Debtors Rights Outline

Document Sample
Debtors Rights Outline Powered By Docstoc
					               Legal Services of Northern Virginia 
                  6066 Leesburg Pike, Suite 500 
                   Falls Church, Virginia 22041 
                            (703) 778‐6800


           Debtors’ Rights and
           Bankruptcy Manual

                              November 24, 2009




A compilation of resources regarding debtors’ rights and bankruptcy prepared
by Legal Services of Northern Virginia personnel.




 
                                              TABLE OF CONTENTS
I. Overview of LSNV’s Debtors’ Rights Clinic and Bankruptcy Practice ............ 5 
    Disclaimer ................................................................................................................ 6 

    Debtors’ Clinic Outline ............................................................................................... 7 

II. Pre-Judgment Collection........................................................................ 9 
    Abusive Debt Collection Tactics .................................................................................. 9 

       Sample Letter to Debt Collector .................................................................................................. 11 
          Sample Letter to the Federal Trade Commission ........................................................................................... 12 

    Are You Collection Proof? .........................................................................................13 

    IRS Form 1099-C: Cancellation of Debt ......................................................................16 

    What Your Credit Report can Tell You ........................................................................17 

III. Post-Judgment Collection ................................................................... 19 
       Top Portion of the Warrant in Debt [Form DC‐412] .................................................................... 19 
    You Received a Warrant in Debt ................................................................................20 

    Top Portion of a Summons to Answer Interrogatories [Form DC-440]...........................22 

    Sample Form-Capital One Bank-Objection to Venue ....................................................22 

    Facts about Garnishment ..........................................................................................25 

       What can a garnishment do? ....................................................................................................... 25 
       What can a garnishment NOT do? ............................................................................................... 26 
       What are the details of a garnishment? ...................................................................................... 26 
       How do I object to a garnishment?.............................................................................................. 26 
       Top Portion of the Request for Hearing ‐ Exemption Claim [Form DC‐407] ............................... 27 
       What does a garnishment mean for your job? ............................................................................ 27 
       What happens if wages at your old job are garnished? .............................................................. 28 
       Garnishment and Child Support Payments ................................................................................. 28 
    The Direct Express® Card: for Social Security or Supplemental Security Income Benefits29 

LSNV's Debtors' Rights and Bankruptcy Manual Page 2

 
    Social Security and Veterans Benefits are Exempt .......................................................30 

       Sample Letter to Bank Where Account Contains Direct Deposited Social Security or Veteran's 
       Income ......................................................................................................................................... 31 

IV. Bankruptcy ........................................................................................ 32 
    Attendance at the Debtors’ Rights Clinic.....................................................................32 

    Pre-bankruptcy Proceedings ......................................................................................32 

    Decision to Represent ..............................................................................................33 

    Chart: LSNV's Bankruptcy Procedures ........................................................................34 

    Documents and Financial Information You Must Get Before a Chapter 7 Bankruptcy ......35 

    The Value of Medical Insurance when Filing for Bankruptcy .........................................37 

    Credit Counseling and Debtor Education Requirements of the Bankruptcy Law ..............38 

    Financial Documents Needed to File a Bankruptcy ......................................................40 

    What is a Security Interest? ......................................................................................42 

    Fraud Exceptions to Bankruptcy Discharge .................................................................44 

V. Appendices ............................................................................................ I 
    Report by the Volunteer Following the Interview of the Applicant.................................. II 

    Status of Application for Legal Assistance................................................................... IV 

    Representation Agreement for Chapter 7 Bankruptcy .................................................. VI 

    Preliminary Request for Chapter 7 Bankruptcy Appointment ........................................ IX 

    Defaulted Student Government Loans ........................................................................ XI 

    Legal Terms .......................................................................................................... XIX 

    The Three-Part Bankruptcy Questionnaire ............................................................... XXII 

    Homestead Deed for Real*****Personal Property ................................................... XXII 

    Pre-Filing Checklist ............................................................................................... XXIV 

    Filing Checklist ...................................................................................................... XXV 


LSNV's Debtors' Rights and Bankruptcy Manual Page 3

 
    Post-Filing Checklist ............................................................................................ XXVII 

    Authorization for Release of Financial Records ........................................................ XXXI 

    If you are collection proof and you receive a Warrant in Debt ................................. XXXII 

    Income Testing (Means Testing) ......................................................................... XXXIV 

       Your Current Budget ............................................................................................................... XXXIV 
       Statistical “Means Testing” ..................................................................................................... XXXIV 
 

 

 

 

 

 

 

 




LSNV's Debtors' Rights and Bankruptcy Manual Page 4

 
 


    I. OVERVIEW OF LSNV’S DEBTORS’ RIGHTS CLINIC
              AND BANKRUPTCY PRACTICE
A part of the consumer debt practice is debtors' rights. LSNV addresses debtors' rights in a
Debtors' Rights Clinic (Clinic) that provides information and assistance with consumer debt
and Chapter 7 bankruptcy.

