Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Recently the commissioners of Jefferson County, Alabama, voted to file the largest Chapter 9 bankruptcy in history. The New York Times reports that the county is “roughly $4 billion” in debt. Jefferson County’s financial trouble stems from poor attempts to finance the court-ordered rebuilding of its out of date sewer system. Jefferson County is Alabama’s most populous county and home to the city of Birmingham.

The size of Jefferson County’s bankruptcy debt is staggering, and surpasses the previous record for largest Chapter 9 bankruptcy set by Orange County, Calif., in December 1994. Orange County listed $1.7 billion in debt. However, Jefferson County’s debt does not set the record for most debt in a bankruptcy case. It’s not even close.

When Enron filed for Chapter 11 in 2001, the company’s total debt was $31.2 billion. Worldcom, Inc. filed bankruptcy in 2002 and listed $41 billion in debt. But the grand daddy of them all is Lehman Brothers Holdings, who in 2008 filed Chapter 11 bankruptcy listing a whopping $613 billion in debt. Of course, much of this debt can be off-set against company assets, but consider that Lehman Brothers is still trying to gain approval for a plan to repay $65 billion to creditors.

No matter the size of your debt load, the bankruptcy code can offer you relief. There are no debt limits for a Chapter 7 bankruptcy case, which discharges personal debts without repayment. The Bankruptcy Code streamlines the reorganization process for individuals, but limits Chapter 13 eligibility to total unsecured debts less than $360,475, and total secured debts less than $1,081,400. If you exceed these limits, then your individual bankruptcy case can be filed under Chapter 11.

If you have debts that you cannot afford to repay, seek out assistance from an experienced bankruptcy attorney. The federal bankruptcy laws can help you restructure your finances, discharge burdensome debt, and provide you with a fresh financial beginning.
 

 The U.S. Bankruptcy Courts have increased the fee for filing bankruptcy by $7. Effective November 1, 2011, the filing fee for Chapter 7 will increase from $299 to $306; the Chapter 13 bankruptcy filing fee will increase from $274 to $281; and the Chapter 11 filing fee will increase from $1,039 to $1,046. As part of the judiciary branch of federal government of the United States, this filing fee increase effects each one of the 90 bankruptcy districts across the country.

Filing fees are generally paid to the bankruptcy court at the time the case is filed. The filing fee may be waived under extreme circumstances, and may be paid in installments. A waiver or installment agreement must be approved by the bankruptcy court.

In addition to the basic filing fee increases, the Judicial Conference of the United States increased other fees that may apply to certain bankruptcy cases:

Certification: Formerly $9, now $11;
Exemplification: Formerly $18, now $21;
Audio Recording: Formerly $26, now $30;
Amended Bankruptcy Schedules: Formerly $26, now $30;
Record Search: Formerly $26, now $30;
Adversary Proceeding Fee: Formerly $250, now $293;
Document Filing/Indexing: Formerly $39, now $46;
Record Retrieval Fee: Formerly $45, now $53;
Returned Check Fee: Formerly $45, now $53;
Notice of Appeal Fee: Formerly $250, now $293; and
Lift/Stay Fee: Formerly $150, now $176.

Be sure to consult with your attorney to determine whether any of these additional fees apply to your individual bankruptcy case.

Filing fees are one of four different fees that a debtor must pay during the bankruptcy process. The other fees are: a credit counseling fee, paid before filing bankruptcy and is typically less than $50; attorney fees, which largely depend upon the bankruptcy chapter and the complexity of the case; and a personal financial management fee, paid after filing and is typically less than $50. The credit counseling and personal financial management requirements were instituted by Congress in 2005 as part of widespread changes to the Bankruptcy Code. Prior to the 2005 changes, the Chapter 7 filing fee was $209.

Despite the fee increase, bankruptcy remains an effective means to permanently rid yourself of burdensome debt. Many people are able to discharge all of their debts through bankruptcy. Others discharge unsecured debts, like medical bills and credit cards, while keeping their homes and vehicles. If you need debt relief, discuss your situation with an experienced attorney and learn how the federal bankruptcy laws can help.

