Bankruptcy Attorney Terry R. Bankert P.C .,is a debt relief agency that will help you file bankruptcy and get creditors off your back.
Get a Fresh Start on Your Finances
The most common reasons for filing Bankruptcy include loss of Employment, Insufficient Medical Insurance, Divorce, or a Failed Business Venture. Most recently, Bankruptcy filings have been surging as a result of the unprecedented availability of high interest Credit Cards, and the crash of the housing market, which inevitably lead to a greater number of Defaults when combined with any of the above problems. Baknkrupcy Lawyer Terry Bankert is a phone call away 810-235-1970.
CHAPTER 7
Getting Rid of Your Debt
Chapter 7 Bankruptcy is the most straightforward form of Bankruptcy and it essentially wipes your financial slate clean. It can be a good option if you:
Are unable to pay your debts
The Debts you do have are debts without co-signers
Face potential suits from Creditors
Both Chapter 7 and Chapter 13 will stop Creditor#s action such as a Foreclosure or Sheriff's Sale, Utility Shut-Off, Vehicle Repossession or Wage Garnishment.
Most Chapter 13 cases are for Debtors who are trying to prevent a Foreclosure of their home or Repossession of their vehicle.
The Chapter 7 Process
Qualification
To qualify for Chapter 7, you must pass a MEANS TEST. Stated simply the Court wants to know if you have the means to pay your bills. First the Court looks to see if your income for the last 6 months times 2 falls below the median income for families in Michigan, based on U.S. Census Bureau statistics, you are eligible. If you earn more than this median income, the court considers your bills for an adjusted income such as the following:
Your income over the past six months
Mortgage payments
Car payments
Back taxes due
Child support due
If after deducting these expenses, you can still pay $100 a month or more to creditors, you may not be able to file under Chapter 7 and must file under Chapter 13 instead.
Filing Chapter 7
The process begins with Bankruptcy Attorney Bankert filing the Petition, Schedules, and a Statement of Financial Affairs with the U.S. Bankruptcy Court for the Eastern District of Michigan. You are part of this process. Several meeting will be held to identify full disclosure of all your assets, income and debt.
You must provide the following information to Attorney Bankert to complete the necessary documents:
A list of your creditors and the amount of money you owe them
Your source(s) of income, amount, and frequency
A list of ALL your property
A detailed list of your monthly living expenses
Once you have officially filed for Bankruptcy, your Creditors cannot attempt to collect directly from you. Creditors must convince the Bankruptcy Judge, following a hearing, that they have cause to continue with the collection process.
The 341 Hearing Also known as the Creditor#s Meeting
Usually between 20-40 days after you file your Petition for Bankruptcy, your Trustee holds the first meeting of Creditors, called a 341 Hearing. This is a routine meeting , you must attend, to allow the Trustee to ask you a few questions. Some of your creditors may also ask you questions.
NOTHING is HOPELESS
Debt Relief is just a call or click away! Contact the Law Office of Terry R. Bankert PC
The Firm offers flexible scheduling to meet your needs. Well known in the Genesee County community, Terry R. Bankert has the reputation of a diligent work ethic and specific Bankruptcy Law experience to help you find light at the end of the dark, dreary debt tunnel.
A Structured Re-Payment Plan:
Chapter 13
An Opportunity to Stop the Harassment - Omits the Guilt Get Back to Living Peacefully while Paying Off Your Debts
Filing Chapter 13 Bankruptcy reorganizes your Debts and allows you Pay them off over a period of 3 to 5 Years. This Bankruptcy Option is best suited for those who:
Are behind on your Mortgage Payments
Owe money to the IRS
Do not meet the Chapter 7 filing Criteria Means Test
Need Relief from Collection Lawsuits
Have Debts with Co-Signer(s)
The Experts at the Law Office of Terry R. Bankert PC can help you plan the most positive outcome in your Chapter 13 filing.
The Chapter 13 Process
When you file for Chapter 13 Bankruptcy, you include a Proposed Plan that provides payment of all priority claims, such as Taxes, in full. The Bankruptcy Court appoints a Trustee, who reviews your Plan. Your Creditors receive a copy of the Plan and will either Accept or Reject it. If the Court approves your Plan, you MUST make monthly payments to the Bankruptcy Trustee, who then distributes the Funds to your Creditors accordingly and proportionately. You are also allowed to keep all your Assets throughout the Plan#s payment period as long as you do continue to make regular and timely payments.
In the event you adhere to, and complete the Approved plan, the balance(s) on any of your unpaid Debts are discharged. If, for some unforeseen reason, you are unable to complete the Plan, Attorney Terry Bankert can help you determine your best legal options.
Frequently Asked Questions
The attorneys and staff at the Law Office Terry R. Bankert PC listen to their Clients and provide answers to many of the questions that trouble them.
How does the filing process work?
Will I lose my house?
Will this be published in the newspaper where everyone will know I# m declaring Bankruptcy?
Will I ever get credit again?
Will someone come to my house and take everything away?
Will Bankruptcy stop creditors from hounding me?
In a Chapter 13 Bankruptcy, who sets the dollar amount that goes into the plan?
What happens at Bankruptcy court?
When you can#‘t see a way out, contact the Law Office of Terry R. Bankert PC.
Bankruptcy does not keep you living below your standard and strapped with Debts. Consumer Bankruptcy advice and assistance from Attorney Bankert will shine the light you’ve searched long for at the end of the tunnel.
How does the filing process work?
The U.S. Bankruptcy Court approved the required forms to file for Bankruptcy in the Eastern District of Michigan. The required forms include the Petition, Schedules, Statement of Financial Affairs, Statement of Intentions, Social Security Declaration, and other documents, depending on your circumstances. You and Attorney Bankert, list all your Assets, Debts, and recent Financial history.
If you are filing for Chapter 13, you must file a plan of Re-Organization and several additional documents related to the Plan. All forms are filed with theBankruptcy Court.
Once you file, your Creditors cannot initiate or continue Collection on your Debt without getting an Order from the Bankruptcy Court specifically allowing a Creditor to continue with collection.
Will I lose my house?
You may actually be at a greater risk of losing your home if you DO NOT file for Bankruptcy. Chapter 13 Bankruptcy can protect you and your home even if it is in Foreclosure.
Will my filing for Bankruptcy be published making everyone aware that I am declaring Bankruptcy?
Although Bankruptcy filings are Public Records, only the Bankruptcy Court, your Creditors, and the IRS receive notification of your Bankruptcy filing. Credit Bureaus record your Bankruptcy, however, and it remains on your Credit record for 10 years.
Will I ever get credit again?
The decision whether to grant you Credit in the future is strictly up to the Creditor and varies from Creditor to Creditor. There is NO law that prevents anyone from extending Credit to you after the filing of a Bankruptcy, but Creditors are not required to extend you Credit.
Will Anyone come to my House and take everything away?
Filing for Bankruptcy can protect your home and other Assets from Seizure, although many factors come into play. In general, Chapter 13 allows you to keep your Assets during the Re-Payment Plan period. Attorney Bankert will explain the risks to you and recommend the best course of action to keep your Assets.
Will Bankruptcy stop Creditors from hounding me?
Once Attorney Bankert has filed your Bankruptcy documents, all Creditor actions against you have to stop by Law and prevents Creditors from initiating or continuing any Lawsuits, Garnishing your Wages, or making harassing telephone collection calls demanding payment from you.
In a Chapter 13 Bankruptcy How is the Amount of the Payment for the Re-Paymnet Plan determined & Calculated?
When you file for Chapter 13,within 15 days of filing your Petition you must file your Re-Payment Plan .Attorney Bankert prepares your Schedule and your Re-Payment Plan based on a thorough analysis of your Income and Financial History according to Bankruptcy Law. The Court will examine your submitted Plan and either approve, modify of reject the Plan.
What Can I Expect in Bankruptcy Court?
Bankruptcy is primarily Administrative work and is outside of the Court .Your personal involvement in a Chapter 7 is usually limited to one Court Appearance. In Chapter 13 cases you will be required to Appear for once, maybe twice before the Court unless a Creditor raises an objection to your Bankruptcy Re-Payment Plan. In Chapter 13 cases, the Bankruptcy Judge holds a Confirmation Hearing and decides whether your Re-Payment Plan is feasible. The Judge also determines whether the Plan meets Bankruptcy Code Confirmation Standards.
FAQ
1.What is Bankruptcy?
Bankruptcy is a Legal proceeding in which a Person (the Debtor) is unable pay his or her debts can get a fresh start. The Bankruptcy process begins by Petitioning the Federal Bankruptcy Court. The Petition discloses all of the Debtor's financial affairs including Assets and Liabilities. Filing Bankruptcy immediately and instantly, though sometimes only temporarily, stops Creditors from seeking to collect Debts. Bankruptcy may also eliminate a Debtor's obligation to pay many, if not all, Debts incurred prior to the filing for Bankruptcy.
