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107 Things You Need to Know Before You File Bankruptcy An Important Message to the Readers This free book provides information from the knowledge and viewpoint of a bankruptcy paralegal. However, laws and procedures change frequently, and they can be interpreted differently by different people. For specific advice geared to your particular financial situation, consult a qualified bankruptcy attorney. No book, software, or other published material is a substitute for personalized advice from a knowledgeable attorney licensed to practice law in your state. Who Will Benefit From This Book This book that you downloaded from our website at http://www.unBusinessnet is dedicated to helping the following types of people: (a) Consumers — people who are interested in learning more about bankruptcy and/or interested in filing their own bankruptcy petition. (b) Paralegals — legal professionals working for an attorney/boss who is considering offering bankruptcy services to clients and are unfamiliar with some of the basic procedures. (c) Attorneys — legal professionals who do not normally offer bankruptcy services to clients, but are interested in doing so. Overview of Filing Bankruptcy A person just doesn’t wake up one morning and say, “Hey, I think I will file bankruptcy today.” Instead, it is normally a long process of worry, struggle and guilt before people reach this point. However, the decision to file bankruptcy is the legal right of every citizen in the United States. To give you a quick history lesson — the bankruptcy law is derived from the same type of laws the Jewish nation enacted back in the Old Testament period. Every 7 years their debts would be forgiven and they could start fresh. (It was called the “Year of Jubilee.) These laws were not enacted because the society wanted to be “nice and generous people”; it was done because they knew that keeping people under debt forever was not good for their society as a whole. By “forgiving” debts every 7 years, those experiencing the heavy burden of debt could now afford to put money back into the economy and hopefully stay out of debt so the problem did not occur again — thereby causing the society as a whole to grow and prosper. Our United States government also knows that if there was no way to forgive heavy, burdensome debts, many people would eventually end up on welfare just to survive, thereby raising taxes, causing high unemployment, effecting prices and causing other companies to go out of business because the majority of people couldn’t afford to buy their products or much less, anything else — even if they wanted to. This situation would eventually collapse the economy of our society, so the bankruptcy law was established to keep our economy balanced. Therefore, don’t believe everything your friends, neighbors and high-pressured debt relief companies tell you. Instead, read the information in this book and ask questions of competent bankruptcy attorneys who are available free of charge on the internet or through a group of legal professionals such as Pre-Paid Legal. Note: Most bankruptcy attorneys provide a free initial consultation, so feel free to consult with one about your particular financial situation who practices law in your state and jurisdiction. Or, feel free to visit The Lawyer Assistant’s website at http://www.lawyerassistant.com/directory/attorneys_online.html. Always remember that the “fear of the unknown” is a natural reaction for human beings who are unsure about a subject. Most people are deeply concerned that they will lose their home, cars or furniture if they file bankruptcy. Although, filing bankruptcy may not necessarily be for everybody, as you will soon see; but after reading this book, you will be in a better position to make an educated decision about your present financial condition. If you decide to go ahead with the process of filing bankruptcy, at least you will know what to normally expect after reading this book. Of course, I cannot cover every possible situation or scenario and this information should only understood as general, not specific to your personal situation. 1. How to Help You Determine if You Should File Bankruptcy: An attorney provided me with the information below to include in this book. He uses it in his client brochure and we feel it is a good “starting point” in looking objectively at your current financial situation. Do you have less than $500 per month left after you pay your normal living expenses (rent, car payment, food, clothing, insurance and utilities)? Do your debts mainly consist of credit cards, medical bills, repossessions, and/or wage garnishments? Have you recently lost your job, or had a decrease in your normal income due to medical or personal problems? Have you recently divorced or separated from your spouse and the debts are too much for you to handle? However, if you possess many assets with higher cash values — I strongly urge you to seek the advice of a bankruptcy attorney in your area. (Check your local phone directory and call each one until you locate an attorney that specializes in bankruptcy law; preferably one that does nothing except debtor bankruptcy.) The reason for this is because if you have a large amount of money in assets (items you own free and clear), you may be asked to have those items appraised and a portion of that money paid by you to satisfy some of the creditors you owe money to. In a situation like that, a good bankruptcy attorney can help you to protect more of your assets than a paralegal has power to do. But, regardless of your financial situation, I hope you enjoy reading this book because it will help you understand more about the general bankruptcy process. Then you can decide which direction is best for you to go in at this time. 2. How Difficult is it to File A Bankruptcy Petition? Filing a bankruptcy petition is as simple as taking the original and six (6) copies of your entire bankruptcy petition to the Bankruptcy court in your area. You will simply walk up to the desk of the Clerk of Court, hand him/her your paperwork and pay the required filing fee. (Chapter 7, $200; Chapter 13, $185.) The Clerk will look through your petition to make sure you have all the papers in order. He/she will then place them into a machine that stamps the current date and time. (Some smaller courts use a hand stamp and others use a rubber stamp and hand writes the date and time on the blank line.) The Clerk will keep the original and 2-3 copies for their own use. They will hand you back the extra copies for you to keep and make copies of (if needed) by creditors who request it. A Judge will also be assigned to your case at this time. The whole process of filing your own bankruptcy petition normally only takes about 10 minutes to complete (about the same amount of time it takes to renew your driver’s license.) But the very moment your bankruptcy petition is stamped with the date and time by the Bankruptcy Court, you have just put into effect a type of “umbrella” for yourself. This is called the “bankruptcy stay” law. What this means is that: Any company or person(s) you owe money to is not permitted to contact you in any way (once they receive notice in the mail from the court) without petitioning the Bankruptcy Court to remove the “bankruptcy stay” (which you would have advance notice of, if it occurred, and be allowed time to answer the motion.) Any wage garnishments taken out of your check will cease to be lawful. If the garnishment is taken out of your check after you file bankruptcy you may be entitled to a refund. Any foreclosure or replevin action currently taking place on your home or other property is stopped. Money judgments can NEVER be collected from you if you surrender your home or property, but the creditor may still petition the court to remove the “bankruptcy stay” (depending on the circumstance) in order to try and repossess the home or piece of property. Again, you would receive a notice from the court before any repossession takes place during the course of your bankruptcy filing. Any Sheriff’s sales are stopped immediately. Any taxes you owe that are currently being collected on by the government are put on hold (while your debts are being reorganized.) 3. Some Terms You Need to Know Concerning Bankruptcy 4. Creditor — This is the person or company you owe money to because they extended credit to you. 5. Debtor — This is YOU. You owe debts, so you are a debtor. 6. Secured Debt — This is a debt you owe for an item that could be taken away from you if you don’t pay the bill. For instance, if you don’t make your house payment, the creditor (or bank) you owe can repossess your house. 