A bankruptcy client once said during an initial consultation, "I have too much month at the end of the money!" If you are in financial trouble, you don't need a wall full of fancy degrees to tell you that you're broke. What you need is help and direction to find an answer to your problem. Bankruptcy could be the answer, but how can you be sure?

Making the choice to file bankruptcy is not easy. You should start with a critical examination of your finances. It is important to have the right information, which means collecting bills, bank records, and a copy of your credit report. You are entitled to a completely free copy of your credit report each year from Experian, Trans Union, and Equifax. Simply go to https://www.annualcreditreport.com/cra/index.jsp

Blank bankruptcy schedules can actually help you organize and understand your financial situation. The bankruptcy schedules can be printed from the U.S. Courts website: http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx

Also helpful is a free calculator from the Federal Reserve that shows how long it will take to pay off credit cards: http://www.federalreserve.gov/creditcardcalculator/

Once you have clearer understanding of your finances, it is time to investigate your options. Bankruptcy is a federal legal proceeding, which means attorneys, a judge and courthouse, and a lot of rules and laws. It is very complex, even for the most skilled bankruptcy attorney. The U.S. Courts offers a series of nine short videos that gives a very good over-view of the bankruptcy process. The videos can be viewed at the U.S. Court's website: http://www.uscourts.gov/video/bankruptcybasics/bankruptcyBasics.html

Finally, it is time to speak with a bankruptcy attorney. An experienced bankruptcy attorney can analyze your finances and recommend solutions. Your attorney can answer questions you have concerning the bankruptcy process and identify any issues that may cause trouble during your case. So don’t procrastinate any longer! Take control and get the information you need to make a wise decision. 

 A Chapter 13 bankruptcy case will generally last three to five years. A lot can happen in that time, especially for an individual who is attempting to deal with serious financial difficulties. In some cases, a financial setback can cause a Chapter 13 debtor to be unable to pay the monthly Chapter 13 plan payments or perhaps payments to a secured creditor. Since the practical effect of the Chapter 13 plan stretches the debtor’s finances thin, a financial hiccup can be a death blow to a Chapter 13 case.

If you get behind on your plan payments, it is important to discuss your situation with your bankruptcy attorney. If you simply miss one payment to the bankruptcy trustee, you may be able to ask permission from the court to skip a plan payment. More than one missed payment will have to be paid to continue your bankruptcy. If your case is dismissed due to your inability to make your plan payments, you will generally be able to reinstate the case after paying all due plan payments, or you may choose to re-file your Chapter 13 case.

Re-filing your case can get complicated. If you get behind on post-bankruptcy payments to a secured creditor, the creditor may file a request for relief from the automatic stay. You are generally ineligible to file bankruptcy for 180 days if your case is dismissed by the court either for failure to obey a court order or via a voluntary dismissal after a motion for relief from the automatic stay has been filed.

Additionally, in 2005 Congress enacted new laws to combat “serial” filers who abuse the bankruptcy laws by filing consecutive bankruptcy cases to frustrate creditors. Essentially, if you file a bankruptcy case within one year of an earlier dismissed case, the automatic stay in the second case terminates 30 days after the filing, unless you are able to demonstrate that the second case was filed in good faith. A subsequent case filed within the same one-year period penalizes the debtor by foregoing the automatic stay entirely, until the debtor shows that this third filing was made in good faith.

If you have trouble making payments to the trustee or to a secured creditor during your Chapter 13 bankruptcy, contact your bankruptcy attorney and discuss your options. Your attorney is able to propose solutions to protect your property and help remedy your financial troubles.

 In 2005, Congress passed new laws making it more difficult for wealthy individuals to relocate and take advantage of another state’s more liberal exemption laws. In the past millionaires facing financial difficulties (and sometimes criminal charges of fraud) could relocate to another state, purchase an expensive home, and file bankruptcy while applying the state’s generous exemption laws to protect assets from creditors. In it’s zeal to close the loopholes that allowed a few wealthy people to cheat the system, Congress created a confusing and a bit nutty set of rules to determine what state’s exemption laws apply in a bankruptcy case.