2. Who can File a Bankruptcy?
You must reside or have a domicile, a place of business, or property in the United States or a municipality.
You must not have been Granted a Chapter 7 Discharge or completed a Chapter 13 Re-Payment Plan. within the last 6 Years
You must not have had a Bankruptcy filing dismissed for cause (not meeting the criteria, fraud, etc.) within the last 180 days.
It must not be a "substantial abuse" of Chapter 7 to Grant the Debtor relief. (???Generally speaking, if after you pay the monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7.??) It would not be fundamentally unfair to grant the debtor relief under Chapter 7.
3. Is it True that I can wipe out all my Bills?
The underlying purpose of Bankruptcy Law is to provide the honest Debtor, who is in Debt beyond his/her ability to Re-Pay the Debt, should be given an opportunity, and meeting the criteria, to have a fresh start by being Granted a discharge of Debts in a Bankruptcy Court.
However, not all debts are dischargeable (forgiven). Generally speaking, the following Debts will not be discharged:
Taxes
Spousal and Child Support
Debts arising out of willful misconduct and or malicious misconduct by the Debtor; Liability for Injury or Death from driving while intoxicated
Debts deemed not dischargeable from a prior Bankruptcy; such as
Student loans
Criminal fines and Penalties
Forfeitures.
The Debts that are secured will be discharged, however, expect the Creditor to take the necessary legal steps to take back the property. In most cases if the Debtor's equity interest in the property is Exempt, the Debtor may keep the property by a process called Redemption or Re-Affirmation.
4. Why File for a Chapter 7 Bankruptcy?
The most common reasons for Consumer Bankruptcy are:
Unemployment
Medical Expenses;
Over Extended Credit
Marital Problems
Unexpected Expenses.
5. Can I stop Bill Collectors Calling & Harassing me?
One of the major Benefits of filing for Chapter 7 is the protection it provides to you as many creditor actions are suspended under Bankruptcy Law. Attorney Bankert can further advise you as to what Debts this applies to and for what Debts collection efforts and Foreclosure is halted.
6. How long after I File will the Creditors stop Calling Me?
Once a Creditor or Bill Collector is notified that you have filed for Bankruptcy Protection, he/she must stop all efforts to collect the Debt. After your Bankruptcy is filed, the Court mails a notice to all the Creditors listed in your Schedules from the information you have provided and prepared by Attorney Bankert. This may take a couple of weeks. If this is not soon enough, then you should have contact Attorney Bankert and ask that the Creditor be contacted directly and informed of your Bankruptcy filing. If a Creditor continues to use collection tactics once informed of your Bankruptcy they may be liable for Court for Sanctions and Attorney Fees for your attorney having to intervene due to this conduct.
7. I am Married so how does Bankruptcy affect my Spouse. Will they also have to file Bankruptcy?
No. In some cases where only one Spouse has Debts, or one Spouse has Debts that are not dischargeable then it might be advisable to have only one Spouse file. Attorney Bankert can advise you in this area. In cases where Real Property is involved, the question regarding a joint Bankruptcy is complex and beyond the scope of being answer here. Contact Attorney Bankert at 810,235.1970.
8. Will I lose my job?
No. Bankruptcy Laws prohibits discrimination based upon a Debtor filing for protection under the US Bankruptcy Laws.
9. Can I go to jail if I file Bankruptcy?
No. There are no Debtor's prison in the United States.
10. Will my Employer find out about my Bankruptcy?
Under normal circumstances, unless your employer is a Creditor, your employer will not know.
11. What happens to my Personal and Real
Property and other Assets?
Once the Bankruptcy is filed, all the property of the Debtor at the time of the filing and certain other property to be received in the future, becomes the property of the Bankruptcy estate. This means that the Bankruptcy Trustee will take control of this property for purposes of satisfying the Creditors. HOWEVER, not all property is surrendered as there is certain property that is either Excluded or Exempt and the Debtor will be allowed to keep it. Property, or Asset Exemption are determined based upon your specific situation, your income and the Laws of your State. To determine which property to keep will require Attorney Bankert do detailed analysis of your situation.
12. Can I keep my Car after Bankruptcy?
You make be able to keep your car but only if your equity is equal to or less than the dollar amount allowed by the Exemption $3,400.00 When Attorney Bankert calculates your equity the Kelly Blue Book or a comparable guide will be used. Once you know the Value, then subtract the amount owed from the Value to calculate the equity.
Generally, most Courts understand that you need a car to work and to get back on your feet. Apply rules of Common Sense here: If you own vintage cars which are free and clear and worth thousands of dollars, you are probably not going to be able to keep them. If, on the other hand, you have a car worth 10,000 and you owe $8000 on it, you will most likely keep it. Again, contact Attorney Bankert regarding your specific circumstances. Most leased vehicles have no equity and therefore are entirely Exempt. If you owe money on your car or it is leased you must still make the payments. In this instance you will have to Re-Deem or Re-Affirm the Debt on this property to keep it.
But, in some circumstance Attorney Bankert can Re-Negotiate the loan or the lease and convince the Creditor to give you a more favorable deal than the original.
13. Can I keep my Credit Cards after Bankruptcy?
Under some circumstances you may keep your Credit Cards. There are many factors which must be considered. Some of those include: the Credit Card balance at the time of the Bankruptcy, are you filing Chapter 7 or Chapter 13 Bankruptcy, what is the position of the Credit Card, and your ability to pay the present and future Credit Card Debt. For an answer more specific to your circumstances, contact Attorney Bankert.
14. Will Bankruptcy stop a Wage Attachment/Garnsihment?
Yes.
15. Will Bankruptcy stop a Judgment?
Yes. Most Civil Judgments are stopped by Bankruptcy.
16. I am a Co-Signer for a Debt so how does Bankruptcy affect my obligation to this Debt?
If the Debt is a dischargeable Debt then you will not have to pay it. However, the Co-Signer will become primarily responsible for the Debt. Be sure to advise Attorney Bankert of all your Debts with a Co-Signer as they are Creditor and are required to be listed in your schedules as they have a Contingent Claim against you.
17. Who notifies the Creditors and Bill Collectors that
I have filed for Bankruptcy?
After Attorney Bankert files your Bankruptcy, the Court mails a notice to all the Creditors listed in your schedules. This usually takes a couple of weeks. If this is not soon enough, then you should contact Bankruptcy Lawyer Bankert immediately and he will inform them .
18. Are there any Debts that I can't wipe out in Bankruptcy?
Yes, there are certain Debts that are NOT dischargeable (forgiven) in Bankruptcy. Generally speaking, the following Debts will not be discharged:
Taxes
Spousal and Child Support
Debts arising out of willful misconduct and or malicious misconduct by the Debtor
Liability for Injury or Death from driving while intoxicated
Debts deemed nondischargeable (unforgivable) from a prior Bankruptcy
Student Loans
Criminal Fines and Penalties
Forfeitures
Debts which are secured will be discharged, however, expect the Creditor to take the necessary Legal steps to retrieve property. In most cases if the Debtor's equity interest in the property is Exempt, the Debtor may retain the property by Redemption or Re-Affirmation to the Bankruptcy Court.
19. Do I have to go to Court?
Yes. Within 30 to 40 days of filing for Bankruptcy you will have to attend a hearing presided over by the Bankruptcy Trustee. This hearing is called the 1st Meeting of Creditors. At this hearing the Trustee will ask you questions while under oath regarding the content of your Bankruptcy papers, your Assets, Debts and other matters. After the Trustee is finished, your Creditors will be permitted to question you. Do not worry, Attorney Bankert is there to represent you and will prepare you for the hearing. Sometimes, after your hearing is over, various Creditors will approach you to discuss the status of your secured property and whether you wish you surrender or keep specific property, or the your desire to retain certain credit card(s). Mr. Bankert will negotiate with them with your permission prior to any negotiation on your behalf.
This is typically the only time you will Appear in Court for a Chapter 7 Bankruptcy. However, if a Creditor files a Motion or an Adversary Action, you may likely have to return to Court to address the Creditors concerns . This is the exception and only Attorney Bankert can determine if this is likely to happen.
20. What happens after I file my Bankruptcy?
After appearing with Mr. Bankert at the 1st Meeting of Creditors, and following any negotiations regarding secured property and completion of any agreements regarding this property and notifying the Court of such arrangements the Bankruptcy Court will issue the discharge on the Debts that are Non-Secured or Re-Affirmed in approximately 60 to 75 days under normal circumstances.
21. Who deals with the Creditors and Bill Collectors
during my Bankruptcy?