Prior to the clinic you will be sent a letter and/or email telling you what to bring to the clinic
and telling you that you must be interviewed over the phone by a volunteer, who will
prepare a memorandum of your situation. These volunteers are both attorneys and non-
attorneys. The letter or email will include maps showing the location of the clinic and three
pamphlets for you to read prior to the clinic: Have You Been Sued in General District
Court?; How Wage Garnishments Work; and Bankruptcy.
At the clinic you will meet with a volunteer paralegal to review any documents you have
brought with you. The volunteer paralegal will also accompany you to your meeting with
the pro bono bankruptcy attorney who will give you advice based on the interview
memorandum and any other information you or the volunteer share with her. After the
consultation with the pro bono attorney, the volunteer will see that you are given the
documents the pro bono attorney decides you should get. The volunteer may also help
you understand [and perhaps help you fill out] the documents you are given. The
volunteer may help you in meetings after the clinic.


At the end of the clinic, applicants seeking further assistance regarding debt management
or bankruptcy are scheduled for an appointment with a LSNV staff attorney and are told to
obtain a number of financial documents, answer numerous questions in a questionnaire
and collate the information in preparation for an appointment with a LSNV attorney.

LSNV attorneys often use the assistance of a volunteer to assist in preparing the applicant's
paperwork for bankruptcy. The volunteer (usually after the applicant collected the
necessary information) meets with the applicant.

If the information is sufficient and in order and the case is merited, the applicant and the
LSNV attorney sign a Representation Agreement for Chapter 7 Bankruptcy. Only after the
Representation Agreement for Chapter 7 Bankruptcy is signed, does the applicant become
a client, and a LSNV attorney files the Bankruptcy petition.

Approximately 30 days after the filing date, the client must attend a meeting of creditors
before the trustee appointed for their case. The trustee is a private attorney appointed to

LSNV's Debtors' Rights and Bankruptcy Manual Page 5

 
review the client’s bankruptcy paper work, and to determine if there are any assets
available to pay something to creditors. A discharge of debts will be issued by the court
approximately 90 days after the filing date.

Applicant folders should be available at the Debtors’ Rights Clinics and should contain the
following documents:
          1. A current printout of the applicant’s file in Kemps, including case all notes.
          2. Report by the Volunteer Following the Interview of the Applicant
          3. Status of Application for Legal Assistance
          4. Preliminary Request for Chapter 7 Bankruptcy Appointment

Information about the Manual
This manual was prepared to be used by lawyers, paralegals and non-lawyers. Copies of
the materials can be copied and distributed to applicants and clients. Contact Russ Hatchl,
Pro Bono Coordinator, telephone number (703) 532-2525 Ext. 213 for more information
regarding this material.




                                        Disclaimer 
                     LSNV and the authors of this material do not
                     represent that the information provided about its
                     use or the legal resources presented, will be
                     appropriate for any specific application.

                     While they believe the information is reliable,
                     human or mechanical error remains a possibility.
                     Therefore, LSNV and the author do not guarantee
                     the accuracy, completeness, timeliness, or correct
                     sequencing of information.

                      They are not responsible for errors or omissions,
                     or for the use of, or results obtained from the use
                     of, the information.




LSNV's Debtors' Rights and Bankruptcy Manual Page 6

 
Debtors’ Clinic Outline
    I.   Pre-Judgment Collection

         A. Explanation of the difference between a secured debt/unsecured debt

                 1. Repossession or foreclosure is remedy for secured debt
                     a. Possibility of a deficiency
                 2. Unsecured debts – creditor’s remedy is to sue in civil court and/or report
                      the unpaid debt to a credit reporting agency.

         B. Abusive collection practices/FDCPA

         C. Getting sued in General District Court

                 1.    What is a Warrant In Debt [Form DC-412]? Will you go to jail if you don’t
                       pay a civil judgment?
                2. Service of Process- “last known address”
                3. proper venue (watch out for Capital One!)
         D. Should you appear at the Return Date?

                 1.    If you are "collection" proof
                 2.    If you are planning to file bankruptcy

         E. What exactly does it mean to be “collection" proof”?

         F. Cancellation of Debt IRS 1099-C.

II.      Post-Judgment Collection

            A. Summons to Answer Interrogatories – what it is and why used

                 1. Go to court!
                 2. “show cause summons”
                 3. Capias

            B. Garnishment Summons
                1. Your employer/bank is being summoned and has no choice but to
                     withhold the money
                2. Going to court on the Return Date
                3. Claiming exemptions, including Homestead deeds
                4. Judgment/collection proof—GET A DIRECT EXPRESS CARD to
                       avoid bank garnishment.