First, the easy answer: if you have resided in only one state for more than 730 days, you must use that state’s exemption laws. To make things a little more complex, if you reside in Arkansas, Connecticut, District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin, you are allowed a choice between your state law exemption and a set of federal exemptions.

Second, if you have not resided in your state for at least 730 days, the exemption law that applies is the state in which you lived most of the time during the 180 days prior to the 730 days. In other words, where did you live most of the time between two and two-and-a-half years before filing? See, I told you this calculation is a bit nutty.

Finally, if the above tests can’t decide the issue, the default rule is to use the federal exemptions only. This may be the case if you have lived overseas, or if a state requires current residency or domiciliary to use its exemptions (such as the state of New York).

The Bankruptcy Code is written by the United States Congress and is interpreted by federal court judges. Consequently, it is a set of laws that are often confusing. If you are in over your head in financial difficulty, call today and get help from a seasoned professional. An experienced bankruptcy attorney can guide you through the federal bankruptcy process without stepping on a procedural land mine.

About half-way through your bankruptcy schedules you will discover "Schedule G - Executory Contracts and Unexpired Leases." While the Bankruptcy Code does not have a specific definition of an executory contract, it is commonly understood as a contract between the bankruptcy debtor and another party in which the terms have not been completely performed. If one party fails to complete the unperformed terms, the contract would be breached.

The most common type of executory contract is a lease for real estate, a car, or for business equipment. Contracts for work not yet performed and intellectual property issues (like an author on retainer to write a book) also fall under the executory contract category. All executory contracts must be listed on Schedule G.

Once the bankruptcy case is filed, the debtor or the bankruptcy trustee can reject, affirm, assume or surrender the executory contract. For example, if a bankruptcy debtor was paid a $1,000 deposit on a $10,000 kitchen remodel job, but has not started work, the debtor has a decision to make. The debtor has the option to do the job and honor the contract, or to walk away. Likewise car leases, home rental agreements, and other executory contracts are handled in much the same manner.

If the debtor decides to continue performance (called "assuming" the contract), an assumption of the contract must signed by the debtor and other party and filed with the bankruptcy court. In a Chapter 7 case, an assumption on an executory contract must generally be filed within 60 days of the bankruptcy filing date. The debtor must also pay any past due amount due under the contract in full and show the ability to perform the outstanding contract terms. During the 60 day period, the "other party" to the executory contract is under an obligation to continue performing as if no bankruptcy had been filed.

While many executory contracts are run-of-the-mill type, some can get complex. If you have an executory contract and are considering a bankruptcy filing, discuss your situation with a seasoned bankruptcy attorney. Your attorney can offer solutions to restructure your finances and deal with your executory contract.
 

Clients are often pleased to learn about one of the bankruptcy law's most powerful protections: the automatic stay. When a bankruptcy case is filed, the debtor receives immediate protection from creditor collection actions. This relief is known as the “automatic stay” because it immediately stops lawsuits, telephone harassment, and other attempts to collect on a debt. The automatic stay continues throughout the bankruptcy case until either the stay is modified by the court or the case ends.

But what about co-signors?

Most co-signors are considered "jointly and severally liable" for the debt. That means that each party is liable up to the full amount of the debt. If you file bankruptcy, your co-signor is typically on the hook for 100% of the outstanding debt. Contrary to a popular misunderstanding, the bankruptcy discharge does not "erase" a financial obligation. The discharge is a legal injunction that prohibits your creditors from enforcing your debts against you individually. The debt still exists, and can be collected from others who are not protected by the bankruptcy laws.

Filing a Chapter 7 bankruptcy case will not stop a creditor from collecting against a co-signor or co-debtor. However, a Chapter 13 bankruptcy case contains a protection known as the “Co-Debtor Stay.” This protection is meant to protect a debtor by insulating him from indirect pressures from his creditors exerted through friends or relatives. The Co-Debtor Stay stops all collection actions against any individual who is obligated on a consumer debt owed by the debtor. This protection continues until the Chapter 13 case has concluded, or the Co-debtor Stay is modified or lifted by the bankruptcy court. Typically, the Co-Debtor Stay will last the duration of the debtor's Chapter 13 bankruptcy case, or three to five years.

