Tài liệu 102 thing you need to know_34

102 Things You Need to Know Before You File Bankruptcy Written and Published by Victoria Ring, Bankruptcy Paralegal Columbus, Ohio USA email: [email protected] 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 particular 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 publication 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 ........................................................................ 16 102 Things You Need to Know Before Filing Bankruptcy 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 considering 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 bankruptcy 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 bankruptcy 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 bankruptcy, 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. 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 information needed for the paralegal to prepare 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 “102 Things You Need to Know Before You File Bankruptcy” Page 1 Guidelines If you are considering filing for bankruptcy, you are not alone. Many people have and will continue to file for bankruptcy 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 sufficiently 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; bankruptcy may be a consideration. 9. If you are depressed about your financial situation, it may be time to consider bankruptcy. 10. If you have a severe financial setback 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 separation; • Excessive major credit card problems; • 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 Bankruptcy 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 original.) 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 2 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: 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. 12. Anybody you owe cannot contact you in any way (once they receive notice in the mail from the court.) 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 telephone 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.) 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 anything 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. 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 allowing you exemptions on them. When anything you own is totally exempt from “102 Things You Need to Know Before You File Bankruptcy” Page 3 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 consumer 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 request 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 concerning your bankruptcy. 29. Conversion — This is when you start out by filing one chapter of bankruptcy 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 another. 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 Chapter 7 bankruptcy, you must be able to meet these guidelines: • You must reside or have a domicile, 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 bankruptcy 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, unexpected 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 4 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 income 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 Reaffirmation 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 5 41. In actual practice, creditors rarely appear at these hearings; however, a representative from one of the companies 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 receive 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 reorganize and pay a certain percentage of their debts over a period of 3 to 5 years. The unpaid balance is discharged 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 consolidation 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 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 to live on each month. A good Chapter 13 bankruptcy attorney or his paralegal is skilled at balancing these two figures so you can easily afford the Chapter 13 payment each month. It is not to the advantage of the attorney or paralegal to give you a payment you can’t afford. This would cause problems later down the road. So don’t be afraid that your payment will be too high for you to afford. 52. 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. 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 the hearing date when you should appear in court. This hearing is often referred to as the “Meeting of Creditors.” 55. 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. 56. In actual practice, creditors rarely appear at this hearing because they know they will be getting paid through the Trustee; however, a representative from one of the companies you owe, or a person you owe, may also show up at this meeting, but they normally only appear to ask where the secure item is and if it is insured. 57. After the Trustee has approved your bankruptcy, you are required to pay your first Chapter 13 payment. Your payment must be in the form of a money order or cashier’s check. No cash is accepted. 58. The Trustee will normally provide you with information on how to contact his/her office with any questions as well as an address where to mail your payments. 59. At this time, you may want to set up a payroll deduction so you don’t have to worry about writing a check every month. Because a payroll deduction may take 4-6 weeks before it begins, you need to continue making payments to the Trustee on your own until 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 in Payments During a Chapter 13 Bankruptcy 61. Nothing stays the same. During the 3-5 years that you are making regular payments to the Chapter 13 Trustee anything could happen. You may lose your job. Your spouse may lose their job. You may have a new baby. You may inherit some money. Your old car may conk out and you have to replace it. A million things can happen, which means your Chapter 13 payment can be lowered or raised depending on the circumstance. 