LSNV's Debtors' Rights and Bankruptcy Manual Page 7

 
          C.  Credit Reports
             1. Getting your free credit report www.annualcreditreport.com
             2. Fair Credit Report Act
                 a) How long can debts stay on my credit?
                 b) Dispute process
III. Bankruptcy

          A. Types of Bankruptcy Explained/Eligibility

               1. Chapter 7
               2. Chapter 13

          B. Exempt property

               1.   Poor Debtor’s Exemption
               2.   Homestead deed
               3.   Property exempt under other laws (SSDI/SSI, child support income)
               4.   Non-dischargeable debts

          C. Secured Versus Unsecured Debts

          D. Effect on Property

          E.   Information and Documents Needed
               1. List of ALL property
               2. List of ALL debts /credit report(s)
               3. Monthly income/expenses
               4. Pay-stubs for 2 months prior to filing
               5. Most recently filed tax return
               6. Credit counseling certificate < 6 mos. old
               7. Bank statements showing all transactions/balances on date of filing.
               8. [after filing] Debtor education certificate
               9.   [at hearing] Photo ID & social security card/W-2




LSNV's Debtors' Rights and Bankruptcy Manual Page 8

 
                    II. PRE-JUDGMENT COLLECTION
Pre-judgment simply means that a judgment has not been entered against the debtor. In
most instances, after the debtor has stopped making payments on their debt, the creditor
will first attempt to collect the debt themselves, hire a debt collector and/or sell the debt to
a collection agency. A creditor or bill collector is very limited in their efforts to collect a debt
without first seeking a judgment. Pre-judgment collection efforts usually include
telephoning and writing the debtor. There are federal-law protections for a debtor if a debt
collector improperly tries to collect the debt.

                              Abusive Debt Collection Tactics 
The creditor or a debt collector calls and writes letters in an effort to get you to pay them
the debt. Many times the debt collector harasses you by constant calling or contacting a
relative, your employer and friends. They also call and write you with offers to settle the
debt for less than the total amount.

Don’t be fooled by offers that sound urgent and give you only a little time to accept an
offer such as paying $3,000 on a $6,000 debt IF YOU ACT WITHIN 10 DAYS. If you are
"collection proof" or you and you have no way of settling the debt, don't agree to anything
you can’t do, thinking that will stop the harassment.

Date of the Call _______________                If you are harassed by phone calls, keep a pad
Time of the Call ____________                   and pencil next to the telephone. Write down
Name of the Bill Collector __________________   the date and time each call is received. Try to
Name of the Caller ______________
                                                get the name of the caller and the agency
What the Caller said ______________________     he/she represents. Write that information
                                                down.
________________________________________
                                                The Fair Debt Collection Practices Act (a
federal law that is sometimes referred to as FDCPA) applies to third-party collectors, but
not to the creditor. Any person or entity who collects for someone else or for another
company or entity, is a third-party debt collector. For example, a doctor trying to get you to
pay her bill for medical services is not a third-party debt collector. However, if the doctor
hires the ABC Debt Collectors, a collection agency, to collect debts from her patients, they
are third party-debt collectors. A collection law firm can also be a debt collector under the
Fair Debt Collection Practices Act.
The third-party debt collector:
    • Must identify his or herself as a debt collector when contacting you.
    • Should not make telephone or personal contact before 8:00 a.m. or after 9:00 p.m.
    • Must limit contact with your place of employment to only determining if you are still
       employed there - the debt collector cannot say things like "do you know why Ms.
       Smith does not pay her bills?" or other things that are designed to embarrass you.
LSNV's Debtors' Rights and Bankruptcy Manual Page 9

 
    •   Must stop contacts by telephone or in person after the debtor sends a letter to the
        debt collector telling them to stop contacting them by telephone or in person. A
        sample letter you can use is below.
    •   Must not behave in a manner that is disrespectful, undignified, unfair, or untrue.

If you are "collection proof" because your only sources of income is Social Security,
Veterans payments or other exempt income, then you may want to use the sample letter
below. You may want to report abusive debt collection practices to the Federal Trade
Commission, see the sample letter below.

If you feel that you are being harassed by a creditor, please call LSNV and, if you are
eligible for our services, we will try to assist you.




                                 [Deliberately Left Blank]


 

 

 

 

 

 

 

 

 


LSNV's Debtors' Rights and Bankruptcy Manual Page 10

 
                               Sample Letter to Debt Collector 
Name of collection agency                        Date
Address of collection agency

       re:    Your account number with the collection agency
              Name of creditor for whom the collection agency
              is working, and your account number with
              that creditor

Dear Sir or Madam:

       Your company has recently contacted me in regards to the above-referenced debt.
At the present time I am unable to pay anything because of my poverty.

       Accordingly, pursuant to the provisions of the federal Fair Debt Collections Practices
Act, 15 USC Sec. 1692, et seq., I hereby demand that you cease any further attempts to
contact me, my family, or any third party by any means other than mail regarding this
debt.

        Should you fail to comply with this instruction, I am prepared to pursue your
violations of the Fair Debt Collections Practices Act in federal court.