There are limits to the Co-Debtor Stay. The Co-Debtor Stay only prohibits collection on personal debts, not business obligations. Additionally, if your co-signor actually received the benefit of the debt, and your Chapter 13 plan proposes not to pay the debt, the creditor can seek to lift the stay. This is often the case when the bankruptcy debtor co-signed a loan so that a friend or family member could purchase a car. Of course, if the creditor is receiving timely payments on the loan, there is usually no issue or impact to the co-signor.

If you need bankruptcy relief, but are worried that your co-signors will be harmed, discuss the issue with an experienced bankruptcy attorney. Your attorney can recommend several options to consider when dealing with co-signors.
 

 There are many myths circulating regarding bankruptcy. One of the most popular myths is that a bankruptcy debtor can pick and choose which debts are included in the bankruptcy discharge. This myth is simply the result of a misunderstanding of the discharge process.

When you file bankruptcy you are required to honestly disclose all personal financial information to the best of your ability. That means listing all of your income, expenses, assets, and debts in your bankruptcy schedules. Intentionally failing to list a debt is a very serious matter and the bankruptcy court could deny your discharge if you are less than honest.

In many cases a bankruptcy debtor has a good reason for wanting to continue paying on a debt. The most common reason is to retain property used as security for a loan (e.g. a car or house loan). In bankruptcy, secured property must be paid for or returned. Fortunately, the bankruptcy code allows the debtor to continue paying the secured creditor and keep the property.

In other cases a debtor may want to continue to pay an unsecured creditor. This is normally the case when the discharge of a debt in bankruptcy will cause financial harm to a co-debtor. For instance, you may owe money to a family member that you want to repay. The bankruptcy discharges the legal obligation to pay the debt, and enjoins the creditor from seeking collection. However, while the bankruptcy prevents your family member from asking for payment, it does not prevent you from making voluntarily payments after the bankruptcy.

The same voluntary payment principle applies to medical bills, credit cards, and any other financial obligation. Voluntary payments do not alter the bankruptcy court’s discharge injunction. A discharged creditor is forever prohibited from taking any action to collect on the discharged debt, including asking for payment, sending a bill or statement, or filing a lawsuit against you.

If you need a bankruptcy attorney in Texas, but also want to continue to pay certain debts, discuss your situation with an experienced Texas bankruptcy lawyer. Your attorney can explain your obligations under the federal bankruptcy code, and can help you decide which debts you should pay.

Debtors in bankruptcy are required to disclose all household income and expenses. While the debtor’s income is often relatively easy to determine through pay stubs and bank records, calculating expenses can be more elusive. When completing your bankruptcy schedules it is important to be realistic. Often changes in the economy can significantly affect your budget. The recent spike in gas prices has impacted the budgets of American families, and changes calculations within your bankruptcy case.

The U.S. Energy Information Administration recently determined that the average price for a gallon of regular unleaded gas in the United States is $3.567. That is a change of almost $.78 from the same time last year. Many economists believe that the national average will climb to over $4.00 per gallon. In fact, in some states (notably California) gas is already over the $4.00 mark.

It is important to account for this increase in your family’s budget. If you drive 12,000 miles per year and your car averages 25 miles per gallon, you use 480 gallons of gas per year, or 40 gallons per month. At the national average price of $3.567 per gallon, you spend almost $143 per month on gas. That is already $31 more per month/per vehicle than a year ago. If gas prices climb to $4.00 per gallon, the additional cost to a two income, two car family will be approximately $97 per month more than last year.

Higher gas prices have also contributed to an increase in food prices. According to the U.S Department of Agriculture, food prices for a family of four with school-aged children averaged $1184.50 during the month of January. That's $26.20 per month more than the same time last year.