7. Unsecured Debt — This is a debt you owe for something that CANNOT be taken away from you. For instance, anything you charge on a credit card is an “unsecured debt.” If you don’t pay the MasterCard bill this month, they cannot come and take whatever you bought with the credit card. All they can do is harass you on the telephone until you pay the bill, turn the bill over to a collection agency, or attempt to get a judgment against you (depending on the amount you owe them.) 8. Asset — This is something you own that has a value. An asset can be something as small as a set of carpenter’s tools, a security deposit with a landlord or utility company, your 401K plan -- all the way to your home and car. In other words, anything you own that can be converted to cash is an asset -- even if the value is only $1.00. 9. Real Property — Real property is considered anything that is attached to God’s green earth. A mobile home is normally not attached to the earth because it sits on wheels. Therefore, a mobile home is considered personal property unless the wheels have been removed and it physically sits on the earth. 10. Personal Property — Personal property is everything else you own that is not real property. 11. Bankruptcy Discharge — This is a notice you receive from the bankruptcy court letting you know your case is ended. A bankruptcy can end because the Trustee files a motion to either dismiss the case, convert it to another Chapter, or the Judge discharges the debts and/or approves the Chapter 13 plan of repayment or Chapter 7 filing. 12. Reaffirmation Agreement — This is an agreement filed with the Bankruptcy Court when you want to continue paying the debt and the creditor agrees to the payment terms. This agreement will contain the names of both parties, the total amount owed to the creditor, the interest rate, payment terms, etc. Reaffirmation Agreements are normally used for mortgages and motor vehicles so you can keep the collateral and make payments. The creditor will normally initiate the Reaffirmation Agreement when they receive a notice from the court that you want to continue paying the debt. Other creditors will bring the Reaffirmation Agreement with them to the 341 Meeting of Creditors. If you are up-to-date on your payments, most creditors will agree to a Reaffirmation Agreement. Where you may run into problems is if you are behind in payments and are financially unable to catch them up before your 341 Meeting of Creditors. Of course, this all depends on the creditor, the type of debt, value of your property and your payment history with the creditor. 13. Conversion — A conversion occurs when you file one Chapter of bankruptcy and convert over to another Chapter after you have filed. (Example, you file for Chapter 7 but decide to convert to Chapter 13 so you don’t lose any assets.) 14. Exemption — Many people are afraid to file bankruptcy because someone told them they will lose everything they own. This is not true! There are a variety of exemption allowances allowed by the Bankruptcy Court to protect the assets you own. Each state has its own set of exemption allowances. These exemptions are necessary to help you to continue living a normal life and not be stripped of everything you own. For instance, you need a house to live in, a car to drive, clothes to wear and furniture in your home to continue living a normal life. The law allows you to keep these types of items by allowing exemptions for them. When anything you own is totally exempt from the bankruptcy, no one can take it away from you because the court will rule you need that asset to maintain a normal life. However, exemptions do not cover everything. If you have a home for example appraised at $100,000 and you owe $50,000 to the mortgage company, you will have $50,000 in equity. If your state exemption allowance is only $25,000 -- you will have $25,000 left in “unexempt” equity that may be requested by the bankruptcy court to divide between your creditors. Of course, this is only a general example, but it is given to help you understand what exemptions are and how they work. 15. Automatic Stay — The moment a bankruptcy is filed stamped by the clerk at the bankruptcy court, all creditor activity to collect debts, obtain judgments, or obtain your property to satisfy a debt is completely stopped and put “on hold.” This is the protection provided to you as a person or company under the Bankruptcy law in the United States. 16. Relief From Stay — This is a court order, requested by a creditor, who asks the court to lift the “Automatic Stay” that was immediately put in place when you filed your bankruptcy petition. If a creditor is granted a “Relief from Stay,” the debtor (you) will receive notice from the court of its existence and the bankruptcy attorney can prepare a Motion on the debtor’s behalf to request the court to remove the Relief from Stay. (Of course, there must be a lawful reason to do so.) 17. Trustee — This is a real “live” person that works for the Bankruptcy Court. When you attend your 341 Meeting of Creditors, you will meet the Trustee assigned to your case. He/she will review your bankruptcy petition, ask you some questions, ask questions of any creditors who may be present, and then tell you if he/she needs any additional documents from you before recommending your case for confirmation to the Judge. The Trustee is an impartial person who works for the benefit of the creditor as well as for the debtor (you). 18. Dismissal — Among other things, your bankruptcy case can be dismissed at any time if you fail to comply to any rules, don’t turn over asset monies that are requested by the Trustee or if you convert from one Chapter of bankruptcy to another. Your case is “discharged” if you completely pay off your Chapter 13 or when your Chapter 7 is legally finished. Facts About Chapter 7 Bankruptcy 19. In order to be eligible to file a Chapter 7 bankruptcy, you must be able to meet the following guidelines: You must reside or have a domicile, a place of business, or property in the United States. You must not have received a bankruptcy discharge within the last six (6) years or have had a bankruptcy case dismissed within the last 180 days. 20. People who file a Chapter 7 bankruptcy do so in order to discharge their debts and get a “fresh start” in life. There are no income requirements to file a Chapter 7 and people who file this type of bankruptcy are those who can no longer afford to repay all their debts due to illness, unemployment, marital problems, unexpected medical expenses, over-extended credit or other large expenses. However, not all debts can be discharged. For example, alimony, student loans, child support and taxes that are less than 3 years old are non-dischargeable and must be repaid in full. 21. Most consumers file a Chapter 7 bankruptcy and then reaffirm on the debts they want to continue paying. For instance, you can file a Chapter 7 and reaffirm on your house. This could possibly erase your other debts and you would continue making your house payments like you normally do now, outside the bankruptcy. (Note: There is pending legislation currently being debated in Washington D.C. to change this law, making it harder for people to file a Chapter 7 and forcing them to file a Chapter 13 instead and pay back a portion of the money they owe to creditors. However, as of August 2002, this law is still pending. If the law is changed, the changes will not go into effect for 180 days after it is signed by the President.) Facts About Chapter 13 Bankruptcy 22. In order to be eligible to file a Chapter 13 bankruptcy, you must be able to meet these guidelines: You must reside or have a domicile, a place of business, or property in the United States. Have a steady source of income so that you can make regular payments to the Trustee. The total amount of your debts cannot exceed $750,000.00 and unsecured debts cannot be more than $250,000.00. 23. People who file a Chapter 13 bankruptcy do so in order to keep property in which a creditor has a lien — like a house or car, or if payments are behind and the creditor is about to foreclose or repossess the property. The filing of a Chapter 13 will stop the foreclosure sale and allow the person 3 to 5 years to repay some, but not all of their debts. Rather than wiping out all their debts in a Chapter 7 proceeding, Chapter 13 allows a person to reorganize and pay a certain percentage of their debts over a period of 3 to 5 years. The unpaid balance is discharged after the payment plan is completed. Payments are made from each paycheck to the Chapter 13 Trustee, normally through employer wage deduction. 24. A Chapter 13 is NOT a bill consolidation loan, although many people look at it that way. Although it is a similar concept, a bill consolidation loan is money actually loaned to you to repay other creditors and you in turn pay back the lender. In a Chapter 13, no money is loaned to you because you make your monthly payments to the Bankruptcy Trustee, who disburses the money among your creditors. 25. Filing a Chapter 13 or Chapter 7 is different from going through a consumer debt counseling service because the bankruptcy law stops all “late fees” and other fee-based charges added by unsecured creditors. Consumer credit counseling centers cannot provide this protection and although you may make your payments, the unsecured creditors still add late fees and other fee-based charges as stipulated in the agreement you signed when you obtained credit. 