have a past due balance on a mortgage or car loan and wish to repay those past due balances over time without fear of foreclosure or repossession;
•	have debts such as taxes or student loans that would not be discharged under a Chapter 7 bankruptcy; or
•	have Disposable Income (as defined by the bankruptcy laws) sufficient to repay a portion of their debts over a three or five year period of time, depending on your income.
Under Chapter 13 you have the opportunity to catch up on your mortgage if it is past due as well as your car loan if it is past due. Also, if you repay your debts through Chapter 13 you are given a predictable payment plan that your creditors are required to accept.    The primary difference between Chapter 13 and debt consolidation is that Chapter 13 gives you the protection of the U.S. Bankruptcy Code from continued interest, late fees and creditor harassment.

WILL I QUALIFY FOR CHAPTER 7?  Your ability to file for Chapter 7 bankruptcy and eliminate your debts is determined largely by your household income, which, for these purposes, is the determined by adding up all of your non-social security income for the last six months, dividing that number by 6 and then multiplying it by 12 to get your annual income.   That number also includes regular contributions to the household by other family members or other members of the household.  If your monthly income is less than the state median income for a household of your size then you most likely qualify for Chapter 7 bankruptcy. If your monthly household income is greater than the state median family income for a household of your size then you may or may not be eligible for Chapter 7.  If your Current Monthly Income is greater than the state median family income for a household of your size the courts look to your allowable expenses (these may or may not be the actual amounts you spend on your basic living expenses). If your Current Monthly Income minus your allowable expenses leaves you with enough money to repay a certain portion of your debts over time then you may be eligible to file for Chapter 13 bankruptcy.

THE BANKRUPTCY PROCESS  Your bankruptcy case begins with our representation of you at which time you can tell all of your creditors to leave you alone.  Under new Bankruptcy legislation, you are required to attend both a Pre and Post filing education course (Complete information is listed below). We take over and handle your creditors from that time on.  We handle preparation of your bankruptcy petition and schedules and the filing of the petition, assist you with questions and concerns the Trustee may have.  Since the trustee's role is to sell any assets that are not protected by law and to distribute the proceeds of that sale to your creditors, we will have already discussed the value of and exemptions for your assets.  In most cases there are no assets to liquidate, so do not be concerned.   If the trustee does identify assets, we probably have already advised you about this possibility.  We will notify you of and be present to represent you at the first meeting of creditors. 

This hearing date will usually occur within 40 days of the filing of your bankruptcy.  Although the purpose of the meeting is to give creditors a chance to ask questions under oath, it is rare that a creditor actually comes to the hearing.  Usually, the trustee will ask you several questions regarding your debts and assets and then the hearing will be over.  Most meetings take only a few minutes.  Most of our clients are very anxious about the meeting of creditors.   But, there is no reason to fear the trustee.  The meeting usually takes place in an meeting room, and the trustee is not a judge; the setting is fairly informal.  After the meeting most people agree that their sleepless night was really uncalled for given the simplicity of what they went through at the hearing.  Just bring the minimal documentation we tell you about before the hearing and answer all questions and the hearing should go off without a hitch.

HOW LONG DOES A BANKRUPTCY CASE LAST?  A Chapter 7 case is usually completed about 90 days after filing.   At that time you will receive a document called “Discharge of Debtor” from the court.   The discharge order is the official court order relieving you of your obligation to pay your bills.   Remember that the Discharge of Debtor in a Chapter 7 case may not relieve you of all of your debts.   You should speak with us to find out which debts will not be discharged in a Chapter 7 case.  In a Chapter 13 bankruptcy case, the discharge order is issued upon your successful completion of the 36 – 60 month repayment plan.
WHAT EFFECT DOES BANKRUPTCY HAVE UPON YOUR CREDIT?  Your bankruptcy filing can remain on your credit record for a period of ten years.  This does not mean that you will not be able to get anything, finance anything, or make any money during that time.   Filing for bankruptcy does not mean the end of your life or even your credit.  By filing for bankruptcy you can eliminate those debts and begin to save money again. And once you save money you won't need credit for routine expenses such as groceries, gasoline and clothing.

There is no reason to feel guilty about filing bankruptcy; it is your Constitutional right.  Use it as an opportunity to make a positive and permanent financial change which will provide security for your family.

A large number of well-known actors, actresses, investors business people and businesses have filed bankruptcy.  Everyone enocounters serious financial problems at some point in life.  Your financial problems may certainly be serious but they are not the end of the world.  Filing bankruptcy is often the beginning of your new life of financial freedom.