While not every budget increase will necessitate a change in your bankruptcy schedules, any significant change that occurs after you sign your bankruptcy schedules should be brought to the attention of your bankruptcy attorney. While only a small percentage of cases will be affected by increases to a debtor's expenses, it is important to keep your attorney apprised of changes in your finances during your case.
 

There is no requirement of citizenship in the Bankruptcy Code. Section 109(a) of the Bankruptcy Code states that "...only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor" in bankruptcy. Your legal status does not determine eligibility to file bankruptcy; however there may be complications if you are not a U.S. citizen.

First, you must be able to prove a physical residence or ownership of property within the bankruptcy court's jurisdiction. A permanent physical address is required for the bankruptcy forms. Residency is also important to qualify for state exemptions used to protect your property. Generally, a debtor must show residency within a state for at least 90 days preceding the bankruptcy filing in order to qualify for that state's exemption laws.

Second, you must prove your identity. Most bankruptcy debtors use a social security number (SSN), but an individual tax identification number (ITIN) may also be used. An ITIN is issued by the IRS to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs. Whether a SSN or ITIN is used, physical verification of the number must be shown to the bankruptcy trustee.

While there is no requirement in the Bankruptcy Code that you must have either a social security number or ITIN, the bankruptcy petition requires you to sign a Statement of Social Security Number. The options on this Statement are (1) you have a social security number; (2) you have an ITIN; or (3) you don't have either. If you select option three, you may be able to use a valid passport or some other official government issued identification as proof of identity. There are bound to be consequences for the debtor that does not have a SSN or ITIN including the red flags it sends to the Department of Justice, the IRS, and INS.

Crimes of "moral turpitude" that are be disclosed within a bankruptcy filing may affect your immigration status or application for citizenship. These acts include the fraudulent use of credit cards, bad check offenses, tax evasion, fraudulent transfer of an asset, or falsifying government documents (including your bankruptcy petition.

If you have immigration issues and need to file bankruptcy, discuss your situation with an experienced attorney. The United States bankruptcy laws are very liberal and can help you get out of debt. Your attorney can work with you to resolve your debts while avoiding deportation.
 

Most credit unions and some banks use “Loanliner” documents. These agreements are standard loan documents developed by CUNA Mutual Group and sold to financial institutions. Over 70% of all credit unions use Loanliner documents for their lending transactions. Included in standard Loanliner lending agreements is a provision in which the borrower agrees that all other loans with the lender are cross-collateralized.

Cross-what?

Cross-collateralization is basically the use of collateral from one loan to secure other loans. The cross-collateralization clause from a recent Loanliner agreement reads: “the security interest also secures any other loans, including any credit card loan, you have now or receive in the future from us and any other amounts you owe us for any reason now or in the future.” Credit unions are fond of using this clause in vehicle loan agreements to secure all other credit union debts with the vehicle. This often causes surprises (and anger) when an unsuspecting credit union member tries to trade-in his car and discovers that the debt on the vehicle includes a personal loan, a line of credit, and credit card balances.

There are a few options if you are faced with a cross-collateralized auto loan. First, you can file a Chapter 13 and cram-down the loan to match your vehicle's value. Any remaining debt is discharged at the end of the Chapter 13 case. During a Chapter 13 case, you can pay a cram-down over three to five years.

During a Chapter 7 case, your attorney can simply ask the credit union to draft a reaffirmation agreement for the vehicle without regard to other debts. You are basically asking the credit union to voluntarily strip off the cross-collateralized loans. If the credit union refuses your request, you have two options: (1) surrender the vehicle and discharge all debts to the credit union; or (2) redeem the vehicle. Redemption is a process exclusive to a Chapter 7 bankruptcy case where the debtor keeps a vehicle by paying the value of the vehicle, not the total debt that is owed. While similar to a Chapter 13 cram-down, redemption differs in that the payment to the secured creditor must be a lump sum. Payments are not permitted.

If you have an auto loan through your local credit union, review the loan paperwork with your attorney for a cross-collateralization clause. Your bankruptcy attorney can discuss your options with you and help arrive at the best financial decision for your family.
 

