102 Things You Need to Know Before You File Bankruptcy Written and Published by Victoria Ring, Bankruptcy Paralegal Columbus, Ohio USA email: bankruptcy@columbus.rr.com website: http://www.victoriaring.com/bankruptcy/ An Important Message to the Readers: This free ebook provides information and general advice about the law from the knowledge and viewpoint of a bankruptcy paralegal. However, laws and procedures change frequently, and they can be interpreted differently by different people. For specific advice geared to your par- ticular financial situation, consult an expert. No book, software, or other published material is a substitute for personalized advice from a knowledgeable attorney licensed to practice law in your state. Copyright © January 2001 by Victoria Ring. ALL RIGHTS RESERVED. No part of this publica- tion may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise for sale or profit, without prior written permission of Victoria Ring. Printing of this publication from the internet download version is permitted for private viewing only. TABLE OF CONTENTS Page Bankruptcy To Go Kit . a Overview a Free Forms Included b Paid Services . b Guidelines 1 How Filing Bankruptcy Can Help You 1 Terms You Need to Know Concerning Bankruptcy 2 Chapter 7 Bankruptcy 3 Steps That Occur in Filing a Chapter 7 Bankruptcy . 4 Chapter 13 Bankruptcy 5 Steps That Occur in Filing a Chapter 13 Bankruptcy . 5 Changes in Payments During a Chapter 13 Bankruptcy 7 Chapter 11 Bankruptcy 7 Rules that Apply to All Forms of Bankruptcy 7 Debts That Cannot be Discharged . 8 The First Steps to Filing a Bankruptcy Petition 8 How Your Credit Will be Effected by Bankruptcy . 10 Other General Questions and Answers 10 Websites to Help you Learn More About Bankruptcy . 13 Information-Gathering Forms for the preparation of Your Bankruptcy Petition 14 General Information . 1 Debt Sheet 2 Income History 3 Monthly Budget . 4 Asset Checklist 5 Duty to Disclose All Assets 13 Duty to Disclose All Creditors 14 Agreement . 15 Additional Documents Needed to File Petition 16 Bankruptcy To Go Kit This file that you recently downloaded from the internet is a complete ebook dedicated to helping the following types of people: (a) Consumers -- people who are interested in learning more about bankruptcy and/or interested in filing their own bankruptcy and saving $100’s of dollars in attorney fees. (b) Paralegals -- legal professionals with an attorney/boss who is consider- ing offering bankruptcy services to clients. (c) Attorneys -- legal professionals who do not normally offer bankruptcy services to clients, but are interested in starting. The forms included in this “Bankruptcy To Go Kit” can be printed and used in the office as master forms. Overview Thank you for downloading this free book from the website located at http:// www.victoriaring.com/bankruptcy/ book01.doc. This book is written by a Victoria Ring, a bankruptcy paralegal, who is well aware of the confusion and multitude of questions that surround the subject of bankruptcy. Her experience of working with 100’s of clients filing bankruptcy in the Columbus, Ohio area has awarded her the ability to know what consumers really think and want to know about this subject as well as all the steps they need to take in order to file. For instance, Matt down the street comes by one day to tell you how he filed bank- ruptcy last week and purchased a new car this week. However, your brother Marshall filed bankruptcy last year and his credit has been ruined ever since. Marshall can’t even get a check-cashing card at his bank. What happened? What did Matt do that Marshall didn’t? Will the same thing happen to you? And what about when Debbie filed bank- ruptcy because her husband died and the household income was reduced? When she filed bankruptcy they came and took her home away! Of course there is no way you would want that to happen to you. You don’t want to lose your home, car and furniture just because you decide to file bankruptcy. Stories like these are certainly not unique. All of these same fears surround almost everyone when they are thinking about filing bankruptcy for the first time. Fear of the unknown is a natural reaction for human beings. However, this is precisely the reason why this book was written. It is written to take the fear out of filing bank- ruptcy, but most importantly, it will educate you so you can make a more informed decision about whether filing bankruptcy is in your best interest or not. Filing bankruptcy is not necessarily for everybody, as you will soon see; and after reading this ebook, you will be in a better position to make an educated decision about your present financial condition. If you decide to go ahead with the process of filing bankruptcy, at least you will know what to expect after reading this ebook. 