                                                    Yours truly,


                                                 your   name
                                                 your   address
                                                 your   phone number(s)
                                                 your   email address

[Before you mail the letter, make a copy, sign it and keep it for your records. Mail the letter
certified mail, return receipt requested. This way you can easily prove in court they
received the letter if they later contact you and you sue them for doing so.]




LSNV's Debtors' Rights and Bankruptcy Manual Page 11

 
Sample Letter to the Federal Trade Commission

Federal Trade Commission                        Date
Bureau of Consumer Protection
Division of Credit Practices
Washington, DC 20580

      re:    your account number with the collection agency
             name of creditor for whom the collection agency
             is working, and your account number with
             that creditor

Dear Sir or Madam:

This is a complaint about abusive debt collection practices and a request that you
investigate the matter. Here is what happened: [tell what happened, including date, day of
the week, time of day, place (home work, etc.), what was said or done that was abusive.]

This is what I know about the debt collector who did that: [give name(s) addresses, phone
numbers, creditor information, and anything else that will help the federal trade
commission identify the abuser.]

                                         Sincerely,

                                         Your name

Cc:   name of abuser you are complaining about. [you may want to send a copy of this
signed letter to the address given on the bill or dunning notice that is not the address to
which you are asked to send a payment.]




LSNV's Debtors' Rights and Bankruptcy Manual Page 12

 
Are You Collection Proof?
Fill out this form to help you determine if you are collection proof.

Name:         _______________
SS #:         _______________
Tax Year:     _______________


Assets as of _______:                               Liabilities as of_______:

    Home:                   $________            Credit Card Debt:          $________
    Motor vehicle:          $________            Mortgage:        $________
    Bank Accounts:          $________            Loans:                     $________
    Personal Property:      $________            Motor vehicle Payments:         $________
    Other:                  $________            Other:                     $________
    Other:                  $________            Other:                     $________
    Other:                  $________            Other:                     $________



       TOTAL ASSETS         $________          TOTAL LIABILITIES $________


       TOTAL LIABILITIES – TOTAL ASSETS = $_____________
                                                     Amount of Insolvency


(Note: In order to be insolvent total liabilities must be greater than total assets. What is
the difference between insolvency and collection proof? Collection proof means that one’s
assets cannot be taken creditors.)

    1. Property that cannot be taken even after you receive it [but you will have
       to keep separate from property that can be taken in order to protect it]:
    2. wedding and engagement rings (subject to security interest [see What is a Security
       Interest? below.])
    3. family Bible
    4. family portraits and heirlooms not to exceed $5,000 in value
    5. pets not raised for sale
    6. medically prescribed health aids

LSNV's Debtors' Rights and Bankruptcy Manual Page 13

 
    7. Necessary wearing apparel: (up to $1,000 in value)
    8. Household furnishings: (up to $5,000 in value) [see What is a Security Interest? below.]
    9. Tools of trade (up to $10,000 in value)
    10. Motor vehicle: (up to $2,000.00 in value, but subject to perfected security interests)
    11. Personal injury cause of action & proceeds, subject to medical service liens 8.01-
        66.2 et seq., & liens created by 54.1-3932 for attorney's fees for prosecuting a tort
        claim and voluntary assignment of benefits permitted 8.01-26
    12. IRA & SEP up to value to produce $17,500 per year per formula
    13. Group life insurance policy
    14. Right to proceeds of life insurance owned by Debtor but payable to someone else,
        when there is no cash surrender or loan value
    15. Right to receive Supplemental Security Income [even when the funds are in your
        possession]
    16. Right to receive Social Security benefits [even when the funds are in your
        possession]
    17. Unemployment compensation
    18. Worker's compensation benefits
    19. Public assistance payments
    20. deposits in U.S. Servicemans' Savings Institution while depositor is on permanent
        duty outside the U.S.
    21. Right to receive Veterans Administration-administered benefits
    22. Accrued wages exempt from garnishment (75% of gross wages minus FICA
        deductions)
    23. Property that can be taken once you receive it:
    24. Right to receive ERISA-qualified retirement benefits exempt from process
        [but not once you receive the benefits]
    25. 401(k) plans
    26. Property in a trust subject to an enforceable restriction on debtor's transfer of a
        beneficial interest
    27. retirement account portion of profit-sharing plan
    28. pre-distribution interest in employer's savings account
    29. Right to receive federal civil service retirement benefits [but not once you receive
        the benefits]
    30. federal employee's Thrift Savings Plan
    31. Right to receive CIA retirement benefits
    32. Right to receive federal government employee's disability or death benefits due to
        work injuries
    33. Right to receive annuities payable to armed services members based on retirement
        or retainer pay
    34. Right to receive military survivor benefits annuities paid pursuant to a Survivor
        Benefit Plan
    35. Right to receive annuity paid to survivors of judges and other judicial employees
        under the Judicial Survivor's Annuity Reform Act