Data recently released by Standard & Poor shows that home prices have dropped roughly two percent nationwide since June. This news is a grim reminder to homeowners that real estate is dragging behind in the economic recovery. In some cities, notably Phoenix and Las Vegas, home prices are now roughly where they were in 2000, while a 27 percent advance would have been needed to keep pace with inflation.

Some analysts have speculated that the homebuyer's tax credit artificially supported the housing market, and now that this credit has ended, the impact of foreclosures and a glut of homes for sale will depress prices in many areas. However, an improving economy could offset that trend and increase demand for homes as the job market improves.

In many cases the federal bankruptcy laws can help a family deal with a home that is losing value. During a Chapter 13 bankruptcy a debtor is able to strip away an entirely unsecured second and/or third home lien. A junior lien is unsecured when the senior lien is more than the value of the home. An unsecured junior lien can be stripped and the debt discharged during a Chapter 13 bankruptcy.

A Chapter 13 bankruptcy also provides an opportunity to negotiate with the lender for a modification of the debt. In some cases the lender may reduce principle or interest and modify the existing note, making staying and paying on the home a more attractive option.

During Chapter 7 or Chapter 13, a debtor is able to walk away from a house and discharge the debt. In this way bankruptcy can be used as a financial tool to relieve the burden of a declining investment.

If you are struggling with debt and overwhelmed by a home that is depreciating in value, speak with an experienced bankruptcy attorney and discuss your options. Your bankruptcy attorney can help you devise a plan to eliminate your debt and improve your financial situation, both short term and long term.
 

Individuals buried in debt need fast relief.  The required relief may vary from case to case, like relief from creditor harassment, from a lawsuit, or from a pending foreclosure.  Fortunately, the bankruptcy process provides you with immediate legal relief from the time you hire an attorney.  As your case progresses, the legal protections grow broader in scope and more powerful in effect. 

The first legal protection starts when you hire an attorney to represent you during your bankruptcy case.  This protection is derived from the federal Fair Debt Collection Practices Act (FDCPA).  Under the FDCPA a debt collector is prohibited from direct contact with a debtor who is represented by an attorney.  When you hire counsel you are able to forward all communication from a debt collector to your attorney, and the debt collector may no longer contact you directly.  This protection stops harassing phone calls and threatening letters from third party debt collectors while you and your attorney are preparing to file your bankruptcy. 

The second powerful protection commences the moment you file your bankruptcy case.  The bankruptcy automatic stay stops all creditor collection action immediately and automatically.  This legal protection applies to all creditors whether or not the creditor is aware of the bankruptcy filing.  The automatic stay is a legal protection that immediately stops any pending lawsuit, foreclosure, garnishment, or other legal proceeding.  The automatic stay is effective during the duration of your bankruptcy case. 

The final protection is the order of discharge that occurs at or near the end of your case.  The discharge order is a court injunction that prohibits discharged creditors from taking any kind of collection action against you personally.  The discharge injunction forbids a discharged creditor from sending bills, making collection phone calls, or filing a lawsuit to collect on a debt.  This protection is final and permanent.  Violation of this court injunction has serious consequences, and may result in a federal contempt of court charge. 

If you are experiencing a debt problem and need immediate relief, consult with an experienced bankruptcy attorney and find out how the bankruptcy process can help you.  Whether you need to stop harassing phone calls, or end a legal proceeding, bankruptcy’s powerful protections can eliminate your debt and give you peace of mind.

Across the nation, consumer bankruptcy filings have increased 14% from the same period one year ago.  Over 770,000 consumers have filed bankruptcy during the first six months of 2010 - a rate of one in 150 households, according to data from the National Bankruptcy Research Center.  The American Bankruptcy Institutes estimates that more than 1.6 million bankruptcy cases will be filed during 2010, the largest total since Congress enacted bankruptcy reform legislation in 2005. Free Consultation 