26. Your priority claims are paid first in a Chapter 13. Priority claims include debts for things like taxes, child support, etc. 27. The amount you owe unsecured creditors, like medical bills, credit cards, etc. can normally be paid back as low as 10¢ on the dollar. (This figure is not written in stone. It is subject to change depending on your individual state laws, type of debt it is, as well as the income and budget of the debtor.) 28. You are allowed to keep your home, car and everything else you own when you file a Chapter 13 as long as you make regular payments to the Chapter 13 Trustee. 29. Your attorney or paralegal will also file a Chapter 13 Plan with your bankruptcy petition that details the amount of your monthly payments and the length of time you are going to be in the Chapter 13 Plan. 30. This amount you pay each month to the Chapter 13 Trustee is determined by the amount of money you currently make and how much money you need to live on each month. A good Chapter 13 bankruptcy attorney or his/her paralegal is skilled at balancing these two figures so you can easily afford the Chapter 13 payment each month. It is not to the advantage of the attorney or paralegal to give you a payment you can’t afford. This would cause problems later down the road. So don’t be afraid that your payment will be too high for you to afford. The payment will be based on your particular circumstances. Changes in Payments During a Chapter 13 Bankruptcy 31. Nothing stays the same. During the 3-5 years that you are making regular payments to the Chapter 13 Trustee anything could happen. You may lose your job. Your spouse may lose their job. You may have a new baby, which brings on added expenses. You may inherit some money. Your old car may conk out and you will have to replace it in order to continue getting back and forth to work. In fact — a million different things could happen, which means your Chapter 13 payment can be lowered or raised depending on the circumstance. For most people, when something occurs where they cannot make a Chapter 13 payment one month, will simply not pay it. This is a very bad idea. All you need to do is contact your attorney and ask them to file a Motion to Modify the Chapter 13 Plan. You will need to go to their office and supply the attorney with new, updated income and budget information, which explains why you cannot make your normal Chapter 13 payment. It will take a couple of months to get all the paperwork approved through court, but it will save you from defaulting on your Chapter 13 payments and enable you to stay in the Plan. 32. If you need to go into debt and purchase something on credit while you are going through a Chapter 13 bankruptcy, your attorney can file a Motion to Incur Debt for you if the item is necessary for you to maintain a normal life. This will allow you the needed money to purchase the item. (Example: Sell one car and purchase another one.) Chapter 11 Bankruptcy 33. Chapter 11 is similar to a Chapter 13, but it is used by larger businesses or individuals with a large amount of assets or debts that exceed one million dollars. In a Chapter 11 bankruptcy you are allowed to still operate your business but your creditors and the court must approve a plan to repay your debts. There is no Trustee unless the judge decides that one is necessary; however, if one is appointed to a Chapter 11 case, the Trustee will take control of the business and property. (Note: I will not be covering Chapter 11 in this book because most consumers file a Chapter 7 or Chapter 13 bankruptcy. Please consult with an attorney if you are interested in filing a Chapter 11.) Steps That Occur IN Either a Chapter 7 or Chapter 13 Bankruptcy 34. After your bankruptcy petition is filed, the bankruptcy court will send a notice to all the creditors listed on your creditor’s matrix (people/companies you owe money to with their complete addresses.) This notice is normally mailed out 5 days after you file your petition. 35. If you owe any secured creditors (mortgage company, automobiles, furniture stores, etc) you are required to notify them yourself. This is done by making a copy of the Certificate of Service and Statement of Intentions (two legal papers included in your bankruptcy petition) and mailing them directly to the creditor. You are required by law to notify these “secure” creditors immediately after filing your petition, hopefully before the Bankruptcy Court notifies them through normal process. 36. The Bankruptcy Court will also normally mail you a notice informing you that you are eligible to file bankruptcy and what documents to bring with you to your 341 Meeting of Creditors. Do not become confused when you receive this notice. You don’t have to do anything but keep it in your personal file and wait on the notice that tells you the date and time of your first hearing with the Trustee (see below.) 37. The Bankruptcy Court will then send all your creditors, including you, a notice informing you of the hearing date when you should appear in court. This hearing is often referred to as the “Meeting of Creditors” or “341 Meeting.” 38. At your Meeting of Creditors a judge is normally never present. Instead, the Trustee will review your bankruptcy petition and ask you specific questions about it. You may be asked to provide him/her with copies of your tax returns, bank statements, pay check stubs, titles to motor vehicles, an appraisal of your home (if you own one) along with a recorded mortgage and deed; or the Trustee may be satisfied with your detailed bankruptcy petition and not request anything at all. That decision is up to the particular Trustee your case is assigned to as well as the accuracy and detail of your petition. 39. In most “no asset” cases, creditors rarely appear at these hearings; however, a representative from one of the companies you owe, or a person you owe, may show up at this meeting. They normally only make an appearance to ask where the secure item is and if it is insured. Normally, their conversation is with the Trustee only, but be prepared to answer their questions if necessary. Note: A “no asset” case means that you have no money left in your approved monthly budget to distribute among your creditors. Since there is nothing for an unsecure creditor to take, they would rather write off the debt versus spending time appearing in court and not get anything anyway. Normally, the only creditors who appear at the 341 Meeting of Creditors are secure creditors who have a secured interest in your real or personal property. 40. If your bankruptcy petition is detailed and provides all the information the Trustee requires, this meeting (hearing) will normally only last 5-10 minutes. Remember, you are not going to court because you committed a crime and have to appear in front of a judge. Filing for bankruptcy was a “voluntary” choice you made. You have committed no crime unless you fraudulently attempt some criminal act such as hiding your assets, committed tax fraud, etc. In this case, the Trustee would notify the proper authorities. Therefore, make sure you reveal every debt and asset in your bankruptcy petition or you could be answering possible fraud charges. Some Reasons Why You Should Not Cheat in Bankruptcy After preparing 1,000s of bankruptcy petitions and interviewing 100's of clients who want to file bankruptcy, believe me, I have ran across almost every trick in the book to conceal assets. Below are a few that may help you to avoid the same temptation: 41. Not Revealing All Motor Vehicles Titled in Your Name The Bureau of Motor Vehicles can instantly access a list of all motor vehicles titled in your name so there is no way you can cheat by not listing every one of them on your bankruptcy petition. Besides, it is doubtful they will be taken away from you anyway because most people who have several motor vehicles only rely on one particular one to get them back and forth to work, which is normally the one they are making payments on. Besides, motor vehicles with no equity do not have to receive the exemption allowance and this allowance can be applied to another motor vehicle already owned free and clear. In fact, in most instances, the other motor vehicles titled in your name may not be running or their market value is so low that no Trustee would bother selling them in order to obtain money to pay the creditors. To check the value of your automobile, go to the Kelly Blue Book website at http://www.kbb.com/ and look up the "trade in" value, which is lower than the resell value. 