62. Many people, when something occurs where they cannot make a Chapter 13 payment one month, will simply not pay it. This is a very bad idea. All you have to do is contact your attorney and ask them to file a Motion to Modify the Chapter 13 Plan. You will need to go to the office and supply the attorney with new, updated income and budget information, which explains why you cannot make your normal Chapter 13 payment, but it is well worth the 2 hours of time. 63. If you need to go into debt and purchase something on credit while you are going through a Chapter 13 bankruptcy, your attorney can file a Motion to Incur Debt for you. This will allow you the needed money to purchase the item. (Example: Sell one car and purchase another one.) Chapter 11 Bankruptcy 64. Chapter 11 is similar to a Chapter 13, but it is normally filed by larger business or individuals with a large amount of assets or debts that exceed one million dollars. In a Chapter 11 bankruptcy you are allowed to still operate your business but your creditors and the court must approve a plan to repay your debts. There is no Trustee unless the judge decides that one is necessary; however, if one is appointed to your case, the Trustee will take control of your business and property. (Note: I will not cover Chapter 11 in this ebook because most consumers file a Chapter 7 or Chapter 13 bankruptcy. Please consult with 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 petition is effected by the additional debt(s). 67. 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 You File Bankruptcy” Page 8 Debts That Cannot be Discharged 69. Some of the debts you owe cannot be forgiven in bankruptcy and will need to be repaid by you. Even if the debt is included in your original bankruptcy petition, any unpaid balance must be paid by you when the bankruptcy is over. The types of debts I am referring to include, but are not limited to the following: • credit obtained by false pretenses or acts of fraud; • all taxes, customs or duties; • debts owed for fines and penalties to another government unit; • student loans; • child or spousal support; • luxury items valued at $500 or more that were purchased sixty (60) days from the date you filed your original bankruptcy petition; • cash advances of $1,000 or more that were made within sixty (60) days from the date you filed your original bankruptcy petition; • debts made due to an act of embezzlement or larceny; • debts owed a party where you maliciously caused injury to another; • debts owed for the death or personal injury while intoxicated by drugs or alcohol. The First Steps to Filing a Bankruptcy Petition 70. Take a file folder and put a statement from every creditor that you owe in it. If you don’t receive a monthly statement from the creditor, put the following information on a sheet of paper and put it in your file: • Name and complete mailing address of who you owe; • Your account number (if applicable); • The name of who owes the debt (husband, wife or both); • The total amount you owe this creditor; • How much your monthly payments are; • The date you originally went into debt with this creditor. (If you can’t remember the exact date, just an approximate year [i.e., 2001, 2002, 2003, etc.] will do); • If the debt is for a credit card, record the last date you charged on this credit card. If you charged less than 90 days ago, you need to write down the amount you charged and the reason for the purchase.) 71. In the same file folder, also put in the following documents: • Your current paycheck stubs; • If you are unemployed, include copies of documents showing any income you receive(d) from unemployment, worker’s compensation, child support, SSI, social security, retirement, estate, etc. • Mortgage and 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” Page 9 needed to file a bankruptcy petition. However, the attorney, or whoever you hire to prepare your bankruptcy petition may also require other documents, depending on your particular situation, but they will let you know when you go to their office for the initial intake interview. 73. A bankruptcy petition is then filed in court. It contains several sheets of paper that includes schedules and forms. Each schedule and form relates to different items that must be filled out properly. Normally people choose to hire an attorney to prepare their bankruptcy petition, but some people hire independent paralegals, and some people purchase bankruptcy kits and attempt to do it themselves. 74. If you decide to hire an attorney, try to find someone who specializes in the field of bankruptcy. In other words, your best choice for an attorney is one who does nothing else but specialize in bankruptcy law exclusively. You will probably also find bankruptcy attorneys that also do divorce, wills, probate, and DUI; but if given a choice between the two — chose the attorney who specializes in bankruptcy. (Note: If you are in the southeastern district of Ohio, I recommend Lloyd D. Cohen & Associates, the attorney I work for at 614-444-4211.) 75. Calling around to different attorney offices and asking them what they charge to file a bankruptcy is NOT the most efficient method of locating a good bankruptcy attorney. Attorneys who advertise cheap prices for filing bankruptcy petitions in your daily newspaper, often do not file all the schedules and forms at one time (which is perfectly legal) and will charge you additional money to file the rest of the petition within the 20-30 day allowance. After being “nickel-and-dimed” to death, you normally pay more money to this attorney than if you just hired a competent attorney in the first place. 76. The best way to locate a good bankruptcy attorney is to first determine if they specialize in bankruptcy. If you cannot locate someone in your area that specializes solely in bankruptcy, then choose an attorney who has been in the practice for at least five (5) years or more. (Just call your local Bar Association and ask for a referral.) 77. Your can hire a freelance bankruptcy paralegal to prepare your bankruptcy petition, but if problems come up (such as litigation with a creditor or the filing of Motions), it would be best to hire an attorney to do these things for you. 78. You can purchase a bankruptcy “doit-yourself” kit but unless you know how to prepare the bankruptcy petition in a manner to present to the court, these kits will do absolutely nothing for you except give you some practice at filling out forms. 