FORECLOSURE   When you fall behind on your mortgage, it can be very scary.   It is tempting to stall and hope a solution will present itself.  However, it is important that you take action as quickly as possible.  Waiting and losing valuable time will only serve to limit your options and the options we have with which to help you.

Bankruptcy can help you catch upon your bills.   Chapter 13 bankruptcy gives you the ability to stop a foreclosure and catch up on your past due mortgage payments over a 3-5 year period.   This is helpful if you have fallen behind on your mortgage payments as a result of a temporary financial problem but are now in a position to catch up. 

REBUIDING YOUR CREDIT  There is life after bankruptcy.  Now that you have eliminated most or all of your debts, it is time to begin rebuilding your credit.   Rebuilding your credit  depends largely upon you.

You will get new credit offers after bankruptcy.  Having a bankruptcy on your credit report does not mean that you will not be able to get credit.   What it does mean is that you will need to put time and distance between yourself and the bankruptcy filing and take an active role in rebuilding it. Many of our clients are able to get new credit just a few months after completion of their bankruptcy. We can work with you to give you suggestions which will help you improve your credit score and credit report. 

THE FAIR DEBT COLLECTION PRACTICES ACT . The Fair Debt Collection Practices Act (the "FDCPA") governs the actions of collection agencies and other debt collectors, including attorneys.  Even where money is legitimately owed, a debt collector's conduct is restricted by this law.  The FDCPA applies to all “consumer” debts.  This means credit cards, mortgages and other household debts. 

WHAT DEBT COLLECTORS ARE NOT ALLOWED TO DO?

Debt collectors are not allowed to take any actions against you that are deceptive, fraudulent, or designed to harass or intimate you.    This includes threats of criminal action, and threats to take legal action (such as garnishment and repossession) without any intention to act on the threat), informing third parties, such as your employer, that they are collecting a debt. 

YOU HAVE RIGHTS WHEN COLLECTORS ARE CALLING YOU.

If, within thirty days after receiving written notice of the debt from the debt collector, you send the collection agency a letter asking for proof of the debt then the collector must stop contacting you and all other efforts to collect the debt until the proof is provided.  

You can instruct a debt collector to make all inquiries about the debt they are collecting through your attorney if you have one.    Then, they can no longer contact you directly.

You may also write the debt collector and simply tell the debt collector to stop contacting you.   Under the FDCPA, they must do so.  Of course, that does not mean you no longer owe the debt, it simply relieves you of the phone calls. 

If the debt collector violates any of the above, you may be able to sue them and recover damages you have suffered plus up to $1,000 and your costs and attorney fees.

Information About Credit Counseling and Debtor Education

Produced in cooperation with the Department of Justice’s U.S. Trustee Program

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged.

The Department of Justice’s U.S. Trustee Program approves organizations to provide the mandatory credit counseling and debtor education. Only the counselors and educators that appear on the U.S. Trustee Program’s lists can advertise that they are, indeed, approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.

Counseling and Education Requirements

As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.
In general, you must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy – but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are produced through a central automated system and are numbered.

Pre-bankruptcy Counseling

A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling, which will generally be about $50, depending on where you live, the types of services you receive, and other factors. The counseling organization is required to discuss any fees with you before starting the counseling session.

Once you have completed the required counseling, you must get a certificate as proof. Check the U.S. Trustee’s website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.

Post-Filing Debtor Education

A debtor education course by an approved provider should include information on developing a budget, managing money, using credit wisely, and other resources. Like pre-filing counseling, debtor education may be provided in person, on the phone, or online. The debtor education session might last longer than the pre-filing counseling – about two hours – and the typical fee is between $50 and $100. As with pre-filing counseling, if you are unable to pay the session fee, you should seek a fee waiver from the debtor education provider. Check the list of approved debtor education providers at www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm or at the bankruptcy clerk’s office in your district.

Once you have completed the required debtor education course, you should receive a certificate as proof. This certificate is separate from the certificate you received after completing your pre-filing credit counseling. Check the U.S. Trustee’s website to be sure that you receive the certificate from a debtor education provider that is approved in the judicial district where you filed bankruptcy. Unless they have disclosed a charge to you before the counseling session begins, debtor education providers may not charge an extra fee for the certificate.

Contact Wagner Law Office, P.C.