102 Things You Need to Know Before Filing Bankruptcy Free Forms Included Beginning on Page 14 of this ebook, a variety of forms are provided for you to print out, fill out and mail in at your convenience if you decide you want to file your own bankruptcy. Or, if you are an attorney, you can print out the forms, remove my name from them and use them for your own office. I personally designed these forms for the two bankruptcy attorney’s that I was employed with. At the time I hired at the law firm, they were still using old 1960’s style forms. Because the bankruptcy laws had changed so dramatically, when we did intake interviews with clients, we had to write additional information on the side, bottom and back of the old 1960’s forms to have enough information to prepare the bankruptcy petition. After several months of using these old, outdated forms I figured out the best way to update them. I sat down one day and re-designed the forms to include virtually every piece of informa- tion needed for the paralegal to pre- pare a well-presented bankruptcy petition to the Bankruptcy Court. However, the forms were not perfect the first time out. We had to put them through actual office use and work the “bugs out” before they were perfect. So be assured, the forms included in this Bankruptcy-To-Go Ebook Package have been previously tested by a law firm that does nothing but specialize in filing bankruptcy petitions. Paid Services If, after reading this ebook, you should contemplate filing bankruptcy, print out the forms and start filling them out. Even if you decide not to file bank- ruptcy right now, you will have pertinent and important information gathered to help you access your financial situation. Also, if you should hire an attorney to file your bankruptcy petition, the forms will already be ready to hand to the attorney. He/She will greatly appreciate your preparedness and it will be quicker to process your bankruptcy petition. However, if you want to save $100’s in attorney fees, I can personally prepare you a Chapter 7 or Chapter 13 bankruptcy and submit it as a “non-attorney preparer.” (It is legal in all 50 states to file your own bankruptcy with or without an attorney.) I will prepare your petition for $89.95 and send it back to you through the mail. You then take the papers and file them in court, attend your 5-10 minute 341 Hearing in about 6 weeks and confirmation hearing which takes 2-3 minutes. It’s a simple process, which I will walk you through if you decide to us my services. But . let’s read on to discover those 102 things you need to know before filing bankruptcy. That’s why you downloaded this ebook for in the first place, right? My best to you, Victoria Ring Victoria Ring Bankruptcy Paralegal Guidelines If you are considering filing for bank- ruptcy, you are not alone. Many people have and will continue to file for bank- ruptcy based upon the times with corporate layoffs, downsizing and continuing business failures. Although not inclusive, the general guidelines below will help you determine if you should consider filing bankruptcy. 1. You should file for bankruptcy when you cannot reasonably pay your bills. 2. If your income does not suffi- ciently pay off or pay down your bills, it’s time to consider bankruptcy. 3. If your monthly debt is 1.5 times your monthly income. For example, if you have a monthly net income of $2,800 but your monthly expenses are about $4,200, it’s time to think about bankruptcy. 4. If you cannot budget yourself out of the debt within four years, it’s time to seriously consider bankruptcy. 5. If you are more than two months late on your bills, bankruptcy may be a consideration. 6. If your loan or mortgage has been “called” or accelerated, it’s time to seriously consider bankruptcy. 7. If you get a foreclosure notice from the bank or a lender; it’s time to seriously consider bankruptcy. 8. If you have withdrawn from your savings account for two months; bank- ruptcy may be a consideration. 9. If you are depressed about your financial situation, it may be time to con- sider bankruptcy. 10. If you have a severe financial set- back such as the loss of a job, major surgery without medical insurance, etc., it’s time to seriously consider bankruptcy. Generally, people filing for bankruptcy are dealing with the following situations: • Loss of their job or their primary means of support; • Been laid off from their job; • Been demoted or given a significant pay cut; • Experienced major family problems leading to divorce, child custody or separa- tion; • Excessive major credit card prob- lems; • Catastrophic medical-doctor bills from an uninsured major surgery or illness such as terminal cancer; • Desperate financial situations with little hope. How Filing Bankruptcy Can Help You 11. Filing bankruptcy is as simple as taking a set of papers down to the Bank- ruptcy court, standing in line at the Clerk of Court, paying a filing fee and having the papers date/time stamped and handed back to you. (The court keeps the origi- nal.) A Judge will also be assigned at this time. This simple process takes about 10 “102 Things You Need to Know Before You File Bankruptcy” Page 1 minutes to complete. This set of papers that you filed with the court is called a “bankruptcy petition.” The moment the Clerk of Court stamps your bankruptcy petition, the following good things can happen to you: 12. Anybody you owe cannot contact you in any way (once they receive notice in the mail from the court.) 