79. In reference to the “do-it-yourself” kits, filing bankruptcy is not simply filling out a set of forms and handing them to the court. For instance, if you don’t know anything about exemption 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 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 them that all prior credit problems have been resolved. The question then becomes, “Are you creditworthy?” 81. Every creditor is different and each one treats bankruptcy with a different set of rules for determining your creditworthiness. Although there are many exceptions, normally a creditor likes to see how well you do in paying your bills during the first year or two after filing bankruptcy before they extend new credit to you. So although a Chapter 7 bankruptcy appears on your credit report for ten (10) years, and a Chapter 13 appears for seven (7) years, most people only find it to be a problem for a couple of years after filing — provided everything else looks good on their current credit report. 82. In addition, there are 1,000’s of creditors who extend credit to people who have filed bankruptcy. The interest rates are normally higher, of course, but you can obtain credit easily with one or more of them. One of the best ways to build your credit after bankruptcy is to obtain a “secured” credit card. This is one where you put money in a bank and the bank issues you a credit card. The credit limit of the credit card will be the same amount of money you have in their bank. After you have shown that you make timely payments, your credit line may be increased without you depositing any more money. 83. However, the fact remains — one of the main reasons for filing bankruptcy is to get OUT of debt — not back into it. You should take responsibility for your own financial spending and saving, making sure not to get to the point where you have to file another bankruptcy. Once you experience total freedom of paying for things you want to buy, and owning them free and clear — you will enjoy life more and grow as a human being. About the only items the average American really needs to go into debt for is an automobile for transportation and a home for their family to live in. Everything else should be purchased out of the monthly income, or saved for and purchased in full. The only reason Americans are in debt is because they “want it now!” and don’t have the patience to wait. Other General Questions and Answers 84. If I am married, does my spouse have to file bankruptcy? No, however the spouse that does not file will not receive the benefits of bankruptcy. In other words, if the non-filing spouse is jointly liable on certain debts, he or she will remain liable for those debts if the filing spouse filed for a Chapter 7 bankruptcy. He or she will also remain liable for any amount not paid for in the filing spouse’s Chapter 13 plan. On the other hand, the non-filing spouse will not have bankruptcy noted on his or her credit report. “102 Things You Need to Know Before You File Bankruptcy” Page 11 Therefore, if the debts you owe are also owed by your spouse, or cosigned by your 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 if the bills are in both your names. In this case, each one of you would have to file separate bankruptcy petition. A competent attorney or paralegal can separate the expenses and budget so that each of you pay 50% of the day-to-day living expenses (if both of you share the expenses) and submit the information properly to the court. 86. Will bankruptcy stop a wage garnishment? Yes, some of the money garnished from your paycheck may even be returned to you. It all depends on how much was garnished and when it was garnished. If your wages are currently being garnisheed, a Notification of Stay pleading need to be filed in court as well as a letter mailed to the creditor and your employer to stop the garnishment after your bankruptcy petition is filed. Stopping a wage garnishment is possible because whomever you owe that is garnishing your check is now being paid (or is being discharged) through the bankruptcy petition you filed. As soon as the clerk file stamps your bankruptcy petition, you have immediate protection under the United States Bankruptcy Court and every creditor you owe must proceed through this court to collect anything from you. 87. How can I immediately stop creditor harassment? The filing of a bankruptcy under Chapter 7 or Chapter 13 will IMMEDIATELY bring the harassment caused by creditors to a HALT. Once your bankruptcy has been filed, creditors are forbidden from taking action against you or against your property to collect money you owe them. If they try to do so, they can be held in contempt of court. This is the advantage of the law, administered by the United States Bankruptcy Court, and provided as a way to help citizens get “another chance.” Even if there is a wage garnishment or other legal proceeding under way, the filing of a bankruptcy will bring it to a screeching halt, giving you the opportunity to take care of your financial affairs in an orderly and permanent way. 88. What if I owe the IRS back taxes? How will bankruptcy help me? Most tax debts cannot be discharged in a bankruptcy. Trust funds and withholding taxes you owe, such as sales taxes or employee withholding obligations can never be discharged. However, income and self-employment taxes can be discharged if they are at least three (3) years old and the tax returns have been on file for at least two (2) years. “102 Things You Need to Know Before You File Bankruptcy” Page 12 In situations like this, a bankruptcy can be a great help in many ways. The biggest benefit is that you may be able to reduce the amount of the tax you owe. In a Debt Adjustment Plan, you can also stop interest and penalties on all taxes you owe — even the ones that are non-dischargable. This will place you in a situation where it will be easier to pay your taxes off. 89. How much does it cost to file bankruptcy? At the present time, the court will charge you $200.00 to file a Chapter 7 bankruptcy petition and $185.00 to file a Chapter 13. 