Bankruptcy Attorney Bankert will be in contact with your Creditors. Here you are given the luxury of saying "you'll have to talk to my lawyer".
22. What if I forget to list a Creditor on my
Bankruptcy papers?
You are permitted to file an Amendment to your schedules for a specific period of time after Attorney Bankert files your Bankruptcy. If the Amendment is timely filed then the omitted Creditor is added to the Bankruptcy. It is Perjury and against the Law to intentionally omit a Creditor and by doing so may cause your Bankruptcy to be dismissed for mis-representing the facts.
However, if you do not know that a Creditor exists and there are no Assets owned by your Creditor or owed for to Creditors, the Debt will be as if it was submitted in the initial petition.
This can be time-consuming to make right after the fact, so be sure to be thorough and list every Asset and every Creditor.
23. What happens to my Credit Rating after Bankruptcy?
The Bankruptcy is a Judgment against you and will be listed for a period of up to 10 years.
24. After Bankruptcy, can I get Credit?
Sure. For a while though, expect to pay extremely high interest and fees.
25. Is there any thing I should not do if I am
contemplating Bankruptcy?
There are several areas related to this question. You should ask Attorney Bankert for specifics related to your individual situation.
26. If I need to file Bankruptcy again, how long do
I have to wait?
You must wait 6 years to file again or if your Bankruptcy was dismissed you must usually wait for 180 days to file again.
Bankruptcy Basics
Certain basic concepts apply under both Chapter 7 and Chapter 13.
The case is commenced by filing a petition with the Bankruptcy Court. The petition must list all of your assets, liabilities and other information required under the code. You cannot pick and choose which Creditors to include on the petition, but that doesn't mean you cannot keep your home or vehicle, as will be explained later.
All Creditors must be listed. You may file as an individual or as husband and wife. Married couples do not have to file together if substantially all debts are solely in one spouse's name.
Your Creditors can force you into Bankruptcy. This is called an# Involuntary Proceeding# For the most part, involuntary proceedings are confined to commercial/business cases. Almost all Consumer Bankruptcy cases are filed voluntarily. Approximately 75% of the cases file a Chapter 7 "wipe-out debt" cases, the other 25% are Chapter 13 "Re-Organization or Re-Payment Plans" in which the Debtor (or husband and wife) make payments to a Chapter 13 Trustee for a 3 to 5 year time period.
Most Chapter 13 cases are for Debtors who are trying to prevent a Foreclosure of their home or Repossession of their vehicle. Some Chapter 13 cases are filed because the Debtor's are not eligible to file a Chapter 7 either because they have filed a prior Chapter 7 in the previous six years or they have too many Assets, or make too much money, or because they could pay their Creditors a good percentage of what they owe with a Chapter 13 Plan without too much of a burden on their life style.
Some clients will file a Chapter 13 Re-Payment Plan even if they qualify for a Chapter 7 just because they want to pay their Creditors. Both Chapter 7 and Chapter 13 will stop Creditor#s action such as a Foreclosure or Sheriff's Sale, Utility Shut-Off, Vehicle Repossession or Wage Garnishment.
The filing of the petition invokes what is known as the Automatic Stay#This means that your Creditors are immediately prevented from doing anything further to compel collection of a debt. The harassing calls, Garnishments, Law Suits, Foreclosures, Repossessions or Shutting Off of Utility Services are all stopped. The "stay" is designed to give you time to sort out your affairs free from the harassment by Creditors.
In the petition, your Debts are classified as either Priority, Secured or UnSecured. Each is treated differently depending if Chapter 7 or Chapter 13 is being filed.
Priority Debts in consumer cases are usually limited to Government Tax Liabilities and Spousal and/or Child Support obligations. Priority Creditors have certain rights to payment over other Creditors.
Secured Debts are backed by property known as collateral, and typically consist of Auto Loans and Mortgages. The Creditor has a lien, or right to recover the property upon Default. In most cases, liens attach to property by virtue of a written security agreement signed when the pledged property is purchased, or upon obtaining a loan.
Unsecured Debts are almost everything else. They include Credit Cards, back Utilities, Medical Bills, Store Charges and Unsecured Loans. Unsecured Creditors do not have a lien or interest in your property. If you purchased certain property with a store charge or credit card, the seller cannot repossess that property on your Default without a security agreement.
Should I File Bankruptcy?
The process of deciding whether to file for Bankruptcy is often very difficult. Nobody wants to file Bankruptcy, whether it be under Chapter 7 or Chapter 13 of the Bankruptcy Code. Bankruptcy is designed for the honest Debtor, someone who has explored all alternatives. A Bankruptcy may have adverse Credit effects and there can be other undesirable ramifications. So, why should or would someone make the decision to file Bankruptcy? The answer to that question, in my opinion, is that you should file only after considering the various possible alternatives. If none of these alternatives is feasible or practical for you, then filing a Bankruptcy petition may be the most responsible step to take.
Most people who file Bankruptcy would much rather repay their Debt if they could, and they must deal with their ingrained fear of Bankruptcy, because mis-informed societal attitudes have always looked upon Bankruptcy Debtors as cheats, criminals and irresponsible.
The fact is most Bankruptcy Debtors have sold much of their valuable Assets to repay Debt, borrowed from friends and relatives, and have simply no other place to turn before looking to the Bankruptcy Code for Debt relief.
The most common reasons for filing Bankruptcy include loss of Employment, Insufficient Medical Insurance, Divorce, or a Failed Business Venture. Most recently, Bankruptcy filings have been surging as a result of the unprecedented availability of high interest Credit Cards, which inevitably lead to a greater number of Defaults when combined with any of the above problems.
The inability to keep current with bills as they become due causes stress that affects marriages, jobs and almost every aspect of life. Anyone who has suffered from a barrage of hostile telephone calls from Bill Collectors knows that something has to give. The Bankruptcy Laws have been enacted to provide a safety valve that gives honest people a fresh start, and helps them regain normal lives.
While there is little reason to feel happy about filing Bankruptcy, you shouldn't feel like a loser either. If you are going through a financial crisis you are not alone. Over a million people a year turn to the Bankruptcy Laws for Debt Relief. Statistics show that the cross section of individuals and couples filing Bankruptcy mirror society as a whole by income, type of employment, home ownership and almost any other relevant category. In other words, anyone can find themselves in Bankruptcy.
Bankruptcy is a Right and a Privilege provided to YOU by the United States Constitution
The Bankruptcy Laws are there for a reason. On the whole, they benefit both the Debtors and Creditors. It is of course important to be responsible for the Debts you incur, but filing a Bankruptcy IS an act of responsibility. It puts you in a position to move forward, to become productive once again, provides closure, and pays your Creditors from your non-exempt Assets.
It is important to seriously explore Bankruptcy as an alternative to struggling for years to no avail. There are many factors to consider before filing a Bankruptcy, but one of them should not be a guilty conscience.
Recognize any of these Warning Signs?
Warning Signs. In assessing whether or not you should seek some kind of Debt Relief, consider the following questions:
Do you ever use one form of Credit, such as a Credit Card or Debt Consolidation Loan, to make payments on other Debts? Or to put it in Biblical terms "Robbing Peter to Pay Paul"?
Have you taken one or more Cash Advances greater than $500 in the past few months to pay living expenses such as everyday utility bills or even groceries?
Do you ever borrow from friends or family to meet regular expenses, such as food and utility bills?
Can you barely make the minimum required payment on Credit Cards or other Debts?
Are you receiving harassing calls or letters from Creditors or Collection Agencies?
Are you being sued (Summons and Complaint), or are your Creditors threatening to sue you?
Are your Wages being Garnished, or are your Creditors threatening a Garnishment?
Are your financial problems impacting your health or relationships due to stress?
Do you owe two months salary or more on your Credit Cards?
Are you using one-quarter or more of your take-home income to pay Credit Cards and Personal Loans (excluding Mortgage Payments)?
Are your Credit Cards charged to the limit or maxed out?
Have you bounced more than one Check in the past year?
Are you without Cash Reserves for a rainy day or emergency?
Are you behind on House (Mortgage or Rent) or Auto Payments?
Are your Creditors threatening to take your Car, House, or other Property (Foreclosure or Repossession)?
Are you behind on your Taxes or do you owe the IRS, State of Michigan or City of Flint?
If you answered "yes" to one or more of the preceding questions, you should consider seeking some form of Debt Relief. Bankruptcy, of course, offers very effective and immediate Debt Relief, but there are possible alternatives to filing Bankruptcy.
Alternatives to Bankruptcy
Generally speaking, the primary alternatives to Bankruptcy involve some form of negotiation and settlement with one or more of your Creditors, perhaps by making payments through a nonprofit Credit Counseling Service. Anytime you are dealing with alternatives to Bankruptcy, be sure that you do not "put all your eggs in one basket." In other words, do not let a Foreclosure Sale occur or allow a Judgment to be entered against you without first finding out your options under Bankruptcy laws.