13. Any wage garnishments taken out of your check will cease to be lawful. If the garnishment is taken out of your check after you file bankruptcy you may be entitled to a refund. 14. Any foreclosure action on your home or other real property is stopped. 15. Any Sheriff’s sales are stopped immediately. 16. Any taxes you owe that are currently being collected on by the government are put on hold (while your debts are being reorganized.) 17. Anybody coming to repossess your auto, boat, furniture, appliances, or any- thing else are stopped immediately and cannot remove anything without the Bankruptcy Court’s permission. Terms You Need to Know Concerning Bankruptcy 18. Creditor — This is the person or company you owe money to because they extended credit to you. 19. Debtor — This is YOU. You owe debts, so you are a debtor. 20. Secured Debt — This is a debt you owe for an item that could be taken away from you if you don’t pay the bill. For instance, if you don’t make your house payment, the creditor (or bank) you owe can repossess your house. 21. Unsecured Debt — This is a debt you owe for something that cannot be taken from you. For instance, anything you charge on a credit card is an “unsecured debt.” If you don’t pay the MasterCard bill this month, they cannot come and take whatever you bought with the credit card. All they can do is harass you on the tele- phone until you pay the bill, turn the bill over to a collection agency, or attempt to get a judgement against you (depending on the amount you owe them.) 22. Asset — This is something you own that has resale value. Your car, TV set, computer, stocks, bonds, bank accounts, piggy bank, clothes, bed, etc. are all things that have some type of value that could be turned into cash. These types of things are your assets. 23. Discharge — This is what happens when your debts are erased and you have completed your bankruptcy. 24. Exemption — There are exemption allowances allowed by the Bankruptcy Court to protect the assets you own that you need to keep in order to live a normal life. For instance, you need a house to live in, a car to drive, transportation to maintain the car, clothes to wear, medicine refills, personal care items, etc. The law allows you to keep these types of items by allow- ing you exemptions on them. When anything you own is totally exempt from “102 Things You Need to Know Before You File Bankruptcy” Page 2 the bankruptcy, no one can take it away from you. 25. Automatic Stay — The moment a bankruptcy is filed, all creditor activity to collect debts, obtain judgments, or obtain property of a debtor to satisfy a debt is completed stopped. This is the protection provided to you as a con- sumer under the Bankruptcy law in the United States. 26. Relief From Stay — This is a court order, requested by a creditor, who asks the court to lift the Automatic Stay that was immediately put in place when the debtor filed the bankruptcy petition. If a creditor is granted a Relief from Stay, the debtor will receive notice from the court of its existence and the bankruptcy attorney can prepare a Motion on the debtor’s behalf to re- quest the court to remove the Relief from Stay. (Of course, there must be a lawful reason to do so.) 27. Reaffirmation Agreement — This is what you file with the court if you decide to pay a creditor outside your bankruptcy. For example, you may want to reaffirm with Bob’s Auto Sales when you file your Chapter 7 bankruptcy petition, because you want to keep making payments on your car since you need it to get back and forth from work. 28. Trustee — This is a real “live” person that works for the Bankruptcy Court who normally oversees the entire process from beginning to end con- cerning your bankruptcy. 29. Conversion — This is when you start out by filing one chapter of bank- ruptcy and decide later to file another chapter. For example, you originally file a Chapter 7 but decide to convert to a Chapter 13. 30. Dismissal — Among other things, your bankruptcy case can be dismissed at any time if you fail to comply to any rules, don’t turn over asset monies that are requested by the Trustee or if you convert from one Chapter of bankruptcy to an- other. Your case is “discharged” if you completely pay off your Chapter 13 or when your Chapter 7 is legally finished. Chapter 7 Bankruptcy 31. In order to be eligible to file a Chap- ter 7 bankruptcy, you must be able to meet these guidelines: • You must reside or have a domi- cile, a place of business, or property in the United States. • You must not have received a bankruptcy discharge within the last six (6) years or have had a bankruptcy case dismissed within the last 180 days. 32. People who file a Chapter 7 bank- ruptcy do so in order to discharge their debts and get a “fresh start” in life. There are no income requirements to file a Chapter 7 and people who file this type of bankruptcy are those who can no longer afford to repay all their debts due to