Nevada is currently the state with the highest consumer bankruptcy rate followed by Georgia, California, Utah, and Tennessee.  The lowest bankruptcy rates are in Alaska, the District of Columbia, and South Carolina, which have filing rates less than 40% of the national average.  The national statistics also reveal that bankruptcy filers are choosing Chapter 7 (liquidation) over Chapter 13 (repayment plan).  Only 27% of May 2010 consumer bankruptcy cases were filed under Chapter 13 cases, despite the attempt by Congress to encourage more Chapter 13 filings rather than Chapter 7.  However, this chapter preference varies from state to state.  Louisiana debtors filed Chapter 13 a whopping 61% of the time, but debtors in Iowa, New Mexico, and South Dakota all chose Chapter 13 less than 10% of the time. Free Consultation 

The total number of bankruptcy cases has risen each year since 2005 when more than two million cases were filed.  Many of these bankruptcy cases are husband and wife filings, also called joint filings.  Researchers estimate that nearly one-third of all bankruptcy cases are joint husband and wife filings. 

If you are in financial distress, you are not alone!  The federal bankruptcy laws are meant to relieve the honest but unfortunate debtor of the stress of overwhelming debt.  The bankruptcy process works and can provide you and your family with real relief.  Don't live your life in a debt prison.  Free yourself through the power of the federal bankruptcy laws. Free Consultation

There are generally two types of “bad checks.”  The first type is the kind that is “payable on demand” meaning that it is expected that the bank will honor the check when it is presented.  This is the most common type of bad check.  When you write a check that the recipient believes is “payable on demand,” and the check is returned for Non-Sufficient Funds (NSF), you may have committed a criminal act.  Depending on the amount of the bad check written, a person can be prosecuted for a misdemeanor or a felony.  Even if you later make payment on the check there may be criminal charges or substantial fees and/or fines. Free Consultation 

A NSF “payable on demand” check is not dischargeable in bankruptcy and bankruptcy will not exonerate you of a criminal act.  The bankruptcy automatic stay does not apply to stop criminal prosecutions.  Likewise, any debt to the victim of the bad check is now considered criminal restitution, also not dischargeable in bankruptcy.  Any restitution, costs, and fines are not discharged by the bankruptcy. 

While criminal prosecution of a bad check case is not affected by your bankruptcy, private collection is stopped by your bankruptcy.  Any civil legal action concerning a bad check must stop, and any civil garnishment or other collection action must cease. Free Consultation 

The second type of bad check is the post-dated check.  These checks include payday loans and other checks that are essentially promises to pay in the future.  You and the receiver are aware that the check is not presently negotiable.  The bank will not pay the check because you don’t presently have the money in your account.  

With a few narrow exceptions, being unable to pay a post-dated check is not a criminal act.  However, it may be a crime to write a post-dated check that you intend to include in your bankruptcy.  Typically the recipient of the post-dated check would have to file an adversary case with the bankruptcy court and prove that you committed fraud in writing the check with no intention to ever pay it. Free Consultation 

If you have outstanding bad checks and are considering bankruptcy, discuss your situation with an experienced bankruptcy attorney.  Your attorney can advise you on the best way to deal with a bad check during your bankruptcy. Free Consultation
 

The Bankruptcy Code requires every debtor to appear and submit to a bankruptcy examination under oath at a meeting with the debtor's creditors.  This meeting is presided over by the bankruptcy trustee and is an opportunity for creditors and the trustee to determine if assets have improperly been disposed of or concealed or if there are grounds for objection to discharge.  At this meeting the trustee must inform the Chapter 7 debtor of the consequences of bankruptcy, the availability of relief under other chapters of the Bankruptcy Code, and the effect of receiving a discharge of debts and of reaffirming a debt. Free Consultation 

The Meeting of Creditors (also called the "Trustee's Meeting," the "Creditors’ Meeting," or the 341 Meeting (after section 341 of the bankruptcy code which requires the meeting) is held between 20 and 40 days after your bankruptcy is filed.  The bankruptcy court schedules the meeting and mails notices to all of your creditors.  However, the bankruptcy judge is prohibited from attending the meeting.  Since there is no judge, the Meeting of Creditors is not a judicial proceeding.  Free Consultation  

The bankruptcy trustee is required examine you under oath and investigate your financial affairs.  The trustee then submits a report to the bankruptcy court and Office of the U.S. Trustee.  The trustee is also required to ask specific questions, including: 

Did you read your schedules before signing them?