Nearly all large companies such as Credit Card issuers have limited or no resources for dealing with individual borrowers. Many of my clients relate to me that they have called and written to their creditors to attempt to work out a method of paying their Debts. Most often, these people find that no matter how good their reason for wanting to work out their Debts, and no matter how hard they try to pay their Creditors what they can afford, the Creditors simply will not "work" with them. This is because these Creditors are vast bureaucracies that have no method and no personnel to deal with people on an individual basis. There are some limited exceptions, however. If your situation is like one of the following, you may want to try to work the problem out without filing Bankruptcy:
Deed in Lieu of ForeclosureIf you have one Mortgage on a home or other piece of Real Estate and you cannot sell the property and simply wish to relieve yourself of the Mortgage obligation, it is possible that you can negotiate a "Deed in Lieu of Foreclosure." This is an agreement where you give the property to the Creditor, who, in turn, releases you from the Debt. This saves the Mortgage Company the cost of Foreclosing against you and allows you to walk away from the Debt without further responsibility. You can try to negotiate this on your own, or you can hire an Attorney Bankert to do it for you. Generally, Mortgage Lenders will not agree to this arrangement unless there is some equity in the property or the property is at least worth the amount that is owed. The Mortgage Holder will not accept the property if there is any other Debt on the property, such as a 2nd Mortgage or a Judgment Lien.It is important to note Automobile Lenders most often will not release you from the Debt upon surrender of the Vehicle. You can expect that following the surrender, the Vehicle lender will seek to collect the deficiency (the amount of the Debt remaining after sale of the Vehicle.)
Re-Amortization of Past-Due Mortgage BalanceIf there is a good reason why you fell behind in payments (such as temporary job loss, illness, or injury), a Mortgage Holder will sometimes consider adjusting the Mortgage so that the past due amount is added in to the total and the term of payments is extended (maybe they will put the payments at the end of the loan). The Creditor will generally consider this only where your Debt-to-Income ratio is acceptable and there is no other Mortgage Debt that is in arrears.
Negotiation of a Single DebtIf there is just one (or a few) old Debts you are trying to "clean up" on your Credit Report, it is possible that the Creditor or its Collection Agency will be willing to settle their Debts with you for significantly less than the total amount that you owe. This is usually only true of older Debts, which may have been bought from the original Creditor by another Company . Again, you can negotiate a settlement yourself, or hire Attorney Bankert to assist you and represent your interests. I usually don't do this because I've found it to be of little help to my clients unless they can afford to pay the Creditor right away with a lump sum of money such as after getting a Tax Refund.
Credit Counseling ServicesCredit Counseling Services can sometimes help, although most of my clients who have tried have failed and eventually just filed Bankruptcy. There are a number of Non-Profit Credit Counseling Services available in the yellow pages under "Credit Counseling." These services negotiate with your Creditors to the extent that they are able. Generally, they can negotiate more favorable terms only with UnSecured Creditors (Debts for which there is no Collateral), such as Credit Card issuers. The Credit Counseling Service attempts to get your UnSecured Creditors to settle for less than the full amount of the Debt that you owe, and also tries to get the Creditors to give you a lower interest rate. Some Credit Card Companies will agree to these types of terms so long as they are getting their payments through the Credit Counseling Service. However, other Creditors are simply unwilling to work with Credit Counseling Services, and the Credit Counseling Service has no way in which to force the Creditors deviate from the original Debt amount and original terms. To be sure that you are selecting a reputable firm, be sure to ask whether or not you will be held responsible for late charges or other fees if the service does not make their monthly distributions on time. You can also ask for references from current or former clients. Unfortunately Credit Counseling Agencies have no real POWER to deal with your Creditors. Filing Bankruptcy puts the ball in your Court.
"Mortgage Assistance" Companies and other Scam ArtistsUnfortunately, there are a growing number of companies that send advertisements to people with pending Foreclosure actions. These "Mortgage Assistance" companies, who get your address from the Court Records, promise that they can stop your Foreclosure and help you avoid a Bankruptcy. Please be very careful of these companies. The vast majority of the time, these companies simply prey on people who are in a desperate situation, taking advantage of your desire to keep your home and "avoid Bankruptcy." Typically, the "Mortgage Assistance" company will require a payment (usually one or two month#s Mortgage Payments) and will promise to obtain another Mortgage Loan to pay off your existing loan or to negotiate with your Mortgage Company to stop the Foreclosure. They will wait until just before (unfortunately sometimes AFTER) the Foreclosure sale to tell you that they were not able to help you, and that you should see a Bankruptcy Attorney. At that point, it is too late and you will be referred to a lawyer who has a good "working relationship" with the Company, to whom you will need to pay even more money.If you choose to use one of these firms, be sure to ask for references of clients that for whom the company has been successful, and check these references. Also, do not put all of your hopes on this type of service until it is too late to file a Bankruptcy making it too late to avoid Foreclosure.
"Do Nothing"Your financial life may be so destitute that even if Creditors obtain a Judgment against you, it would be worthless. If you are older and receiving Pension and/or Social Security and don't own many Assets, you may be "Judgment Proof". You'll probably still have to deal with Creditor calls.
How Bankruptcy Affects Your Credit
When Bankruptcy is appropriate, it is usually not a question of maintaining good Credit - your Credit standing is probably already damaged. Judgments, delinquent payments, and Credit Counseling Services are reported to the Credit Agencies for long periods of time like Bankruptcy. Few lenders give Credit under those circumstances anyway, and even if you satisfy a Judgement it still is a part of your Credit History.
The Credit Reporting Bureaus report a Chapter 7 filing for a period up to 10 years. The Credit Bureaus report a Chapter 13 filing for up to 7 years as long as you successfully complete the plan. If the plan is dismissed, then the Chapter 13 will be reported up to 10 years as well.
A fresh start allows you to re-establish your damaged Credit. Aside from being reflected on your Credit Report, the Bankruptcy Laws do not restrict you from obtaining Credit after the case is completed. Keep in mind, whether you have good or bad Credit is always a subjective decision in the eyes of a prospective Creditor. Of course, you must be prepared to explain why it is necessary to file Bankruptcy if a prospective Creditor should inquire. Maintaining a good "track record" after filing will minimize the adverse impact of the future financial troubles related to the Bankruptcy. With the right strategy, you can build good Credit once again.
There may be some "pre-filing" strategies to Re-Establish Credit. A non-filing spouse's Credit report is not affected by the Bankruptcy unless the spouse is a co-signer on any of the Debts. If only one spouse files then the other may be able to maintain a good Credit Standing. Also, if there is a Bank Card or Line of Credit with a zero balance before filing, you may be able to use the Card after filing, provided it is not revoked by the Creditor.
Should I File Chapter 7 or Chapter 13?
You must ultimately decide for yourself whether filing Bankruptcy is the proper action to take, and if so, which Chapter is better for you. Some of the factors to consider are as follows:
If you are not making more money than you need for your current living expenses (meaning no "disposable income"), Chapter 13 is not a realistic option.
Chapter 7 has the advantage of wiping the slate clean and enabling you to embark on your "fresh start" immediately. With Chapter 13 you will be making payments for 3 to 5 years.
If you have a particular Asset that you want to keep and that is valued above the allowable Exemption then Chapter 13 may be the only alternative to retain this Asset. For example, if you own a house with significantly more than $21,625 in equity and you don't want to lose it, you will not qualify for Chapter 7.
If you are trying to ward off Repossession or a Foreclosure, Chapter 7 will not help you, and you will need to file a Chapter 13. If your Debts are primarily Consumer Debts, and if your budget reveals that after filing Bankruptcy your income substantially exceeds your expenses, it is possible that the United States Trustee could the Chapter 7 case for "substantial abuse." In such a case Chapter 13 may be the better alternative.
Chapter 7 vs. Chapter 13
There are two basic options available to consumers under the Bankruptcy laws: Chapter 7 and Chapter 13. The major benefit of a Chapter 7 is to "discharge" or get rid of UnSecured Debt such as Credit Cards and Medical Bills. You will be allowed to keep certain kinds of property under the Exemptions allowed by Federal Laws.
While a Chapter 7 Bankruptcy is appropriate under the right circumstances, its use is limited in comparison to a Chapter 13. A Chapter 13 can be used to protect "Non-Exempt Property." In a Chapter 13, you pay a portion of your monthly income to a Trustee for distribution to your Creditors. A repayment Plan is useful when you are behind on your home Mortgage payments, Taxes, or a Car Loan. A Chapter 13 may be in effect from 3 to 5 years. It normally allows you to pay less than you owe. The extended payment period allows you to make smaller payments. You will be allowed to keep part of your monthly income to pay for living expenses like food, clothing, rent/mortgage, and medicine.