illness, unemployment, marital problems, unex- pected medical expenses, over-extended credit or other large expenses. However, not all debts can be discharged. For “102 Things You Need to Know Before You File Bankruptcy” Page 3 example, alimony, student loans, child support and taxes that are less than 3 years old are non-dischargable and must be repaid in full. 33. Most consumers file a Chapter 7 bankruptcy and then reaffirm on the debts they want to continue paying. For instance, you can file a Chapter 7 and reaffirm on your house. This could possibly erase your other debts and you would continue making your house payments like you normally do now, outside the bankruptcy. (Note: There is pending legislation currently being debated in Washington D.C. to change this law, making it harder for people to file a Chapter 7 and forcing them to file a Chapter 13, but the law has not been enacted as of the date this ebook is written.) Steps That Occur in Filing a Chapter 7 Bankruptcy 34. In order to be eligible to file a Chapter 13 bankruptcy, you must be able to meet these guidelines: • Have a steady source of in- come so that you can make regular payments to the Trustee. • The total amount of your debts cannot exceed $750,000.00 and unsecured debts cannot be more than $250,000.00. 35. When your bankruptcy petition is prepared and signed by you, it is filed with the Bankruptcy Court. You are assigned a case number and a Trustee or “interim” Trustee. An interim Trustee is the person who is responsible for overseeing your bankruptcy until the Meeting of Creditors, at which time you will be appointed a new Trustee or the interim Trustee will be assigned to your case. 36. If you plan to reaffirm on a debt (which means you want to continue paying the bill on your own after the bankruptcy is over), your attorney or paralegal needs to submit a Reaffirmation Agreement to the creditor, obtain their signature and file this with the court. However, you can still pay the bill on your own without filing a Reaffir- mation Agreement; but it is best to file one if the creditor you owe can repossess something you want to keep (i.e., car, house, TV, computer, tools, etc.). 37. The Trustee will send a notice to all the creditors (people/companies you owe money to.) This notice is normally sent 5 days after you file your petition. 38. The court will normally send you a notice informing you that you are eligible to file bankruptcy. You don’t have to do anything with this notice but keep it in your personal file. 39. The Trustee will then send all your creditors, including you, a notice informing you of the hearing date when you should appear in court. This hearing is often referred to as the “Meeting of Creditors.” 40. At your Meeting of Creditors NO judge will be present. The Trustee will ask you some of the same questions you answered when you first filled out the paperwork for the attorney or paralegal; who originally prepared your bankruptcy petition. “102 Things You Need to Know Before You File Bankruptcy” Page 4 41. In actual practice, creditors rarely appear at these hearings; however, a representative from one of the compa- nies you owe, or a person you owe, may show up at this meeting. They normally only appear to ask where the secure item is and if it is insured. 42. If your bankruptcy case is a “no asset” Chapter 7 bankruptcy, the meeting will normally only last 5-10 minutes. 43. If your bankruptcy case is a “no asset” Chapter 7 bankruptcy; you normally will not have to appear in court again. Essentially, you will re- ceive a discharge through the mail and all your allowed debts are forgiven. Chapter 13 Bankruptcy 44. People who file a Chapter 13 bankruptcy do so in order to keep property in which a creditor has a lien — like a house or car, or if payments are behind and the creditor is about to foreclose or repossess the property. The filing of a Chapter 13 will stop the foreclosure sale and allow the person 3 to 5 years to repay some, but not all of their debts. Rather than wiping out all their debts in a Chapter 7 proceeding, Chapter 13 allows a person to reorga- nize and pay a certain percentage of their debts over a period of 3 to 5 years. The unpaid balance is dis- charged after the payment plan is completed. Payments are made from each paycheck to the Chapter 13 Trustee, normally through employer wage deduction. 45. A Chapter 13 is NOT a bill consolida- tion loan, although many people look at it that way. Although it is a similar concept, a bill consolidation loan is money actually loaned to you to repay other creditors. In a Chapter 13, no money is loaned to you because you make your monthly payments to the Trustee, who disburses the money among your creditors. 46. Your priority claims are paid first in a Chapter 13. Priority claims include debts for things like taxes, child support, etc. 47. The amount you owe unsecured creditors, like medical bills, credit cards, etc. can normally be paid back as low as 5¢ on the dollar. (This figure is not written in stone. It is subject to change depending on your individual State laws, type of debt it is, as well as the income and budget of the debtor.) 