42. Not Listing the Money Your Live-In Partner Brings Into the Home I have had many divorced women fill out their bankruptcy petition, write down that they have no income but they pay rent, utilities and other living expenses. My first question is "How can you pay these debts if you have no income?" Oftentimes, it is because they have a live-in partner or roommate who pays the bills. It is perfectly okay if a live-in partner is paying the bills while you are unemployed or living on other types of government assistance. Your bankruptcy petition will simply list all your normal living expenses on Schedule J and on Schedule I under "other income" and list the amount the live-in partner contributes to pay these bills. This will balance out Schedule I and J of your bankruptcy petition to most likely a balance of $0.00. 43. Not Listing Small Business Income Because You Didn't File Income Taxes Although we all know it is illegal to not file income taxes if you are making an income being self-employed, some people still do this because they are barely making enough money to label their enterprise a business.. But what happens if you no longer can pay your bills and you are forced to file bankruptcy? Will the Internal Revenue Service come knocking down your door and haul you to jail? Very unlikely! All you have to do is go to the IRS website at http://www.irs.gov and download the tax forms for the last 2 years; fill them out and file your taxes according to law. Besides, it is very rare that you will owe a lot of taxes if you had a small home business that never made any money. It is very common for home businesses to make the same amount of money as their business expenses, resulting in little or no actual business income. By providing the IRS with a list of your business expenses, which normally offset the income you brought in, you will probably not be paying a lot of taxes anyway for those years you didn't file. Besides, you will have the option of making payments on any taxes you owe to the IRS. (Naturally, if you made a larger business income than you have expenses you would pay more taxes, but it is unlikely not enough money for the IRS to take you to jail and charge you with tax evasion, so relax.) 44. Not Providing Information About Tickets and Crimes Some people would rather just pay their fines and not reveal this information in a bankruptcy petition. While it may be an embarrassing situation that you want to forget about, by including these debts as a priority unsecured debt, additional money can be added to your monthly budget allowing you to keep paying those fines and reducing the money you have left every month to pay your creditors. For instance, if you are paying $50 per month for a fine, this $50 will be added to Schedule J as a budgeted monthly expense and that is $50 less the creditors can attempt to take away from you. 45. Not Revealing Back Child Support Owed Almost every state in the U.S. provides an unlimited exemption allowance for back child support owed to you. Even if it is court ordered child support, and/or uncollectable, it will be to your benefit to reveal it on your asset pages. Besides, the truth will come out and if you should happen to receive the money and you have not declared it on your bankruptcy petition, the entire amount (or a large portion) may be demanded by the Bankruptcy Court. By listing the child support and exempting the entire amount in your petition, this asset is more than likely safe and secure. 46. Overstating Your Monthly Living Expenses People who do not understand the bankruptcy law will sometimes "beef up" their living expenses so it will appear that they have no money left at the end of the month, thinking this will help them to wipe away their debts. By doing this, they feel they will do themselves a favor; but instead they do more harm. I had a lady one time who said she spent $600 per month on clothing. The income she reported was $2,400 per month. I could not think of any job paying only $2,400 per month that would require her to purchase $600 per month in clothing. Unless she is a celebrity that is ordered under contract to spend this much money on clothing every month, the Trustee did not accept it and disallowed the expense. This in turned caused the Trustee to question her entire petition and the case was delayed for 8 months while the client gathered paperwork and other documents to prove the validity of the rest of her bankruptcy petition. So, tell the truth and you will have nothing to worry about. In addition, I had another client who claimed he spent $120 per month in long distance calls to his friends and relatives. You cannot expect the Bankruptcy Trustee to allow a telephone expense of this high amount. If this is your situation, you will have to ask your friends and relatives to start calling you, or find out how to send them email for communicating. Normal telephone expenses are the basic charges, not long-distance. That is an expense not necessary for your survival. So be truthful about your normal living expenses. If not, the Trustee will question the expense, ask you to prove and/or disallow it and delay your bankruptcy discharge; possibly even dismissing your case altogether. What Happens in a Foreclosure? If you are buying a home and are 2 months or more behind in your house payment, you need to start planning on doing something about it as soon as possible. If you do not anticipate being able to pay your mortgage for several months due to a sudden drop in income or other unusual circumstance, filing bankruptcy before the beginning of formal court proceedings will save you $100's, if not $1,000's of dollars in service fees, late fees and other fees mortgage companies will tack on to the total you owe them. In fact, by not doing anything and not making your monthly mortgage payment, you may discover that you owe the creditor more than the original loan amount after all the late fees and extra charges are added on. However, if you have found you are several months behind in our mortgage payment and/or you are interested in the procedure of foreclosing on your home, below is the normal procedure followed by creditors to foreclose on your property: 47. Complaint is Filed Before a creditor or mortgage company can begin the procedure of taking possession of your home, they have to file a Complaint, Motion and Affidavit with the Common Pleas court in the county where your home is located. A copy of your signed contract and mortgage or title is attached to the Complaint to prove that the mortgage company has the right to foreclosure on your home. You will receive a copy of these documents when they are filed, which is called "serving the Complaint." A Hearing Notice is also enclosed allowing you five (5) days to request a hearing to dispute the debt. Of course, if you know you owe the money you do not have to request a hearing, but requesting one can delay the foreclosure process because the court will have to appoint a hearing date in which you will appear and state your side of the story. The Judge will normally grant the Motion in favor of the creditor unless you can prove the debt or the amount owed is not accurate and the foreclosure proceeding will continue. Because Complaints are served by the court by certified mail and personal service, and must be properly served before the process can continue; some people will not accept certified mail thinking it will "buy them more time." However, the opposite is true. If good service cannot be obtained by certified mail, the Sheriff will be dispatched out to serve you the Complaint documents in person, which could be embarrassing. Ordinary mail service is also performed by the creditor filing a Praecipe with the Clerk of Court and if the post office does not return the piece of mail, the court considers this to be notice of proper service. After service of the Complaint and other documents are done, an Order is then sent to the Judge for his/her signature. Once the Order is obtained, the mortgage company will them begin the process of actually repossessing the home. 48. Filing Bankruptcy After Service of Complaint I have had several clients decide to file bankruptcy at this point because it can be a scary situation when the court or Sheriff serves foreclosure documents. However, it would have been to their advantage if they would have filed before this period of time. Even if past due arrears are owed on a home, these arrears can be included in the Chapter 13 bankruptcy petition and paid over a period of 3to 5 years, stopping all additional service and late fees. But, if you are in a situation where you have waited this long and decide to file bankruptcy now, the bankruptcy petition will delay the foreclosure procedure for a short period of time. This is because the creditor will only be able to repossess the home but will never be entitled to a money judgment because you filed bankruptcy. This causes the creditor to re-file additional paperwork with the court in order to proceed and will help the debtor "buy some time," especially if he or she is planning to surrender the home and get rid of the debt entirely. 