To qualify for a Chapter 13 Re-Payment Plan, you must have regular income, and your UnSecured Debts must not exceed a certain amount .
After completing a Chapter 7, you may not start another Chapter 7 for 6 years. There is a minimal waiting period after a Chapter 13. Attorney Bankert can review your situation and advise whether to seek a Chapter 7 or Chapter 13. The best Bankruptcy alternative for you depends on a number of variables, including the source of your income, the amount and types of your Debts, your desire to protect your Co-Signers, if any, the equity you have in your property, and what property you wish to keep. Attorney Bankert will give your financial situation careful consideration and explain your rights fully, but ultimately the decision to file is left to you.
Chapter 7
Chapter 7 is commonly known as Straight or Liquidation Bankruptcy. Under this Chapter, you are seeking to have your Debts discharged (forgiven), which means the legal obligation to pay Creditors is canceled. You can pay all or some Creditors after Bankruptcy if you feel morally obligated, but is not legally required. You can file Chapter 7 no more than once every 6 years. Certain types of Debts are Non-Dischargeable. With some Exceptions, they include Student Loans, Taxes, Alimony and Child Support, Fraudulent Debts, Debts for Embezzlement or Larceny, Debts incurred from purchasing Luxury items or for taking large Cash Advances shortly before filing, Fines and Penalties, Debts incurred as a result of a Willful or Malicious Injury, unreported Debts to the Bankruptcy Trustee, and Debts denied discharge in a prior Bankruptcy.
Secured Debts are fully dischargeable but you may lose the collateral because valid Liens survive Bankruptcy, and the Creditor is free to Repossess or Foreclose on the collateral once the Bankruptcy case is concluded. If you want to keep the collateral you must Re-Affirm the Debt. Re-Affirmation means a legal Re-Obligation to pay the Debt as if the Bankruptcy never occurred. In exchange for Re-Affirming the Creditor will allow you to keep the pledged property because the Creditor is assured payment. Re-Affirming requires that you sign a written contract that is filed with the Court. You will most likely want to Re-Affirm on your Home and Automobile, but not Credit Cards or other Debts unless there is good reason.
Once your Bankruptcy is filed, a Trustee is appointed to represent the best interest of your Creditors. The Trustee is given broad power under the Law. He can set aside improper transfers of property, and can even recover money paid to Creditors shortly before filing. The Trustee makes sure that all Creditors are treated fairly and equally in the Bankruptcy proceeding.
Most importantly, however, the Trustee is responsible for collecting and liquidating certain valuable Assets at a Bankruptcy sale. Your Creditors are notified of the sale and have an opportunity to bid, or object to someone else's bid. Sale proceeds are distributed to Creditors based upon the classification and priority of their Debt. Any money left over is returned to you after Creditors and administrative expenses are paid.
The Trustee theoretically has an interest in all Non-Exempt Assets you own up to the date your Bankruptcy is filed. These Assets, as a group, are called the Bankruptcy Estate. With limited exception, property you acquire after filing does not become part of the Bankruptcy Estate, and can not be taken by the Trustee.
Does this mean you lose everything? Not at all. In most cases, your valuable property is either Secured or Exempt. Much of your other property, as a practical matter, may not be worth the expense of conducting a sale. A typical rule of thumb is that property with a value of less than $1000 will not be sold by a Trustee.
The Laws allow you to keep certain property above any Liens or Encumbrances to preserve your ability to live. These are called Property Exemptions. Exempt Property, up to certain value limits, includes your Home, Vehicle, Furniture, Appliances and various other personal possessions. Contact Attorney Bankert to discuss what property is considered Exempt.
Can the Trustee sell Secured Property? If the Trustee sells Secured Property, he must first pay off the Lien. Therefore, the Trustee will not sell any Secured Property that at a minimum does not exceed the value of the Lien. Therefore, if you can afford the payments on the Secured Debts, you can Re-Affirm with the Creditor to keep the collateral if you choose.
For this reason, most people can keep their Home and Automobile, as there is usually limited equity in such property. A Home, for example, may have a Secured Mortgage which leaves little or no equity in the property. Equity is further eroded if you deduct 10% of the home's sale price as an estimate of closing costs. As long as equity does not exceed the Exemption amount, the Trustee is left with nothing to distribute to Unsecured Creditors if the property were sold. Therefore, the Home has no value to the Bankruptcy Estate, and the Trustee will not sell the property. The same holds true for a Motor Vehicle with equity less than $2,400.
Approximately 45 days after filing your Bankruptcy, you are required to attend a meeting, known as the Section 34, also know as the 1st Meeting of Creditors. There, the Trustee will determine whether there are Assets to be liquidated, or whether there has been any improper conduct affecting your case. There is usually only one meeting, but occasionally a 2nd meeting is scheduled if further information is needed. Your Creditors are free to appear and ask questions as well, but Creditors rarely attend. The length of the meeting may vary. It usually takes no more than an hour for all scheduled cases on the calendar to be completed.
Approximately two months after the meeting date, the court issues the Discharge Order signifying the conclusion of the case. The two month waiting period is designed to allow the Trustee or a Creditor enough time to file an objection to dischargeability, if appropriate. These objections to discharge are known as Adversary Proceedings, and are usually based on some alleged fraudulent activity. The U.S. Trustee's office, a branch of the Justice Department, can also object if they find that there has been a substantial abuse of the Bankruptcy laws. The vast majority of cases, however, will be concluded without objections, and honest Debtors should have nothing to fear.
The average case is completed in 3 to 4 months. You then have a fresh start, free from the harassment of Creditors. While your Creditors will not be paid after discharge, some can treat the discharged Debt as a loss on their Income Tax Return.
Chapter 13
Chapter 13 is known as the Re-Payment Plan or Wage Earner#s Bankruptcy. You can think of Chapter 13 as a Debt Consolidation, where you group all your Debts together, and repay Creditors over 3 to 5 years through an installment payment plan formulated with the help of Attorney Bankert. Chapter 13 can be filed more often than Chapter 7, as long as it is filed in "good faith".
The main advantage of filing under Chapter 13 is that your property is not liquidated by the Trustee as in Chapter 7. You keep all of your property as long as you comply with the Plan. But you are not completely discharging your Debt. You must pay your Creditors a percentage on the dollar established in accordance with your Assets and ability to pay.
Not everyone can file under Chapter 13. For instance, there is a Debt ceiling, or limit to the amount of Debt you can have. The Plan must also be feasible. To be eligible, you must have regular Income such as Wages, Pensions, Self-Employment or other Income sufficient to fund the Plan. The Plan cannot run longer than 5 years, and you must show the Court that you have enough Disposable Income to pay your Plan payments within that time.
Corporations cannot file under Chapter 13, and must use the more complex and expensive Chapter 11 Bankruptcy if they wish to Re-Organize. A business proprietor that is not Incorporated, however, can file under Chapter 13 provided the Debt ceiling and other provisions under Chapter 13 are met.
The Chapter 13 Trustee acts as a disbursing agent. He collects your installment payments, and distributes them to Creditors according to the Plan.
All Creditors may not be fully paid. Un-Secured Creditors, in many cases, may be paid only a small percentage on the dollar, and upon successful completion of the Plan the remainder of their Debt is discharged similar to Chapter 7.
To determine how much of your Creditors will be paid in Chapter 13, the Bankruptcy Code provides the guidelines setting forth the minimum amount Un-Secured Creditors must receive through the Plan. First, the Disposable Income Test requires that you pledge all of your Disposable Income into the Plan for at least a 3 year period of time. Disposable Income is your monthly Income after your monthly living expenses are paid. In other words, you must pay Un-Secured Creditors as much as you can afford for at least 3 years. Secondly, under the Chapter 7 Test, you must pay Un-Secured Creditors the same amount through your Chapter 13 Plan as they would get had your property been Liquidated under Chapter 7. Put another way, your Plan must pay Un-Secured Creditors an amount equal to the value of your Non-Exempt Property.
For example: Assume we have a husband and wife owning a home with $30,000 worth of equity. Remember, only $20,000 worth of equity can be Exempted. That leaves $10,000 worth of equity which, theoretically, would have been distributed to Un-Secured Creditors if a Chapter 7 Petition were filed. So, under the Chapter 7 Test, this means that Un-Secured Creditors must receive a total of $10,000 over the duration of a Chapter 13 plan. Now, let's assume there is $14,000 in total Un-Secured Debt. By dividing $14,000 into the minimum $10,000 to be paid, you arrive at the percentage to be paid to Un-Secured Creditors. 10,000 divided by 14,000 equals 71% or seventy-one cents on the dollar.