48. You are normally allowed to keep your home, car and everything else you own when you file a Chapter 13 as long as you make regular payments to the Chapter 13 Trustee. Steps That Occur in Filing a Chapter 13 Bankruptcy 49. When your bankruptcy petition is prepared and signed by you, it is filed with the Bankruptcy Court. You are assigned a case number and a Trustee. Normally, there is only one Chapter 13 Trustee who makes decisions on all Chapter 13’s filed in his/her jurisdiction. In a Chapter 7, there may be more than one Trustee, called an “interim” as well as a “trustee.” “102 Things You Need to Know Before You File Bankruptcy” Page 5 [...]... an attorney if you are interested in filing a Chapter 11.) Rules that Apply to All Forms of Bankruptcy 65 Any debts you make AFTER you file your bankruptcy petition cannot be included in your bankruptcy 66 Any debts you made BEFORE you filed your bankruptcy petition, but forgot to include when you filed, can be added by your attorney He/she will file an Amendment to whichever Schedule of the bankruptcy. .. 102 Things You Need to Know Before You File Bankruptcy Page 6 50 Your attorney or paralegal will also file a Chapter 13 Plan with your bankruptcy petition that details the amount of your monthly payments and the length of time you are going to be in the Chapter 13 Plan 51 This amount you pay each month to the Trustee is determined by the amount of money you currently make and how much money you need. .. deed if you own or are purchasing a home or other real property (i.e., land, apartment complex, etc.); • Copies of your car, boat, motorcycle, mobile home or other titles to motor vehicles; • Copies of your tax returns; • Copies of any court proceedings filed against you; 72 When you have put together your file, you will have most of the information 102 Things You Need to Know Before You File Bankruptcy ... petition will be rejected or you may lose something you own  102 Things You Need to Know Before You File Bankruptcy Page 10 How Your Credit Will Be Effected by Bankruptcy 80 If you are behind in paying your bills, your credit is already effected Filing a bankruptcy may actually be your first step in repairing a bad credit situation When a creditor finds a bankruptcy on your credit report, it shows... After your bankruptcy is over and the creditors have been satisfied, any lien you have is not automatically removed from your property The attorney will need to be hired to remove the lien 68 Never make the mistake of running up debts on all your charge cards and then filing bankruptcy You can be held responsible for any charges you made within the last ninety (90) days  102 Things You Need to Know Before. .. the wage deduction starts If you get behind in payments, your case could be dismissed and you will have to start all over again 60 Finally, a Confirmation Hearing is scheduled but you normally do not appear in court Your attorney normally appears on your behalf to simply confirm that you are approved to be in the Chapter 13 plan  102 Things You Need to Know Before You File Bankruptcy Page 7 Changes... notice to all the creditors (people/companies you owe money to. ) This notice is normally sent 5 days after you file your petition 53 The court will normally send you a notice informing you that you are eligible to file bankruptcy You don’t have to do anything with this notice but keep it in your personal file 54 The Trustee will then send all your creditors, including you, a notice informing you of... and get some relief, which is legally offered to you by the United States Bankruptcy Court  102 Things You Need to Know Before You File Bankruptcy Page 14 IMPORTANT PLEASE READ!! The following 16 pages contain the forms you need to fill out in order to have a bankruptcy petition preparer obtain all the information necessary to prepare your official bankruptcy petition for court These forms have... filing bankruptcy Not one of us is immune from the world’s problems So if there comes a point in your life where you find it necessary to take advantage of the bankruptcy law, don’t feel “guilty” about it In fact, you should be glad the United States has set up a governing body to protect people like you and me  102 Things You Need to Know Before You File Bankruptcy Page 13 Websites to Help you Learn... spouse, it would be to your benefit to file a bankruptcy together as a married couple If most of the debts are in your name only, you may consider filing a bankruptcy as the only debtor 85 What if I am unmarried but living with someone? Can we file a bankruptcy together? At the present time, if you are living together with a significant other but are unmarried, you cannot file a bankruptcy together, even . you; 72. When you have put together your file, you will have most of the information 102 Things You Need to Know Before You File Bankruptcy Page 8 needed. allowances you will not know how to include them and your petition will be rejected or you may lose something you own. 102 Things You Need to Know Before You File