49. The Next Step Repossessing a mobile home is different from foreclosing on real property (real property is anything attached to God's green earth.) That's because a mobile home is considered to be personal property. It is easy for a truck to hook up the mobile home and return it to the creditor, but that would be impossible for an actual home attached to a piece of land. Instead, real property must be sold and/or the title removed from your name. The foreclosure procedure for real property involves posting a notice in the newspaper, allowing time for bids and finally setting up a time for the Sheriff's sale. If payments have not been met to satisfy the creditor, the Sheriff will deliver a notice giving you a period of time (normally 30 days) to vacate the property. At this point, you better have a place to move to or money to pay all the past due payments, late fees and extra added-on charges. Sheriff's have been known to physically enter the home and set the furniture and anything else outside on the lawn in order to repossess the home because people still refuse to move after being given this "grace period" to move on their own. Again, this would be a very embarrassing situation for you and your family and will probably result in damage to your household goods and furnishings. 50. How Long Does All This Take? Because every mortgage company is different and has different collection methods, it could take from 2 to 9 months for everything to occur and you be ordered to move from the home. While it is not suggested that you live "rent free" in your home until the last minute before the Sheriff sets you out on the street, if you are severely behind in your mortgage payments and cannot afford to keep the house, use the next few weeks to save for a down payment on an rental and move as soon as possible. Or, if you want to keep the home, you can file a Chapter 13 bankruptcy as soon as you realize you are 2 months behind in your payments and include those past due payments in your Chapter 13 Plan so they will be paid with your other debts. That way, you can keep your home and not have to pay back the arrears that you may not be able to afford at this time in your life. Handling Collectors Lets face it. No one wants to receive a call from a collector who demands payment or else. One tactic many of them use now is to scare you into providing them with your credit card number so they can deduct the amount you owe them from your checking or savings account at regular intervals. Never give your credit card number or bank check routing number out to anyone over the phone. If you decide to pay a creditor in this manner, demand that a written statement be mailed to you which you will fill out and return with your sensitive information. The statement should contain the amounts to be deducted from your account and the dates they will deduct the payment. This is the only way to prove the collector will deduct the proper amount on the dates you verbally agree to. If the collector refuses to do this, ask to speak with their supervisor! The reason you don't want to provide credit card or bank routing information from your check over the phone is because anyone could call you up, pretend to be a collector and obtain this information. Then this person or company could clean out your bank account virtually overnight. And even if the collection agency is legitimate, there is nothing in writing and they could deduct more than you verbally authorized them to. Then, it would be your word against theirs and you will probably never get any money back for the additional money they deducted, especially since you owe that amount to the creditor anyway. 51. Why Are Collectors So Hateful? My girlfriend was a collector for a major credit card company at one time, so I know it is true that most collectors are paid their salary by the amount of money they collect. The majority of them could care less if you eat or live in a house without heat. Their only concern is forcing you to pay them (basically by scaring you) so they will receive a commission check on the amount of money you pay. In addition, most debts turned over to a collection agency by a creditor are purchased for a lower amount than the debt actually is for. For instance, I worked for a large department store one time and they sold their past due accounts for a price of only 10¢ on the dollar. In other words, if a person owed this company $1,000, they sold the debt to a collection agency for $100. Anything the collection agency collected over the $100 was pure profit for them. That is why you can often negotiate with collectors to pay back a lower amount than the actual debt is for. (Note: This is just a typical example and does not apply to all creditors and collection agencies.) 52. Credit Card Collectors From my personal experience, the most hateful collectors are ones that are collecting on credit card debts. However, a credit card is an unsecured debt. By that, I mean that if you don't pay the bill they cannot come to your house and take anything you own. If you used a Visa card to purchase a television set, Visa cannot come and take the item unless you signed a document putting the television up for collateral. However, if you are renting to own your television and don't pay the bill, the rent-to-own store has the right to repossess the item because you signed a contract providing them with that option if you get behind in payments. Let credit card collectors know up front that you are not scared of them taking any of your property because they are unsecured debts. If the collector is trying to intimidate you, ask to speak with their supervisor and tell them you are willing to work out a payment arrangement if they will talk to you in a business manner. Do not allow collectors to scare you, threaten you and harass you. If you owe the bill and can make a payment, then do so with a collector who is willing to work with you -- not some hateful person screaming, yelling and demeaning your character. You have the right to not allow this type of cruel treatment and certainly don't deserve it if you have tried your best to pay your bills and are currently suffering financial hardship. One tip of stopping collectors without filing bankruptcy is to get the name and mailing address of the collector the next time they call you. Write a letter stating something similar to this: This letter serves as written notice to cease all collection procedures by telephone immediately. You may only collect for my debt through the mail only. This right is granted to me by the Fair Debt and Practices Act. Make sure you include your name, address and account number. Then mail the letter by REGISTERED MAIL, RETURN-RECEIPT REQUESTED. The collector will receive your letter and have to sign for it. The signature card will be returned to you and you will have proof of delivery. The harassing phone calls should stop immediately. 53. Will You Ever Get Your Credit Cards Paid Off? If you make the minimum monthly payment on your credit cards, you can normally count on never getting the debt paid for 20, 30 or more years. That is because credit card companies add on so many charges that they legally can get away with because you signed a contract when you first obtained the credit card allowing them to do so. Other companies will send you a statement in the mail (normally printed in tiny 6 point type) explaining their right to add on hidden charges. Most people throw this in the trash when they receive it, which is what the companies are counting on. It is really a shame that most collectors have actually aided in forcing people to file bankruptcy that would otherwise have been more than happy to pay their bills. Back in the old days when credit cards first started (circa 1970's), you borrowed an amount of money and interest was calculated on the amount you borrowed. Today, companies will add interest on top of interest, daily charges, over limit fees and anything else they can drum up to get a few extra dollars from you. When they do this to millions of people, you can understand why credit card companies and banks get rich off the common working class of people. For instance, I had a client who had a credit card with only a $200 limit. Because she had bad credit, the company issued this unsecured credit card with a low limit. However, each month she had to pay a $6.00 service fee for the right to carry this silly credit card. One month, when the company added the $6.00 fee it pushed her balance up to $200.16. And because she owed 16¢ more than her credit limit, the company charged her an additional $30 over the limit fee and another $6.00 service fee as well as a late fee compounded daily for each 24-hour period the account remained over the limit. In my opinion, this is highway robbery so I suggested that she pay off this creditor immediately, tear up the credit card and never do business with them again. 