What about Priority and Secured Debts? In every case, your Plan must pay Priority Creditors in full. Also, Secured Creditors are entitled to be paid an amount equal to the value of their Collateral. The difference between the value of the Collateral and the balance of the note is the Un-Secured portion of the Debt, and is grouped together and paid the same percentage as the other Un-Secured Debts such as Credit Cards.Contact Attorney Bankert for more information and clarification and how this applies to your situation.
Similar to Chapter 7, in Chapter 13 you must attend a Section 341 meeting of Creditors, held within 45 days of the filing. Unlike Chapter 7, however, the meeting is followed by a Confirmation Hearing. At the Confirmation Hearing, the Plan is presented to a Bankruptcy Judge for review. If there are no Objections, and the Plan meets the requirements of Chapter 13, then the Judge will confirm the Plan, which makes it binding upon Creditors.
The first payment under the Plan is due approximately 30 days after filing. Thereafter, the payments must be made regularly under the terms of the Plan. Debtors can make payments directly to the Trustee, or for convenience, the payments can be scheduled to be automatically deducted directly from their wages.
Chapter 13 may have some advantages aside from allowing you to retain property which is otherwise Non-Exempt in Chapter 7. For instance, your Co-Signors are protected if the Co-Signed Debt is paid in full through the Plan. Delinquent Mortgage payments, back property Taxes and missed Automobile payments can be paid through the Plan to stop Foreclosure or Repossession.
Chapter 13 is commonly used to save a Home from Foreclosure. Under the US Bankruptcy Code, a Plan which proposes to pay all Mortgage Arrears through the Plan can decelerate a Mortgage Default. You must, however, have enough Disposable Income both to fund the Plan, and to start making the current Mortgage payments once again directly to the lender as they become due after the Petition is filed. You can pay Student Loans, Spousal and Child Support arrears or Restitution through the Plan, and some Debts which are Non-dischargeable in Chapter 7 may be partially dischargeable as an uUn-Secured Debt in Chapter 13.
When Bankruptcy Affects your Credit
When Bankruptcy is appropriate, it is usually not a question of maintaining good Credit - your Credit standing is probably already damaged. Judgments, Delinquent Payments, and Credit Counseling Services are reported to the CreditAagencies for long periods of time like Bankruptcy. Few lenders give Credit under those circumstances anyway, and even if you satisfy a Judgment it still is a part of your Credit History.
The Credit Reporting Bureaus report a Chapter 7 filing for a period of up to 10 years. The Credit Bureaus report a Chapter 13 filing for up to 7 years as long as you successfully complete the Plan. If the Plan is dismissed, then the Chapter 13 will be reported for 10 years as well.
A fresh start allows you to re-establish your damaged Credit. Aside from being reflected on your Credit Report, the Bankruptcy laws do not restrict you form obtaining Credit after the case is completed. Keep in mind that whether you have good or bad Credit is always a subjective decision in the eyes of a prospective Creditor. Of course, you must be prepared to explain why it is necessary to file Bankruptcy if a prospective Creditor should inquire. Maintaining a good "track record" after filing will minimize the adverse impact of the financial troubles leading to the Bankruptcy. With the right strategy, you can build good Credit once again.
There may be some "pre-filing" strategies to re-establish Credit. A non-filing spouse's Credit Report is not affected by the Bankruptcy unless the spouse is a Co-Signer on any of the Debts. If only one spouse files then the other may be able to maintain a good Credit Standing. Also, if there is a Bank Card or Line of Credit with a zero balance before filing, you may be able to use the Card to access these funds after filing Bankruptcy, provided it is not revoked by the Creditor.
6 Years Before Bankruptcy Filed
Prior Bankruptcy Prevents Filing of Chapter 7
You are prohibited from receiving a discharge under Chapter 7 if you received a discharge in a Bankruptcy filed within the last 6 years. A discharge may still be granted if the prior Bankruptcy was under Chapter 12 or 13 and paid 100% of allowed Un-Secured Claims, or paid at least 70% allowed Un-Secured Claims and the Plan was proposed in good faith and was the your best effort.
This restriction does not apply to the filing of a Chapter 13 after any prior Bankruptcy.
1 Year Before Bankruptcy Filed
Transfer, Concealment or Destruction of Property Prevents Discharge in Chapter 7
The Court may deny you discharge of all Debt if you attempted to hinder, delay or defraud a Creditor when you transferred, removed, destroyed, mutilated, or concealed property within one year prior to the filing of your Chapter 7 Bankruptcy.
The BankruptcyTrustee may recover the property from the person to whom you transferred it.
Payment to Relative or Insider is a Preference
A total of $600 or more in money or property paid to a Creditor that is a relative or insider (certain business associates) within 1 year prior to filing is a preference. The Trustee may recover preferences and divide the money between all Creditors.
In Chapter 13, you may be able to prevent the Trustee from going after the relative by increasing the amount paid into your Plan.
180 Days Before Bankruptcy Filed
Dismissal of prior Bankruptcy prevents Filing Chapter 7 or 13.
You may NOT file any Bankruptcy if you filed a previous Bankruptcy which was dismissed in the Court Hearing preceding 180 days because of: 1, a Court's Order because you willfully failed to obey a Court Order, 2. failed to Appear in Court when required, 3. or at your request after filing a request for Relief from the Automatic Stay.Contact.
90 Days Before Bankruptcy Filed
Minimum Residency Requirement
You must be a resident in the State in which you are filing for the last 90 days. If you do not meet the residency requirements in the State you now reside, you can only file in the State where you previously resided, or has been your principal place of Business, or has been the location of your principal Assets for the majority of the last 180 days.
Payment to Creditor is a Preference
A total of $600 or more in money or property which is paid to a Creditor within 90 days Prior to filing Bankruptcy is a Preference. The Trustee may recover Preferences and divide the money between all Creditors.
In Chapter 13, you may be able to prevent the Trustee from going after the Creditor by increasing the amount paid into your Plan.
60 Days Before Bankruptcy Filed
Debt Presumed to be Non-Dischargeable
Debt of $1,075 for cash advances or "luxury goods or services" incurred within 60 days before the Bankruptcy is filed is presumed to be Non-Dischargeable.
This applies to Chapter 7 cases, and to Hardship Discharge (sudden loss of Income source) in Chapter 13.
Bankruptcy Filed
Commencement of Case
A voluntary Bankruptcy is commenced when you file a Petition with the Bankruptcy Court requesting protection from your Creditors under Chapter 7 or Chapter 13. A husband and wife may file 1 Petition together and commence a Joint Case.
Under the US Bankruptcy Code, filing Bankruptcy also puts a Stay into effect prohibiting Collection actions by your Creditors
15 Days After Bankruptcy Filed
Deadline to File Schedules and Financial Statement, and Chapter 13 Plan
Within 15 days after filing the Chapter 7 or Chapter 13 Petition that commences your case, you must file schedules listing your Assets and Liabilities, your current Income and Expenditures, Executory Contracts and Un-Expired Leases, and a Statement of your Financial Affairs.
In Chapter 13, the Re-Payment Plan must also be filed within 15 days after the Bankruptcy was filed. The Plan provides for submission of future Income and the treatment of your Creditors, specifying when and how much each category of Creditor will receive.
About 18 Days After Bankruptcy Filed
Court Mails Notice of Commencement of Case
Approximately 18 days after your Bankruptcy is filed, the Court mails a Notice of Commencement of Case to you and to the Creditors you have included in your mailing list. The Notice contains the Hearing date, deadlines for Objections to Discharge and for filing Proofs of Claims by your Creditors
After Chapter 13 Plan Filed
Chapter 13 ONLY: Deadline to Notice Chapter 13 Plan
In the Eastern District of Michigan, your attorney must mail your Chapter 13 Plan to all Creditors after the Chapter 13 Plan is filed.
30 Days After Bankruptcy Filed
Chapter 7 ONLY: Deadline to File Statement of Intention
Within 30 days after filing Chapter 7 Bankruptcy a Statement of Intention must be filed indicating whether you will be surrendering or keeping property Secured by Consumer Debt. If you are keeping Secured Property, you will need to indicate whether you intend to: (1) Re-Affirm the Debt and continue to make the remaining payments for the balance of the Debt, (2) Redeem the property by immediately paying the value of the property and receive a Discharge for the balance of the Debt.
A copy of the Statement of Intention must be served on the Trustee and the Creditors named in the Statement on or before the filing the Statement of Intention.
30 Days After Chapter 13 Plan Filed
Chapter 13 ONLY: First Payment Due Under Chapter 13 Plan
You must make your 1st payment under the Chapter 13 Plan within 30 days after the Plan was filed.