LSNV's Debtors' Rights and Bankruptcy Manual Page 14

 
    36. Right to receive benefits payable to surviving spouses of Lighthouse Service
        Personnel
    37. Right to receive special pensions awarded persons on the Army, Navy, Air Force and
        Coast Guard Medal of Honor roll
    38. Right to receive benefits due or to become due under Servicemans' Group Life
        Insurance or Veteran's Group Life Insurance
    39. Lot in burial ground
    40. Tenancy by the entireties property: including identifiable proceeds
    41. growing crops
    42. Right of fishermen, seamen or apprentice to receive wages
    43. Property that MAY be taken once you receive it:
    44. Lottery prizes
    45. Right to receive railroad workers unemployment insurance benefits
    46. seaman's clothing
    47. Excess over $1.00 recoverable from seaman for debt incurred during a voyage for
        which the seaman has signed on, until the voyage is ended
    48. Right to receive Foreign Service Retirement and Disability payments
    49. Right to receive disability, accident, and sickness insurance payments
    50. Right to receive industrial sick benefit insurance payments
    51. Right to receive pension benefits under Virginia Retirement Act
    52. Right to receive injury or death compensation payments from war risk hazards
    53. Right to receive Longshoremen's and Harbor Workers' Compensation Act death and
        disability benefits
    54. Right to receive Railroad Retirement Act annuities and pensions




                                   [Deliberately Left Blank]




LSNV's Debtors' Rights and Bankruptcy Manual Page 15

 
IRS Form 1099-C: Cancellation of Debt
Overview
This Information is for individuals who have received a Cancellation of Debt IRS 1099-C.

If you have reached a compromise or settlement with a creditor agreeing to release you
from any further obligations regarding the repayment of a debt, a credit card debt for
example, your responsibilities may not end at this point. Your creditor may “write off” all or
part of the debt it claims that you owe, and report it as a tax loss to the Internal Revenue
Service (IRS) using a 1099-C.

Because you never paid the debt-claim in full, the IRS can treat a cancellation of a debt-
claim as income you have received. For example, $4,500 credit card bill in which a
compromise has been reached to settle the debt for $2,500 is in theory a $2,000 personal
net gain. The IRS may require you to report this as income you have received for the tax
year even though you have not actually received the money.

What is a 1099-C: Cancellation of Debt form?
A 1099-C form lets you know that a creditor is going to “write off” the remaining unpaid
portion of your debt. An IRS 1099-C: Cancellation of Debt form is filed by a creditor to the
IRS when a settlement agreement between a debtor and a creditor has been reached or
when a creditor has determined that a debt will never be paid. If the debt is for $600 or
more the creditor must send you, the debtor, a 1099-C in the mail by January 31st and to
the IRS by February 28th of the tax year in which the debt was discharged.

What should I do after I receive a 1099-C: Cancellation of Debt form?
If you receive a 1099-C form from a creditor, you must report (see the exceptions below)
the amount of the canceled debt as income to the IRS even though you have not actually
received the money. (The amount shown in Box 2 of the 1099-C form is the amount that
must be reported as income.)

What debts are forgiven under a 1099-C: Cancellation of Debt form?
The IRS recognizes five situations where a cancelled debt does not have to be reported as
income.
    1. Bankruptcy – the debt was already discharged through a bankruptcy proceeding.
    2. Insolvency – your total debts exceed your total assets at the time your debt was
        settled or deemed non-collectable.
    3. Indebtedness is due to a qualified farm expense.
    4. Indebtedness is due to certain real property business losses.
    5. Discharge of your debt was treated as a gift. (Extremely rare)

LSNV's Debtors' Rights and Bankruptcy Manual Page 16

 
If you are insolvent you need to explain this to the IRS in one of two ways. Fill out IRS
Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness; or attach a
detailed letter to your tax return explaining the calculation of your total debts and assets.

How do I know if I am insolvent?
You are deemed to be insolvent if your total liabilities (debts) are greater than your total
assets. For example, if your total liabilities are $8,000 and your total assets at the time are
$6,000 you are insolvent in the amount of $2,000. To determine the value of your assets
use the fair market value rather than what you paid for them or what you think they are
worth.

    Helpful tips to avoid problems if you have received a 1099-C.
     • If you settle your debt for less than full consideration (paid in full) be sure to ask the
       creditor if they intend to submit a 1099-C form to the IRS.
     • Consider, if a debt compromise is in your best interest, or is it a smarter decision to pay
       the debt in full? Failure to report added income could end up costing you in the end.
     • The name of the creditor may not be readily recognizable on the 1099-C form. The
       creditor may have sold the debt to a third party collection agency or the name of the
       parent company could be listed as the creditor.
     • You cannot claim that you never received a 1099-C form in the mail. Even if you do not
       receive a 1099-C form you are expected to recognize a capital gain.

IMPORTANT: For individuals receiving public benefits and public housing. Be sure to
check if your updated income will exclude you from the benefits you are receiving.