54. Medical Bills Many hospitals have collection agencies that they turn over their accounts to for collection, and these collectors can be just as hateful and uncooperative as credit card collectors. However, you may find that your insurance has already paid a portion of the hospital bill and you may not really owe as much as they claim you do. It is important to request an itemized statement showing all the charges, what the charges were for and the amount the insurance company(s) paid. Verify these amounts with your insurance company when you receive the itemized statement and make sure the hospital is not double billing you. After determining exactly what you do owe the hospital, you can make an appointment with the Billing Department and attempt to negotiate a settlement to reduce the amount. In my experience, I have never failed to be able to reduce a hospital bill by 25% or more of the original balance and then help my client to be able to afford monthly payments on the balance that will fit their budget and totally pay off the debt in a fraction of the time. 55. Other Outstanding Loans Most creditors will be happy to negotiate a lower amount on the total bill you owe because it is better for them to get some money than none at all. However, when an agreement is reached, be sure to get it IN WRITING as well as the NAME of the person you talked with. Collectors and creditors never have your personal interests at heart and they often never follow through with verbal promises made over the phone. Recording the conversation may help if you go to court, but the collection agency or hospital can always say that their employee was not authorized to make that agreement and you will have wasted a lot of time and court expense. 56. Summary In no manner am I attempting to suggest that you not pay your debts. Instead, I hope to help you understand more about the collection process so you don't get taken in by scare tactics and have your bank account cleared out of money by unauthorized collectors on the phone. If you are in a financial hardship, the last thing you need at this time is more pressure. Use common sense and work out payment arrangements with creditors to pay your bills. If this cannot be done and you cannot pay your bills at all, this may be a time you may want to consider filing bankruptcy. Other Facts You Need to Know 57. Any debts you make AFTER you file your bankruptcy petition cannot be included in your bankruptcy. However, before the 341 Meeting of Creditors, debts can be added by filing the proper Amendment with the Bankruptcy Court and an Amended Creditor’s Matrix. Court filing fees for most Amendments is normally $20.00. 57. Any debts you made BEFORE you filed your bankruptcy petition, but forgot to include when you filed, can be added by your attorney or by filing an Amendment with the Bankruptcy Court and paying an additional filing fee. 59. After your bankruptcy is over and the creditors have been satisfied, any lien you have on your property is not automatically removed. An attorney will need to be hired to remove the lien once the debt is paid in full. 60. Never make the mistake of running up debts on all your charge cards and then filing bankruptcy immediately thereafter. You could be held responsible for any purchases you made within the last ninety (90) days if these expenses were not necessary for your day-to-day living expenses. It is understandable for some people to use credit cards for food, rent and transportation prior to deciding to file bankruptcy -- but you cannot take a vacation or add debts because you know you can file bankruptcy on them. This is considered fraud. Debts That Cannot be Discharged 61. Some of the debts you owe cannot be forgiven in bankruptcy and will need to be repaid by you. The types of debts I am referring to include, but are not limited to the following: credit obtained by false pretenses or acts of fraud; all taxes, customs or duties; debts owed for fines and penalties to another government unit; student loans; child or spousal support; luxury items valued at $500 or more that were purchased sixty (60) days from the date you filed your original bankruptcy petition; cash advances of $1,000 or more that were made within sixty (60) days from the date you filed your original bankruptcy petition; debts made due to an act of embezzlement or larceny; debts owed a party where you maliciously caused injury to another; debts owed for the death or personal injury while intoxicated by drugs or alcohol. The First Steps in Preparing to File a Bankruptcy Petition 62. Take a file folder and put a statement from every creditor that you owe in it. If you don’t receive a monthly statement from the creditor, put the following information on a sheet of paper about the debt and place it in your file: Name and complete mailing address of who you owe; Your account number (if applicable); The name of who owes the debt (husband, wife or both); The total amount you owe this creditor; How much your monthly payments are; The date you originally went into debt with this creditor. (If you can’t remember the exact date, just an approximate year [i.e., 2001, 2002, 2003, etc.] will do); If the debt is for a credit card, record the last date you charged on this credit card. If you charged less than 90 days ago, you need to write down the amount you charged and the reason for the purchase.) 63. In the same file folder, also put in the following documents: Your current paycheck stubs; If you are unemployed, include copies of documents showing any income you receive(d) from unemployment, worker’s compensation, child support, SSI, social security, retirement, estate, etc. Mortgage and deed if you own or are purchasing a home or other real property (i.e., land, apartment complex, etc.); Copies of your car, boat, motorcycle, mobile home or other titles to motor vehicles; Copies of your tax returns; Copies of any court proceedings filed against you; 64. When you have put together your file, you will have most of the information needed to file a bankruptcy petition. You can now start completing the forms that are included in the back section of this book and/or make an appointment with an attorney in your area to discuss your options. 65. The information you supply on the Client Intake Forms (included in this book) are then entered in a correct legal manner into a set of forms called a bankruptcy petition. A bankruptcy petition includes such documents as: Voluntary Petition, Summary of Schedules, actual Schedules, Forms, Statement of Intentions, Creditor’s Matrix, etc. Each Schedule and Form in your bankruptcy petition relates to different items that must be filled out properly. Normally people choose to hire an attorney to prepare their bankruptcy petition, but some people hire independent paralegals. Note: Unless you are familiar with the bankruptcy law, the average consumer cannot properly complete a bankruptcy petition. Besides, it is dangerous to attempt to do so. If you don’t know the difference between real property and personal property for instance, or the legal codes for exemption allowances (Schedule C) you could lose everything you own and put yourself in a living condition much worse than you are in right now. Many debtors have told me horror stories about what happened when they went to the library, got a book about bankruptcy and then filled out their own forms. If you decide to take this option though, I urge you to have someone skilled in bankruptcy law review your forms before you file them. 66. If you decide to hire an attorney, try to find someone who specializes in the field of bankruptcy. In other words, your best choice for an attorney is one who does nothing else but specializes in bankruptcy law exclusively. You will probably also find bankruptcy attorneys that also do divorce, wills, probate, and DUI; but if given a choice between the two — I urge you to choose the attorney who specializes in debtor bankruptcy. 67. Calling around to different attorney offices and asking them what they charge to file a bankruptcy is NOT the most efficient method of locating a good bankruptcy attorney. Attorneys who advertise cheap prices for filing bankruptcy petitions in your daily newspaper, often do not file all the schedules and forms at one time (which is perfectly legal) and will charge you additional money to file the rest of the petition within the 20-30 day allowance. After being “nickel-and-dimed” to death, you normally pay more money to this attorney than if you just hired a higher-priced attorney in the first place. How Your Credit Will Be Effected by Filing Bankruptcy 68. If you are currently behind in paying your bills, your credit is already affected. Filing a bankruptcy may actually be your first step in repairing a bad credit situation. When a creditor finds a bankruptcy on your credit report, it shows them that all prior credit problems have been resolved. The question then becomes, “Are you creditworthy?” 69. Every creditor is different and each one treats bankruptcy with a different set of rules for determining your creditworthiness. Although there are many exceptions, normally a creditor likes to see how well you do in paying your bills during the first year or two after filing bankruptcy before they extend new credit to you. So although a Chapter 7 bankruptcy appears on your credit report for ten (10) years, and a Chapter 13 appears for seven (7) years, most people only find it to be a problem for a couple of years after filing — provided everything else looks good on their current credit report. 