90. When does a bankruptcy take effect? When the Clerk of Court receives your bankruptcy petition and date/time stamps it, your bankruptcy is immediately effective. The Court sends notice of your filing to all of your creditors and bill collectors generally within 24-48 hours after filing. That is why it is so vitally important to include complete addresses and zip codes of all the people you owe on your bankruptcy petition. The court will send a copy of your petition to all these creditors so they will stop harassing you. If those addresses are not correct, the creditor won’t know you filed bankruptcy and will continue to harass you. It is also important to list all the collection agency addresses so they can be notified as well. Upon receipt of the notice of your filing, creditors and bills collectors are prohibited from having contact with you. If your should receive any harassing or annoying creditor calls after filing your bankruptcy petition, a letter can be mailed to the creditor which spells out Section 362 of the Bankruptcy Code (Automatic Stay.) This letter prohibits the creditor from contacting you again or risk being held in contempt of court. 91. Am I a “bad” person because I file bankruptcy? You are NOT a “bad” person because you decide to file for bankruptcy. Back in the old days (pre 1900), if a person went bankrupt, creditors stepped in, sold everything the person owned, split the money between themselves, put the bankrupt person out in the street and make a public mockery of them. Therefore, this is why people who have not kept up with the times, still feel that bankruptcy is a “bad” thing to do. But that was over 150 years ago! The economy has changed, employers have changed, life is more complicated, interest rates are higher than they have ever been in history and the money you make doesn’t reach as far as it used to just five years ago. Any one of these factors could cause a “good” person who was responsible and financially secure, to suddenly consider 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 More About Bankruptcy 92. http://www.bid4assets.com/ — A bidding website where you can purchase items sold in bankruptcy estates. Pick up a real bargain! 93. http://www.swiggartagin.com/bkfaq/ — This site lists a long list of questions and answers about bankruptcy to help consumers. 94. http://bankruptcy-law.freeadvice.com/ — This is another web site containing a long list of questions and answers to help consumers understand more about bankruptcy. 95. http://www.myguidehub.com/bankruptcy/ — This wealth of information website is specifically for consumers filing bankruptcy. 96. http://www.uscourts.gov/bankform/ — You don’t have to spend money on a “do-it-yourself” kit. Download all the official bankruptcy forms from the internet so you have an idea of what they look like. 97. http://www4.law.cornell.edu/uscode/ 11/ — The Bankruptcy Code online. 98. http://bankrupt.com/ — Internet bankruptcy library. 99. http://findlaw.com/01topics/03bankruptcy/ — Findlaw’s resources for bankruptcy. 100. http://www.bestcase.com/ — The software program I highly recommend using for preparing bankruptcy petitions. I recommend it to all attorney offices, freelance paralegals and other nonattorney preparers. 101. http://www.abanet.org/home.html — This link will take you to the American Bar Association website where you can search for and locate an attorney in your area that is a member of the Bar Association. 102. http://www.victoriaring.com/bankruptcy — I update this website on a weekly basis. I also add questions from people just like you on the “question and answer” page. So bookmark my website, subscribe to my ezine and keep checking back for the latest information. I sincerely hope this book helped you to become more knowledgeable about the subject of consumer bankruptcy. I certainly understand and symphasize with people who are experiencing financial difficulties because I have been in the same boat you are in right now. (I had to file bankruptcy back in 1988.) However, don’t allow debt to destroy your life. Instead, you have the opportunity to take charge of your financial situation 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 been used in Columbus, Ohio and were personally designed by Victoria Ring and they are provided free to you as part of the “Bankruptcy-To-Go” Kit. Print these pages out and follow the information at the top of each form to properly complete it. Please understand, these forms are NOT the forms you use to file in court. They are only information-gathering forms that are retained in your confidential file. The information you supply on these forms is taken and correctly entered on the official bankruptcy petition. This document is the one filed with the Bankruptcy Court, not these information gathering forms. Do not attempt to file these forms with any court. They are strictly for obtaining information to prepare your bankruptcy petition. GENERAL INFORMATION Name of Bankruptcy Jurisdiction: (To obtain this information, call the directory assistance operator [or check the court listings in your telephone directory] and obtain the telephone number of the Bankruptcy Court in the county where you reside. [You will need to know where this court is in the future to file your petition.] Ask the receptionist at the Bankruptcy Court what the “jurisdiction” is for your county. Print this information above. If you are unable to locate this information for any reason, enclose an additional $5.00 and I will search and locate this information for you. This information is extremely vital for the completion of your bankruptcy petition.) Name, First Middle (spell out) Last Social Security Number Date of Birth Street Address City State Zip County of Residence Length of Time at This Address SPOUSE, First Name Middle (spell out) Last Social Security Number Date of Birth Address (if living separately) City State Zip Area Code & Home Phone Work Phone Spouse’s Work Phone DEPENDENTS Name Age Relationship to You Are you paying or receiving any alimony or support money? o Yes Is this dependent living With You? o No Has either you or your spouse been known by any other name during the past 6 years? (Example: maiden name, last name from previous marriage, legal name change, etc.) o Yes o No If yes, write the NAME and DATE(S) USED below: Page 1 of 16 -- Information Gathering Sheets for Bankruptcy Petition Preparer Designed by Victoria Ring, http://www.victoriaring.com/bankruptcy/