What Your Credit Report can Tell You
You are entitled to get a free copy of your credit report from each credit reporting agency,
once a year. You may want to space these out, so you get a free credit report every four
months or so. You can get call toll free to (877) 322-8228 or go online at
https://www.annualcreditreport.com/cra/index.jsp

When you call or go online to get your free credit report, you should have available to you
the account numbers of your debts. In order to verify that you are not being impersonated
by someone else, you will be asked to select the correct account number from among a
choice of account numbers.

Use the credit report to:
   • Get accurate creditor names, addresses, type of debt, balance due, and account
          numbers. Some credit reports do not give all of the information. (If you choose to


LSNV's Debtors' Rights and Bankruptcy Manual Page 17

 
        file a bankruptcy case represented by LSNV, you will have to provide the full name,
        address and account number of the debt, as well as a good estimate of the amount
        still owed to each creditor.)
    •   Remember creditors you may have overlooked.
    •   Find out about judgments against you.
    •   Find out about liens against your property, and the need to seek legal counsel to
        deal with them. A judgment against you can be a lien against any real estate you
        may own. An IRS lien might also be discovered.
    •   Find out whether you have co-signed for someone else, and whether they have
        failed to make the payments.
    •   Find out about debts your spouse may have without your knowledge.
    •   Find out about mistakes on your credit record.




                                  [Deliberately Left Blank]




LSNV's Debtors' Rights and Bankruptcy Manual Page 18

 
                 III. POST-JUDGMENT COLLECTION
In a post-judgment collection, the creditor (now called a judgment creditor) has gotten a
judgment against the defendant (the defendant is now called a judgment debtor). This
entitles the creditor to use a number of remedies (court proceedings) to try to collect the
debt (now called a judgment). They include:

    •   garnishment of wages or a bank account;
    •   Summons to Answer Interrogatories [Form DC-440]; and
    •   liens.

The most common remedy is the garnishment action. See Facts About Garnishment below.

This section starts with the Warrant in Debt [Form DC-412] which is the usual way a
creditor commences a court action on a debt in the Virginia courts.

Top Portion of the Warrant in Debt [Form DC­412] 




LSNV's Debtors' Rights and Bankruptcy Manual Page 19

 
You Received a Warrant in Debt
You received a Warrant in Debt [Form DC-412]. Generally you were personally served by
the sheriff, you found the Warrant in Debt attached to your front door of your residence
(called posting) and you received a copy in the mail.

Look at the name of the plaintiff. You may recognize the name as one of your creditors. Or,
you may not recognize the name because the creditor "sold" the debt. This often happens
when a creditor "sells" the debt to a third party and the third party sues you.

Even though the paper that you receive is called a Warrant In Debt [Form DC-412], it is not
an arrest warrant. It is a civil action against you, and you cannot be put in jail if you don't
come to court or pay the debt.

If you dispute (don't believe that you owe the debt or don't believe that you owe the
amount of the claim) the debt, you must go to court and defend yourself. In Virginia, most
creditors bring an action in the General District Court. There is a General District Court in
each Virginia County and in some cities, e.g., Alexandria City. The Warrant in Debt is a
summons in this court.

In the top right-hand corner of the Warrant in Debt is the "Hearing Date and Time." This is
the date for what is called the "Return Date." If you wish to dispute the debt or the amount
of the debt, you must go to court on that date and by that time. Be on time, don't be late!

The first court appearance in General District Court is the Return Date and when your case
is called, the judge will ask you if you contest the debt. If you contest the debt, tell the
judge:

“I want a trial and a Bill of Particulars and a trial date.”

A Bill of Particulars [see http://www.courts.state.va.us/forms/district/dc441.pdf] is the legal
name for a detailed statement prepared by the entity who is suing you (plaintiff). The
judge orders the Bill of Particulars be sent to the court with a copy to you by a date certain.

The judge may order you prepare a Grounds of Defense
[http://www.courts.state.va.us/forms/district/dc442.pdf] that is due to the court with a
copy to the plaintiff on a date certain after the date the Bill of Particulars is due. The
Grounds of Defense is a detailed statement telling the court why you don't owe the money.
You must file the original of the Grounds of Defense with the court clerk and mail a copy to


LSNV's Debtors' Rights and Bankruptcy Manual Page 20

 
the plaintiff on or before the date ordered by the judge. In addition to setting the date for
the Bill of Particulars and Grounds of Defense to be filed, the judge will set a trial date.

You can get more information regarding the Bill of Particulars and the Grounds of Defense
(sometimes called the Answer) by going to
http://www.courts.state.va.us/forms/district/civil.html

After the date the Bill of Particulars and the Grounds are due, the matter goes to trial.
Again, you must be on time to court. A the end of the trial, the judge finds for the plaintiff
or you. If the judge finds for the plaintiff a judgment is entered against you. This means
that you owe the plaintiff the amount of the judgment and possibly interest, court fees and
attorney's fees.

At this time the plaintiff can use some of the court's powers such as interrogatories and/or
garnishment to "enforce" the judgment. We will first discuss interrogatories.