70. In addition, there are 1,000’s of creditors who extend credit to people who have filed bankruptcy. The interest rates are normally higher, of course, but you can obtain credit easily with one or more of them. One of the best ways to build your credit after bankruptcy is to obtain a “secured” credit card. This is one where you put money in a bank and the bank issues you a credit card. The credit limit of the credit card will be the same amount of money you have deposited in their bank. After you have shown that you make timely payments, your credit line may be increased without you depositing any more money. 71. However, the fact remains — one of the main reasons for filing bankruptcy is to get OUT of debt — not back into it. You should take responsibility for your own financial spending and saving, making sure not to get to the point where you have to file another bankruptcy. Once you experience total freedom of paying for things you want to buy, and owning them free and clear — you will enjoy life more and grow as a human being. You will also find that you have more money to spend. The only items the average American really needs to go into debt for is an automobile for transportation and a home for their family to live in. Everything else should be purchased out of the monthly income, or saved for and purchased in full. The only reason Americans are in debt is because they “want it now!” and don’t have the patience to wait. Other General Questions and Answers 72. If I am married, does my spouse have to file bankruptcy? No, however the spouse that does not file will not receive the benefits of bankruptcy. In other words, if the non-filing spouse is jointly liable on certain debts, he or she will remain liable for those debts if the filing spouse filed for a Chapter 7 bankruptcy. He or she will also remain liable for any amount not paid for in the filing spouse’s Chapter 13 plan. On the other hand, the non-filing spouse will not have bankruptcy noted on his or her credit report. Therefore, if the debts you owe are also owed by your spouse, or co-signed by your spouse, it would be to your benefit to file a bankruptcy together as a married couple. If most of the debts are in your name only, you may consider filing a bankruptcy as the only debtor. If you live in a “community property” state — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin — most property is equally owned by both husband and wife regardless of the name of the person on the title or mortgage. 73. What if I am unmarried but living with someone? Can we file a bankruptcy together? No. If you are living together with a “significant other” but are legally unmarried, you cannot file a bankruptcy together, even if the bills are in both your names. In this case, each one of you would have to file separate bankruptcy petition. A competent attorney or paralegal can separate the expenses and budget so that each of you pay 50% of the day-to-day living expenses (if both of you share the expenses) and submit the information properly to the court. In addition, if you are separated from your legal spouse, your bankruptcy petition can be prepared showing two separate living expenses for each person. 74. Will bankruptcy stop a wage garnishment? Yes, some of the money garnished from your paycheck may even be returned to you. It all depends on how much was garnished and when it was garnished. If your wages are currently being garnisheed, a Notification of Stay pleading needs to be filed in court as well as a letter mailed to the creditor and your employer to stop the garnishment after your bankruptcy petition is filed. Stopping a wage garnishment is possible because whomever you owe that is garnishing your check is now being paid (or is being discharged) through the bankruptcy petition you filed. As soon as the clerk file stamps your bankruptcy petition, you have immediate protection under the United States Bankruptcy Court and every creditor you owe must proceed through the court to collect anything from you. 75. How can I immediately stop creditor harassment? The filing of a bankruptcy under Chapter 7 or Chapter 13 will IMMEDIATELY bring the harassment caused by creditors to a HALT. Once your bankruptcy has been filed, creditors are forbidden from taking action against you or against your property to collect money you owe them. If they try to do so, they can be held in contempt of court. This is the advantage of the law, administered by the United States Bankruptcy Court, and provided as a way to help citizens get “another chance.” Even if there is a wage garnishment or other legal proceeding under way, the filing of a bankruptcy will bring it to a screeching halt, giving you the opportunity to take care of your financial affairs in an orderly and permanent way. 76. What if I owe the IRS back taxes? How will bankruptcy help me? Most tax debts cannot be discharged in a bankruptcy. Trust funds and withholding taxes you owe, such as sales taxes or employee withholding obligations can never be discharged. However, income and self-employment taxes may be discharged or reduced by the Trustee if they are at least three (3) years old and the tax returns have been on file for at least two (2) years. In situations like this, a bankruptcy can be a great help in many ways. The biggest benefit is that you may be able to reduce the amount of the tax you owe. In a Debt Adjustment Plan, you can also stop interest and penalties on all taxes you owe — even the ones that are non- dischargeable. This will place you in a situation where it will be easier to pay your taxes off. 77. How much does it cost to file bankruptcy? At the present time, the court will charge you $200.00 to file a Chapter 7 bankruptcy petition and $185.00 to file a Chapter 13, regardless of which state you live in. 78. When does a bankruptcy take effect? When the Clerk of Court receives your bankruptcy petition and date/time stamps it, your bankruptcy is immediately in effect. The Court sends notice of your filing to all of your creditors and bill collectors generally within 5 days after filing. That is why it is so vitally important to include complete addresses and zip codes of all the people you owe on your bankruptcy petition. The court will send a copy of your petition to all these creditors so they will stop harassing you and allow them the opportunity to file a Proof of Claim. If those addresses are not correct, the creditor won’t know you filed bankruptcy and will continue to harass you. It is also important to list all the collection agency addresses so they can be notified as well. Upon receipt of the notice of your filing, creditors and bills collectors are prohibited from having contact with you. If you should receive any harassing or annoying creditor calls after filing your bankruptcy petition, a letter can be mailed to the creditor which spells out Section 362 of the Bankruptcy Code (Automatic Stay.) This letter prohibits the creditor from contacting you again or risk being held in contempt of court. 79. I feel so guilty not being able to pay my bills. Am I a “bad” person because I need to file bankruptcy? You are NOT a “bad” person because you decide to file for bankruptcy. Back in the old days (pre 1900), if a person went bankrupt, creditors stepped in, sold everything the person owned, split the money between them, put the bankrupt person out in the street and make a public mockery of them. Therefore, this is why people who have not kept up with the times still feel that bankruptcy is a “bad” thing to do. But that was over 150 years ago! The economy has changed, employers have changed, life is more complicated, interest rates are higher than they have ever been in history and the money you make doesn’t reach as far as it used to just five years ago. Any one of these factors could cause a “good” person who was responsible and financially secure, to suddenly consider filing bankruptcy. Not one of us is immune from the world’s problems. So if there comes a point in your life where you find it necessary to take advantage of the bankruptcy law, don’t look back. Meet the problem head on, clear it up and get over it. In fact, you should be glad the United States has set up a governing body to protect people like you and me so we can continue to survive in times of great financial burden. 80. Is it legal for me to file my own bankruptcy petition? It is perfectly legal in all 50 states to file your own bankruptcy petition. Don’t allow anyone to tell you otherwise. To prove it, on the 2nd page of the Voluntary Petition that you file in court, there is a signature area for a non-attorney bankruptcy petition preparer to sign. There is also a statement that appears below your signature line that reads: "Debtor not represented by an attorney." If it were not legal to file your own bankruptcy petition, then why would the Federal Government put this directly on their forms? In other words, it is just as legal for you to file your own voluntary bankruptcy petition as it is for you to get your driver’s license renewed. 