If your Plan was filed with the initial Petition, your 1st payment is due within 30 days of the beginning of the case. Since the Plan must be filed within 15 days after the commencement of your case, the latest date you may start making payments is 45 days.
About 6 Weeks After Bankruptcy Filed
341 Meeting
Section 341 of the Bankruptcy code requires the Trustee to preside at a Meeting of Creditors within a "reasonable time." This meeting is usually held approximately 6 weeks after your Bankruptcy is filed.
You (as the Debtor in a Bankruptcy case) are required to appear at this meeting and Testify under Oath, but most Creditors do not come to the meeting. The failure of Creditors to attend the meeting does not effect their right to challenge the Discharge in a Chapter 7 or to Object to the Plan in a Chapter 13. If you do not attend, your case will be dismissed.
45 Days after Statement of Intentions is Filed
Chapter 7: Deadline in Chapter 7 to perform under Statement of Intention
In Chapter 7, within 45 days after you filed Statement of Intention, you are to perform as you indicated. In that Statement, you were required to indicate whether you would be surrendering or keeping property Secured by Consumer Debt. If you were keeping Secured Property, you would have indicated whether you intended to: (1) Re-Affirm the Debt and continue to make the payments and remaining obligated for the balance of the Debt, or (2) Redeem the property by immediately paying the value of the property and receiving a discharge for the balance of the Debt.
30 Days After the 341 Meeting
Deadline for Creditors or Trustee to Object to claim of Exempt Property
Your Creditors and the Trustee have until 30 days after the Creditor's Meeting to Object to the property you have claimed as Exempt in your Schedule C. While most 341 Meetings are concluded on the same day they are set, some will require the meeting to be continued at a latert date, which ultimately extends the time that Creditors have to Object.
60 Days After the 341 Meeting
Chapter 7: Deadline in Chapter 7 for Objection to Discharge of a particular Debt Creditors have up to 60 days after the first date set for Creditor's Meeting to file a Complaint allowing Creditors to Object to the Discharge of Debts which were obtained by false pretenses, a false representation, or actual fraud; Debt from Fraud or Defalcation while acting in a Fiduciary capacity, Embezzlement or Larceny; Debt for willful and malicious Injury; and Debt incurred in a Divorce or Separation (other than Spousal and Child Support which are NOT discharged even without an Objection to discharge).
Chapter 7:
Deadline for Objection to Discharge of all Debt
Creditors have until 60 days after the first date set for Creditor's Meeting to file a Complaint Objecting to the Discharge of all Debts because of misconduct including Transfer, Concealment, Destruction, Falsification or failure to keep Financial Records; making False Statements; Withholding Information; Failing to explain Losses; Failure to Respond to Material questions; having received a discharge in a prior case filed within the last 6 years.
Chapter 7:
Deadline for U.S. Trustee or Court to move to dismiss case for Substantial Abuse
Until 60 days after the first date set for creditor's meeting, the U.S. Trustee or the Court may move to dismiss a case in which Debts are primarily Consumer Debts if it finds that the Granting of relief would be a Substantial Abuse of the Provisions of Chapter 7.
Substantial Abuse has been interpreted by a number of Courts to mean having sufficient Disposable Income to pay more than half of your Un-Secured Debt over the next 36 months.
Chapter 13:
Deadline in Chapter 13 to file ALL Due Un-Filed Tax Returns
For cases filed in the Eastern District of Michigan, you must file all due but unfiled tax returns within 60 days after the first date of the 341 Hearing.
More than 60 Days After the 341 Meeting
Discharge Entered in Chapter 7 case
Court#s are required to enter "forthwith" a Discharge after the expiration of the time for the Creditor#s Objection to Discharge or moving to Dismiss the case. The time for those Objections expires 60 days after the first date set for Creditor's Meeting (341 Hearing).
The Discharge is not absolute or final. The trustee can ask that the Discharge be Set Aside if you do not turn over Non-Exempt property, and for other Violations of the Debtor's duties.
90 Days After the 341 Meeting
Deadline for Non-Government Creditor to File Proof of Claim
A Creditor, other than a Governmental unit, must file its Proof of Claim within 90 days after the after the first date set for Creditor's Meeting in Order to share in payments from the Bankruptcy Estate.
180 Days After Bankruptcy Filed
Deadline for Governmental Unit to File Proof of Claim
A Governmental Unit, such as the Internal Revenue Service, must file its Proof of Claim during the pendency of the case in Order to share in payments from the Bankruptcy Estate.
3 Years from First Plan Payment
Minimum length of payments under Chapter 13 Plan
Unless all allowed Claims are paid sooner, Plan payments must continue for the 3 year period from the due date of the 1st payment under the Plan. During this period, the Plan must provide that all of the Debtor's projected Disposable Income is committed to the Plan.
Discharge Granted in Chapter 13
Upon completion of plan payments the discharge in Chapter 13 is entered.
5 Years from First Plan Payment
Maximum Length of Payments Under Chapter 13 Plan
The maximum length of a Chapter 13 Plan is 5 years .After the 3rd year the Plan no longer needs to require that all of the Disposable Income be committed to the Plan.
TERMINOLOGY
A
Adversary Proceeding:
A Lawsuit filed in the Bankruptcy Court related to the Debtor's Bankruptcy case. Examples are Complaints to determine the Dischargeability of a Debt and Complaints to determine the extent and validity of Liens.
Automatic Stay:
The Injunction issued automatically upon the filing a Bankruptcy Case, which prohibits certain Collection actions against the you, the Debtor, the Debtor's property, or the property of the Bankruptcy Estate.
Avoidance:
The Bankruptcy Code permits the Debtor to eliminate (avoid) some kinds of Liens that interfere with (or impair) an Exemption claimed in the Bankruptcy. Most Judgment Liens that have attached to the Debtor's home can be avoided if the total of the Liens (Mortgages, Judgment Liens and Statutory Liens) is greater than the value of the property in which the Exemption is claimed. This is sometimes called "Lien Stripping."
Avoidance Powers:
Rights given to the Bankruptcy Trustee or the Debtor-in-Possession to recover certain transfers of property such as Preferences or Fraudulent Transfers or to void Liens created before the filing your Bankruptcy Case.
B
Bankruptcy
A condition where a Debtor cannot pay Debts now or as they become due, and uses the protection of the Law to Re-Organize their financial affairs by liquidating certain property or formulating a Re-Ppayment Plan to satisfy their Debts.
Bankruptcy Code:
Title 11 of the United States Code governs Bankruptcy proceedings. Bankruptcy is a matter of Federal Law and is, with the exception of Exemptions, the same in every State. When Federal Bankruptcy Law conflicts with State Law, Federal Law prevails.
Bankruptcy Estate:
The Estate is ALL of the legal and equitable interests of the Debtor as of the filing of Bankruptcy of the case. From the Bankruptcy Estate, an individual Debtor can claim certain property Exemptions; the balance of the Estate is liquidated in a Chapter 7 to pay the administrative costs of the proceeding and the claims of Creditors according to their priority.
C
Chapter 7:
The most common form of Bankruptcy. A Chapter 7 case is a liquidation proceeding available to individuals, married couples, partnerships and corporations.
Chapter 11:
A Re-Organization proceeding in which the Debtor may continue in business or in possession of its property as a Fiduciary. A confirmed Chapter 11 Plan provides for the manner in which the claims of Creditors will be paid in whole or in part by the Debtor.
Chapter 12:
A simplified Re-Organization Plan for family farmers whose Debts fall within certain limits. Chapter 12 was not renewed when it expired this session of Congress.
Chapter 13:
A Re-Payment Plan for individuals with Debts falling below statutory levels which provides for Re-Payment of some or all of the Debts out of future income over 3 to 5 years.
Collateral:
The property, which is subject to a Lien. A Creditor with rights in collateral is a Secured Creditor and has additional protections in the Bankruptcy Code for the claim Cecured by Collateral. The measure of the Secured claim is the value of the Collateral available to Secure the Claim. It is possible to have a Lien on property that is subject to a Senior Lien or Liens such that the security available to pay the claim is really without value to the Junior Creditor. The general rule with respect to Liens is "First in time, first in right."
Confirmation:
The Court Order, which makes the terms of the plan for Re-Payment of Debts in a Chapter 11, 12 or 13 binding. The terms of the Confirmed Plan replace the Petition rights of the Debtor and Creditor.
Conversion:
Cases under the Code may be converted from one Chapter to another Chapter; for example, a Chapter 7 case may be converted to a Chapter 13 if the Debtor is eligible for Chapter 13. Even though the Chapter of the Code which governs it changes, it remains the same case as originally filed.
Creditor:
The person or organization to whom the Debtor owes money or has some other form of Legal obligation.