The plaintiff can request the court to issue a Summons for Interrogatories [Form DC-440]
You must come to court on the "Hearing Date and Time" on this Summons or you could be
arrested. At court you will be questioned by the plaintiff under oath regarding your finances
such as your bank account information, employment and Social Security Number.




                                [Deliberately Left Blank]




LSNV's Debtors' Rights and Bankruptcy Manual Page 21

 
Top Portion of a Summons to Answer Interrogatories [Form DC-440]




Sample Form-Capital One Bank-Objection to Venue
Many individuals in Northern Virginia have credit cards issued by Capital One Bank. As part
of the credit card agreement between the bank and the credit card holder, if credit card
holder defaults on the agreement, they gave Capital One Bank permission to bring a civil
action against them in Richmond City General District Court. Pursuant to Virginia law, the
defendant (debtor) can request that venue be moved to the General District Court in the
county or city where they reside. This sample form is for that purpose.

For more information regarding a change of venue, see the second page of the Warrant in
Debt [Form DC-412] The pertinent part is set forth below.




LSNV's Debtors' Rights and Bankruptcy Manual Page 22

 
Sample of a request to change venue for a suit by Capital One Bank.

See Objection to Venue Form below.

VIRGINIA:

    IN THE GENERAL DISTRICT COURT FOR THE CITY/COUNTY OF __________________

Capital One Bank            )
__________________________ )
             Plaintiff      )
                            )
       vs.                  )                    Case No. _____________________
                            )
                            )                    Return Date: __________________
___________________________)
             Defendant      )


                                  OBJECTION TO VENUE

        Comes now your Defendant, ____________________________, who responds to

the Plaintiff’s Warrant in Debt and states as follows:

        1. Defendant is a long term resident of the City/County of

_____________________, Virginia.

        2. Defendant has not resided in the City/County of

___________________________.

        3. Defendant requests this case be transferred to _________________ County/City

so that he/she may best present evidence as he/she may be required.

        Signature:   _______________________________________


Name:         _______________________________________


LSNV's Debtors' Rights and Bankruptcy Manual Page 23

 
Address:     _______________________________________

             _______________________________________

Phone:       _______________________________________

                                 CERTIFICATE OF SERVICE

      I hereby certify that on [date:] _____________________________ I mailed a true
and accurate copy of this Objection to Venue by first class mail, postage prepaid, to Capital
One Bank, P.O. Box 85168, Richmond, Virginia 23285-5168.


Signature:   _______________________________________


[Before you mail the Objection to Venue to the court and the Capital One Bank, make a
copy of the completed and signed form to keep for your records.]

[A listing of the General District Courts and their addresses can be found at
http://www.courts.state.va.us/courts/gd.html ] To check case status, visit
http://www.courts.state.va.us/caseinfo/home.html click the General District Court Case
Information paragraph, select the court, enter the client’s name and select the civil and
active/inactive buttons, the select SEARCH.




                                [Deliberately Left Blank]




LSNV's Debtors' Rights and Bankruptcy Manual Page 24

 
Facts about Garnishment
A garnishment action against wages or a bank account is the most common way a plaintiff
tries to enforce a judgment. The person or business you owe money to is called a creditor.
If a creditor wants to force you to pay a debt, they first must ask the court for a judgment.
A judgment is simply a legal document that says you owe someone a certain sum of
money. So, unless there is a judgment, a creditor cannot use a garnishment action to try
to collect money from you.

A garnishment is an order from the court that tells your employer (or bank) to withhold
money from you. This means that money that is normally paid to you gets paid to the
creditor instead.

What can a garnishment do? 
As stated above, a garnishment can take money out of your wages or money in your bank
account. However, if the garnishment action is against your wages, there are limits to how
much of your wages can be garnished. Wage garnishments can only take a percent of your
“disposable net earnings.” This is the money you make after you subtract the amounts that
must be withheld by law. Amounts that must be withheld by law include federal and state
taxes, but do not include optional deductions from wages.

If your disposable net earnings for the week are more than $349.33, a garnishment can
take 25% of them. If your disposable net earnings for the week are less than $349.33 but
more than $262.00, a garnishment can take whatever amount of money leaves you with
$262. If you make less than $262 per week, you cannot be garnished at all. (On July 4,
2009, these cutoff amounts will increase to $386.66 and $290.00)

Also, your bank account can be garnished. A bank account garnishment will temporarily
freeze your bank account. Therefore, if you have any checks outstanding at the time the
garnishment action hits your account, those checks will "bounce." In addition, you will be
charged a fee by your bank (usually $75.00 to $100.00).




LSNV's Debtors' Rights and Bankruptcy Manual Page 25

 
What can a garnishment NOT do? 
A garnishment action cannot touch your direct-deposited government benefits. This
includes:
    • Social Security, Supplemental Security Income (SSI);
    • Temporary Assistance for Needy Families (TANF);
    • Black Lung benefits;
    • unemployment compensation;
    • workers’ compensation; and,
    • Veterans’ benefits.