81. What about filing bankruptcy on bad checks I wrote at check-cashing agencies? Can I include them? First of all, you should include ALL the debts you owe, regardless of who or what they are for on your bankruptcy petition. However, you need to understand something about check- cashing agencies. Believe it or not -- when you walk into the corner check-cashing store, write them a post-dated check and they give you cash, a bounced check is not considered to be the same thing as writing a “bad check.” How could this be? Because the person at the check- cashing store is fully aware of the fact that the check you are giving them is “post-dated.” That means, that at the time you are writing the check, the check-cashing agency is aware the check is bad. You make a promise that the check will be “good” on a certain date. If you break that promise you still owe the debt but it is treated as “unsecure” rather than a criminal act of check fraud. However, if you go to several check-cashing agencies and get cash advances against the same payroll check; you are committing fraud if you obtain one or more cash advances that amount to “more” than your check will cover. 82. Will I lose any of my personal belongings or household goods when I file bankruptcy? If you are filing a Chapter 13 bankruptcy and paying back your creditors 100% of the debt you owe them, the Trustee at the Bankruptcy Court will not take any of your personal belongings or household goods and sell them to pay your debts. If you are filing a Chapter 7 bankruptcy, the only way you could lose any personal belongings or household goods is if any of the following is true: You do not totally own the personal belongings or household goods because you are still making payments on them. (Example: furniture and appliances you purchased at a rent-to-own store.) In this case, if you want to keep the item, you can "reaffirm" the debt if you have enough money per month to keep paying the bill and are current on your payments. Otherwise, you may want to surrender the item, which does not necessarily mean it will be repossessed. It depends on the market value of the item and how the individual company handles repossessions on bankruptcy claims. or If the personal belonging or household good is not covered by an exemption, that item could be sold by the Trustee and distributed to your creditors. But, don't be alarmed by this statement. Most average consumers filing a Chapter 7 normally do not have more than one motor vehicle, television set, computer, stove, refrigerator and some miscellaneous costume jewelry; and these items are all exempted in your bankruptcy petition. 83. How is my leased vehicle treated in bankruptcy? A leased vehicle is treated as an executory contract and the monthly payment is included in Schedule J along with the normal monthly expenses. Because you do not actually own the vehicle, it is treated as a rental and actually carries no asset value. 84. Some of the personal belongings and furniture I have belong to an ex-roommate. Should I list these in my bankruptcy? Yes, the value of these items will be recorded on the Statement of Affairs in your bankruptcy petition as ONE amount. They do not need to be listed separately. You will find a question in the "Statement of Affairs" section of the Client Intake Forms you downloaded from my website. One of the questions asks you if you have anything in your possession belonging to someone else and the value of it. Simply write: "Furniture and personal belongings of ex- roommate, John Doe (fill in name), valued at $500 (fill in correct amount.)" That is the only information necessary if you have no financial interest in the item(s). The main issue here is if you are holding these items pending a potential lawsuit because the ex-roommate owes you money. If this is the case, you must provide information as to how much this person owes you and if you have filed a lawsuit against them. If not, do you plan to do so within the next six months or do you plan to collect the money yourself within that period of time? If you are simply holding the furniture and personal belongings of an ex-roommate, who doesn't owe you any money and they plan to return and get these items, their value only needs listed on the Statement of Affairs and no exemption is necessary. In other words, these items cannot be taken from you by the bankruptcy court because they do not belong to you and you have no financial interest in them. Bankruptcy Websites for Additional Bankruptcy Information 85. http://www.agin.com/bkfaq/ A web site run by a bankruptcy law firm, providing advice to other attorneys as well as a generalized list of questions and answers regarding debtor bankruptcy. 86. http://www.freeadvice.com/law/506us.htm Ask questions about debtor bankruptcy law from participating attorneys all over the United States. 87. http://www.bankruptcy-law.freeadvice.com/ This web site lists an excellent variety of questions and answers about debtor bankruptcy to help consumers. 88. http://www.bid4assets.com/ Bid and buy assets from the government, private sector, corporations, restructuring and bankruptcy estate sales. 89. http://www.lawinfo.com/ A fantastic site filled with free legal forms, attorney search, expert witnesses, paralegal resources, legal help guides and much more. 90. http://www.uscourts.gov/bankform/ The official federal bankruptcy forms from the U.S. government. These are in PDF format so you can print them out on your printer and fill in by hand if need be. If you are an attorney or bankruptcy paralegal, you could download these forms, edit them in Adobe Acrobat so the PDF form could be filled in on your computer and avoid the purchase of expensive software. 91. http://www.bankruptcydata.com/Courts/Courts.htm Links to all the bankruptcy courts in the United States. Locate addresses, telephone numbers, read bankruptcy headlines and much more. Creditor’s lists, plan summaries and reports can be viewed on a “pay per view” basis. 92. http://www.usdoj.gov/ust/7_12n13.htm#TOC Find the name and contact information of any bankruptcy trustee in the United States. Contains lists for Chapter 7, Chapter 12 and Chapter 13 trustees. 93. http://www.bankrupt.com/lbr/ and http://www.uscourts.gov/rules/bk-localrules.html Local rules of court for all local bankruptcy court districts in the United States. 94. http://www4.law.cornell.edu/uscode/11/ The complete federal bankruptcy code on-line with a search feature so you can go directly to the section you want to read or cite. 95. http://findlaw.com/01topics/03bankruptcy/ Findlaw’s information on bankruptcy. From a well-stocked bankruptcy library to message boards, supreme court decisions, journals, newsletters and much, much more. 96. http://www.debtworkout.com/states2.html Individual bankruptcy exemptions for all 50 states compiled by Mory Brenner, Esq., author and editor of “Bankruptcy Alternatives / Debtor’s Options.” 97. http://www.kbb.com/ The official Kelly Blue Book web site to quickly and easily find market values of automobiles, boats, motorcycles and other vehicles, 98. http://www.carquotes.com/blackbook.asp The official Black Book website. Find the auction sale value of most motor vehicles. 99. http://www.wwlia.org/diction.htm Online legal dictionary to look up legal words you don’t understand. 100. http://www.usparalegal.com/ Contains over 5,000 legal forms with questions and answers to common legal questions. 101. http://law.chapter7.com/ Chapter 7 help center. 102. http://www.nolo.com/category/dc_home.html Nolo debt and bankruptcy reference. 103. http://www.abiworld.org/headlines/todayshead.html Keep up-to-date on the latest changes in the bankruptcy law. 104. http://www.crossingthebar.com/upl.htm Information on the unauthorized practice of law in all 50 states. 105. http://www.ashworthcollege.com/ Are you interested in working in the legal field? This college offers an excellent on- line paralegal education. You can earn your Paralegal Certificate and/or Associate’s Degree in the comfort of your home. Although there are 100’s of online colleges like Ashworth, I highly recommends this college because this is where she personally obtained her degree. Summary 106. Don’t allow debt to destroy your life, make you miserable or break up your happy home. Instead, reach out and research the best direction for you to solve your problem. You have the opportunity to take charge of your financial situation and may be able to obtain some relief, which is legally offered to you by the United States Bankruptcy Court. 107. Do not hesitate to contact Bankruptcy Preparer Services if we can help you in any way. Email us directly at email@example.com or call us Monday through Saturday between the hours of 10:00 a.m. and 9:00 p.m. Eastern Standard Time.
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