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EVERYTHING YOU NEED TO KNOW ABOUT
BANKRUPTCY
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In most Chapter 7 bankruptcy cases, an individual is allowed to keep all of his or her assets including:
In most Chapter 7 cases you are allowed to keep your automobile if it does not have a significant value. In most cases if you have an automobile loan you may keep your automobile, but you must continue to make loan payments or risk having your automobile repossessed.
In most Chapter 7 cases you are allowed to keep your house if you use it as a primary residence, as long as the house has less than $75,000.00 in equity, or in a joint husband and wife bankruptcy petition, less than $150,000.00 in equity. Equity is calculated as the difference between what the house is worth and what the outstanding balances are on the existing mortgages and / or other liens, ie., tax liens, judgment liens, etc… You may keep investment properties as long as said properties do not have any equity.
In most Chapter 7 cases you are allowed to keep household goods and furnishings such as clothing, furniture, personal items, petty cash and in many cases, up to $9,000.00 in personal property of any kind.
In most Chapter 7 cases you may keep proceeds from a personal injury case or automobile accident case, after deducting for attorneys fees and medical bills. In the event an individual has more than one case, they are entitled to exempt each case, as long as the individual has a medical report showing some kind of permanency rating for each case. You are allowed to keep your workers compensation case or social security disability case.
In a Chapter 7 case personal and / or credit card debt, judgment liens, wage executions, medical bills, automobile repossession debts / deficiencies, foreclosure deficiencies and other types of debt can be discharged, or eliminated by the Bankruptcy Court. Certain State taxes and Town car taxes can be discharged.
Certain debts including student loans, child support, alimony and federal taxes less than three years old, debt for criminal restitution or debt procured by fraud cannot be by the Bankruptcy Court in a Chapter 7 case.
Once an individual files a bankruptcy petition, a trustee’s meeting is scheduled. The trustee will ask the debtor to verify all of the information listed in his or her bankruptcy petition. Said bankruptcy petition contains a list of assets and a list of liabilities, a list of monthly income and a list of monthly expenses. The meeting usually lasts approximately fifteen minutes and is recorded under oath to verify that all the information provided to the Bankruptcy Court is true and accurate. If a debtor is not truthful about his or her assets or financial statements, he or she can be subject to criminal charges by the United States Department of Justice.
At the Trustee meeting, the debtor must submit a photo identification, such as a driver’s license, and social security card. If the debtor does not have a social security card, the debtor may provide a pay stub, W-2 or other form of identification that has a social security number.
Approximately three months after the bankruptcy filing, a Notice of Discharge from the Bankruptcy Court will be sent to the debtor indicating that all debts have been discharged, or eliminated, by the Court. In most cases creditors do not object to the Debtor’s discharge, or appear at the Trustee meeting.
In most cases, total charges for a single Chapter 7 bankruptcy filing range between $1,000.00 and $1,200.00, which includes attorney and filing fees. Payment plans are acceptable. Payments can be made over whatever length of time an individual requires, however, the bankruptcy petition will not be filed until the total fee is paid. In the meantime, after an individual makes an initial deposit, he or she can inform creditors that he or she is filing for bankruptcy and provide the name and number of my law firm to handle future communication with creditors.
The new bankruptcy law passed in October of 2006 made it harder to file a Chapter 7 bankruptcy for high wage earners. In most cases, an individual who earns under $50,000.00 per year will not be impacted by this new law and will be able to file a Chapter 7 petition. In some cases, even if you earn over $50,000.00, you may still be able to file for bankruptcy if you can claim a number of dependants. You should not be discouraged from filing a Chapter 7 bankruptcy just because you are a high wage earner. Your wages and expenses will be analyzed under a formula set forth by the Federal government called a "Means Test." If you fall within the means test you will be able to file a Chapter 7 bankruptcy case. My office can make the necessary calculations before you file bankruptcy in order to determine whether you fall within the means test.
Under the new bankruptcy law you are required to enroll in a Credit Counseling Class before you file bankruptcy. The class usually only takes about a half hour and can be done over the telephone or over the internet. You are also required to take a Financial Management Class, which also takes about a half an hour and can be done over the telephone or over the internet. Each class generally costs between $40.00 and $50.00 to enroll.
Under the new bankruptcy law you must provide the following documentation to the United States Trustee:
1. 2 years of tax returns
2. 2 months pay stubs AND spouse’s pay stubs unless legally separated
3. 2 months of bank statements
4. Credit Counseling Certificate: Alliance Credit Counseling: 888-995-7856 5. List of names and addresses of all creditors and amounts of debts, OR statements for credit cards OR credit report.
6. Mortgage statement
7. Car loan statement
8. Real estate information on any property transfers made within the last 4 years
9. Information concerning any automobile accident cases or other cases involving pending personal injury claims
10. 401 K, pension, retirement and IRA statements
11. Stock, bond, mutual fund statements
12. Information concerning any inheritance or anticipated inheritance
13. List of all monthly household expenses
14. Copy of Divorce decree
15. Copies of statements of income received from social security, pension or other sources
A Chapter 13 bankruptcy case or plan is filed when a debtor is behind in his or her mortgage payments, or when a debtor is in foreclosure. A Chapter 13 plan allows a debtor to pay back mortgage arrearages in a five year payment plan. The debtor will be required to make current monthly payments on the mortgage, plus make additional monthly payments towards the arrearage and trustee fees. Once the debtor completes the plan the arrearage is paid in full and the case is closed.
If a debtor is in foreclosure, a Chapter 7 or a Chapter 13 bankruptcy filing will immediately stop the foreclosure process for a number of months. During this period of time the debtor can decide what options to pursue: whether a Chapter 13 plan would be feasible, a refinance, a short sale, or a sale of the house listed with a real estate broker. In any event the debtor will not have to make mortgage payments during this period of time and will be able to continue to reside in his house. If an auction date is scheduled for a home in foreclosure on a Saturday, the debtor can file a bankruptcy petition on a Friday, which will immediately delay the foreclosure for at least a couple of months and allow the debtor to stay in the home and not make mortgage payments.
Some banks allow a debtor to sell his house in a short sale. A short sale is when the bank agrees to take less than the full amount of the mortgage as payment in full. The debtor is relieved of any deficiency on the mortgage. To get the bank to approve a short sale can be time consuming and requires that the debtor submit substantial financial documentation to the bank.
If you wish to set up an appointment for a free consultation, please call the number below.
The Law Offices of Lawrence S. Dressler are affordable and provide payment plans for bankruptcy filings.
Appointments can be scheduled during the week, at night or on weekends.
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LAW OFFICES OF LAWRENCE S. DRESSLER
12 TRUMBULL STREET, NEW HAVEN, CT
Dresslerlaw@aol.com
Phone (203) 772-4848
Fax (203) 498-1792
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The information contained herein includes bankruptcy relief under Title 11 of the United States Bankruptcy Code. The Law Offices of Lawrence S. Dressler is a debt relief agency as defined by the United States Bankruptcy Code. All information contained herein is intended for general informational purposes only and the reader is warned not to file a bankruptcy petition without the assistance of a fully licensed, competent attorney. The information contained herein is subject to change, as the Federal Bankruptcy laws and guidelines are periodically updated and amended. |
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