Creditors meeting:
A meeting required under Section 341 of the Bankruptcy Code, conducted by the Trustee, and where the Debtor can be examined concerning Assets, Finances or Improper Conduct having a bearing on the case. This is also referred to as the 1st Credito#SYMBOL \f "WP TypographicSymbols"61s Meeting, or just Creditor#SYMBOL \f "WP TypographicSymbols"61s Meeting.
D
Debtor:
The Debtor is the entity (person, partnership or corporation) who is liable for Debts, and who is the subject of a Bankruptcy case.
Debtor-in-Possession:
In a Chapter 11 case, the Debtor usually remains in possession of its Assets and assumes the duties of a Trustee. The Debtor-in-Possession is a Fiduciary for the Creditors of the Bankruptcy Estate, and owes them the highest duty of care and loyalty.
Default
A failure to perform a Legal obligation imposed by Law or Contract.
Denial of Discharge:
Penalty for Debtor misconduct with respect to the Bankruptcy case or Creditors as a whole. The grounds on which the Debtor's Discharge may be denied are found in 11 U.S.C. 727. When the Debtor's Discharge is denied, the Debts that could have been Discharged in that case cannot be Discharged in any subsequent Bankruptcy. The administration of the case, the liquidation of Assets and the recovery of avoidable Transfers, continues for the benefit of Creditors.
Discharge:
The Legal elimination of Debt through a Bankruptcy case. When a Debt is Discharged, it is no longer Legally enforceable against the Debtor, though any Lien which secures the Debt may survive the Bankruptcy case.
Dischargeable:
Debts that can be eliminated in Bankruptcy. Certain Debts are not Dischargeable; that is, they may not be Discharged through Bankruptcy or may only be Discharged through Chapter 13. Family Support and CriminalRrestitution are examples of Debts, which cannot be Discharged. Debts incurred by Fraud can only be Discharged in Chapter 13.
Dismissal:
The termination of the case without either the Entry of a Ddischarge or a Denial of Discharge; after a case is Dismissed, the Debtor and the Creditors have the same rights as they had before the Bankruptcy case was filed.
E
Equity
The value of property to its owner after all Liens and encumbrances are satisfied and the costs of sale paid.
Exempt:
Property that is Exempt is removed from the Bankruptcy Estate and is not available to be used to pay the claims of Creditors. The Debtor selects the property to be Exempted from the Statutory Lists of Exemptions available under the Law of his State. The Debtor gets to keep exempt property for use in making a fresh start after Bankruptcy.
Exemptions:
Exemptions are the lists of the kinds and values of property that is legally beyond the reach of Creditors or the Bankruptcy Trustee. What property may be Exempted is determined by State and Federal Statutes, and varies from State to State.
F
Fiduciary:
One who is entrusted with duties on behalf of another. The Law requires the highest level of good faith, loyalty and diligence of a Fiduciary, higher than the common duty of care that we all owe one another. The Debtor-in-Possession in a Chapter 11 is a Fiduciary for the Creditors, owing loyalty to the Creditors and not the shareholders of the Debtor.
Foreclosure:
A forced sale of real estate by a Creditor to satisfy a Defaulted Mortgage, delinquent Property Taxes or a Judgment.
G - K
Judgment
The legal outcome resulting from a Court action determining that a Liability does or does not exist.
General, Unsecured Claim:
A creditor's claim without a priority for payment for which the creditor holds no security (or collateral). If the available funds in the estate extend to payment of unsecured claims, the claims are paid in proportion to the size of the claim relative to the total of claims in the class of unsecured claims.
L - M
Lien:
An interest in Real or Personal Property which Secures a Debt; the Lien may be voluntary, such as a Mortgage in Real Property, or involuntary, such as a Judgment Lien or Tax Lien.
Liquidated:
A Debt that is for a known number of dollars is liquidated. An unliquidated Debt is one where the Debtor has Liability, but the exact monetary measure of that Liability is unknown. Tort Claims are usually unliquidated until a Trial fixes the amount of the Liability of the Tortfeasor.
Mortgage
A Lien on Real Estate.
N - O
Non-dischargeable:
A Debt that cannot be eliminated in Bankruptcy. Non-dischargeable Debts remain legally enforceable despite the Bankruptcy discharge. Personal Property: Property that is not Real Property or affixed to Real Property, such as Cars, Stock, Furniture, etc.
P - Q
Petition:
The document that initiates a Bankruptcy case. The filing of the Petition constitutes an Order for Relief and institutes the Automatic Stay. Events are frequently described as "Pre-Petition", happening before the Bankruptcy Petition was filed, and "Post Petition", after the Bankruptcy.
Preference:
A transfer to a Creditor in payment of an existing debt made within certain time periods before the commencement of the case. Preferences may be recovered by the trustee for the benefit of all creditors of the estate.
Pre-petition:
Claims or events arising before the commencement of the Bankruptcy case, that is, before the filing of the Bankruptcy petition. Generally only pre-petition debts may be discharged in a Bankruptcy proceeding.
Priority:
The Bankruptcy Code establishes the order in which claims are paid from the Bankruptcy estate. All claims in a higher priority must be paid in full before claims with a lower priority receive anything. All claims with the same priority share pro rata. Claims are paid in this order:
Costs of administration;
Priority claims; and
General unsecured claims.
Secured claims are paid from the proceeds of Liquidating the Collateral, which Secured the Claim.
Priority Claims:
Certain Debts, such as unpaid Wages, Spousal or Child Support, and Taxes are elevated in the payment hierarchy under the Code. Priority claims must be paid in full before general Un-Secured claims are paid.
Proof of Claim:
The form filed with the Court establishing the Creditor's Claim against the Debtor.
Property of the Estate:
The property that is not Exempt and belongs to the Bankruptcy Estate. Property of the Estate is usually sold by the Trustee and the claims of Creditors paid from the proceeds.
R
Reaffirm:
The Debtor can chosen to Re-Affirm Debts that would otherwise be discharged by the Bankruptcy. Generally, when a Debt is Re-Affirmed, the parties to the Re-Affirmed Debt have the same Rights and Liabilities that each had prior to the Bankruptcy filing; the Debtor is obligated to pay and the Creditor can sue or Repossess if the Debtor doesn't pay. Debtor is not protected on Re-Affirmed property by the Bankruptcy.
Reaffirmation Agreement:
A Re-Affirmation Agreement is an Agreement by which a Bankruptcy Debtor becomes Legally obligated to pay all or a portion of an otherwise Dischargeable Debt on the Re-Affirmed property. Such an Agreement must be timely filed by the Debtor within 60 days after the first date set for the Creditor#SYMBOL \f "WP TypographicSymbols"61s Meeting.
Re-Affirmation Agreements are strictly voluntary. They are not required by the Bankruptcy Code or other State or Federal Law. A Debtor can voluntarily repay any Debt instead of signing a Re-Affirmation Agreement, but there may be valid reasons for wanting to Re-Affirm a particular Debt.
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Since a reaffirmation agreement takes away some of the effectiveness of the debtor's discharge, it is advisable to seek legal counsel before agreeing to a reaffirmation. Even if the debtor signs a reaffirmation agreement, the debtor has 60 days after the agreement is filed with the court to change his/her mind. If the debtor's discharge date is more than 60 days after the agreement is filed with the court, the debtor has until the discharge date to change his/her mind. If the debtor reaffirms a debt and fails to make the payments as agreed, the creditor can take action against the debtor to recover any property that was given as security for the loan and the debtor may remain personally liable for any remaining debt. Therefore a reaffirmation agreement should not be entered into without careful consideration of your responsibilities and knowledge of the right to rescind or cancel the agreement within sixty days.
Relief From Stay:
A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. If the motion is granted, the moving party (but no one else) is free to take whatever action the court permits. Relief can be absolute, for example, permitting the creditor to foreclose on property, or limited, as for example, allowing the recordation of a notice of default.
S
Schedules:
The debtor must file the required lists of assets and liabilities to commence a Bankruptcy case, collectively called the schedules.
Secured Debt:
A claim secured by a lien in the debtor's property by reason of the debtor's agreement or an involuntary lien such as a judgment or tax lien. The creditor's claim may be divided into a secured claim, to the extent of the value of the collateral, and an unsecured claim equal to the remainder of the total debt. Generally a secured claim must be perfected under applicable state law to be treated as a secured claim in the Bankruptcy.
T
Trustee:
The court appoints a trustee in every
Chapter-7 and
Chapter-13 case to review the debtor's schedules and represent the interests of the creditors in the
Bankruptcy case. The role of the trustee is different under the different chapters.
U - Z
Unsecured:
A claim or debt is unsecured if there is no collateral that is security for the debt. Most consumer debts are unsecured.
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