Did you list all of your assets?

Did you list all of your debts?

Are your schedules accurate or do you need to make any corrections?

Do you have a domestic support obligation? 

The trustee may also have specific questions concerning your schedules which may involve your assets, income, expenses, debts, or financial transactions.  Your attorney will be present with you to assist you during this examination.  The trustee may also require that you provide information or documents before, during or after the meeting including bank statements, pay stubs, tax returns, vehicle titles, and land ownership and debt documents.  Finally, you are required to provide proof of identity including social security number and a government issued photo I.D. Free Consultation 

Despite the name, the Meeting of Creditors is generally a meeting that no creditors attend.  For most national creditors like Ford Motor Credit or Capital One it is not cost-effective to attend these meetings.  Because the trustee conducts dozens of these meetings on the same day, any creditor questions are limited to only a few minutes.  If the creditor needs additional time, it can ask the bankruptcy court to order the debtor to appear for a further examination between just the creditor and the debtor at a later date. Free Consultation 

Many bankruptcy debtors are very nervous going into the Meeting of Creditors, but soon realize that it is just a procedural formality.  Your bankruptcy attorney will assist you during your meeting, and can answer any questions concerning the Meeting of Creditors or the bankruptcy process. Free Consultation

Filing bankruptcy is a very personal process. Many clients worry that their friends and neighbors will learn about their bankruptcy. A common question is, “Who will know about my bankruptcy?”

First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.

Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:

1. Everyone you owe money (called “creditors”);
2. The bankruptcy trustee;
3. Co-signors and co-debtors; and
4. You and your attorney.

Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.

Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.

Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.

Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.

Bankruptcy is a powerful tool for eliminating personal debt. It is important to know what bankruptcy can do for you, and what it cannot.

What Bankruptcy Can Do:

Bankruptcy can eliminate your personal obligation on many unsecured debts. For many debtors this is the most important benefit of bankruptcy. Most credit cards and medical bills can be discharged during bankruptcy and you will never worry about them again.

Bankruptcy can stop creditor collection activities and harassment. When a bankruptcy is filed, all collection activity must stop. After a debt is discharged at the end of your bankruptcy case, the creditor is prohibited from contacting you to collect on that debt.

Bankruptcy can stop a foreclosure or repossession. In a Chapter 7 bankruptcy the debtor is given time to negotiate an agreement with the creditor, or prepare to walk-away from the debt and surrender a home or vehicle. In a Chapter 13, the debtor can also surrender property back to the creditor, or force the creditor to accept payments to cure an arrearage and resume monthly payments.

Bankruptcy can protect personal assets. Ordinary household goods, certain equity in vehicles or a family home, and retirement accounts are all protected during a bankruptcy. Statistically only 1 in 20 debtors lose anything, and your bankruptcy attorney can advise you of any property that is at risk in advance of the filing.

Bankruptcy can strip away certain liens. Many loans that are secured with an item you previously owned (called a Non-Purchase-Money Security Interest) can be stripped away during bankruptcy. Under certain circumstances a second mortgage can be stripped and made an unsecured debt (and eligible for discharged).

What Bankruptcy Cannot Do:

Bankruptcy cannot allow you to keep secured property without payment. While there are exceptions, generally if you do not pay for a secured property (e.g. car or house), the property must be returned to the secured creditor.

Bankruptcy cannot eliminate certain types of debts. The Bankruptcy Code lists debts that cannot be discharged such as student loans, certain taxes, and child support obligations. However, every situation is different and many of these “non-dischargeable debts” can be discharged under certain circumstances. Your bankruptcy attorney can discuss your individual situation and options for eliminating your debts.

The goal of the federal bankruptcy laws is to give the debtor a fresh start on a new financial future. There are many powerful legal options available in bankruptcy to eliminate or reduce overwhelming debt. An experienced bankruptcy attorney can explain your options and guide you to your fresh start.