These benefits also can’t legally be garnished if you keep them separate from any other
money you have (for example, in a separate bank account). However, because many banks
will still freeze your totally exempt bank account, you will want to check with the branch
manager where you bank to see if they will do that. In addition, if your benefits come from
the Social Security Administration, you may want to have these benefits put in a special
debit card that is also exempt from garnishment. Call toll-free at 1-877-212-9991 or sign up
online at www.USDirectExpress.com. SeeThe Direct Express® Card: Safer than a Bank
Account for your Social Security or Supplemental Security Income (SSI) Benefits.

What are the details of a garnishment? 
If your wages are garnished, the garnishment papers tell your employer to take money out
of your wages and to send it to the court. This can go on for 30, 60, 90 or 180 days,
depending on how long the creditor asked the court to garnish you.

This garnished money is under the control of the court (not the creditor) until the
garnishment period is over. The garnishment period ends at what is called the “Return
Date.” Your creditor is not allowed to touch the money until the Hearing Date and Time.
This period of time is there to give you a chance to object to the garnishment in court.

How do I object to a garnishment? 
You do this by filing a Request for Hearing - Exemption Claim [Form DC-407] with the court
that issued the garnishment. You may be able to do this by yourself, but unless you are a
lawyer that is not a good idea. You may lose income or property if you don’t know the law.
It is better to get legal help.




LSNV's Debtors' Rights and Bankruptcy Manual Page 26

 
Top Portion of the Request for Hearing ­ Exemption Claim [Form DC­407]   




You must get a court hearing before the Hearing Date and Time. to object to the
garnishment. At the hearing, you have an opportunity to explain why the money shouldn't
be garnished. If the Judge agrees, the money that was garnished is returned to you.

What does a garnishment mean for your job? 
If your wages are garnished, you and your employer will receive a letter from the court.
The letter orders your employer to take money out of your paycheck and to send a part of
it to the creditor. Employers have no choice but to do what the letter says, no matter how
much they may not want to.

Your employer can’t fire you the first time your wages are garnished. Dealing with
garnishments, however, does mean extra work for your employer; and some employers
would rather fire people than do extra work. It is against the law for an employer to fire
you because of a garnishment (or even several garnishments) from one creditor. But, if
more creditors also garnish you, it is possible that your employer may be legally allowed to
fire you, as long as the firing decision is not discriminatory.




LSNV's Debtors' Rights and Bankruptcy Manual Page 27

 
What happens if wages at your old job are garnished? 
Creditors have to know where you work to garnish your wages. They will usually try to
garnish you at the job you wrote down on your credit application. If you no longer work
there, your old employer will just tell the court that you no longer work there, and nothing
more will happen. You do NOT have to appear on the garnishment summons Return Date.

When the creditor finds out you don't work there any more, it may have the court send you
a “Summons to Answer Interrogatories [Form DC-440].” This is an order from the court to
show up at the courthouse and answer questions under oath, including disclosing where
you work. That court appearance is MANDATORY.

Garnishment and Child Support Payments 
As of July 1, 2008, child-support payments cannot be garnished (Va. Code § 20-108.1.G,)
However, if the child support is mixed (commingled) with nonexempt funds in a bank
account, then the bank account can be frozen and the owner of the account can be forced
to go to court to prove what portion of the funds in the account are exempt by virtue of
being child support.

Even when the funds are proven in court to be exempt child support, the owner of the
account may incur a bank-garnishment fee and bounced check fees. Therefore, it is wise to
segregate child support funds in a separate account where only child support is deposited,
and to send a letter to the bank [delivered by a visit to the manager of the local bank
branch] explaining that the only funds in the account are exempt child support. If the bank
does not assure the owner that an account with only child support will not be frozen by a
garnishment, the funds should be put in another bank.




LSNV's Debtors' Rights and Bankruptcy Manual Page 28

 
The Direct Express® Card: for Social Security or Supplemental
Security Income Benefits
Direct-deposited federal benefits are not supposed to be subjected to garnishment when in
a bank account where no other funds are deposited. However, some banks will not honor
this law, and will instead freeze the account and make the owner go to court to prove that
the funds are exempt. This can result in bank-garnishment fees and bounced-check fees
being imposed by the bank.

What is Direct Express®?
The Direct Express® card is a new debit card you can use to get and spend your Social
Security or Supplemental Security Income (SSI) benefits. You don’t need a bank account.
With the Direct Express® card, your benefits are deposited directly onto your card in full,
on time, every month. You can use the card to make purchases, pay bills or get cash at
thousands of locations. And most transactions are free.

Why should I sign up for Direct Express®?
The Direct Express® card is safer and more convenient than paper checks or electronic
bank deposits. Anyone receiving Social Security or SSI payments can enroll. No more
waiting for the mail, fretting about lost or stolen checks, or worrying about bank account
garnishments.

How do I use the card?
You can use the card to make purchases, pay bills or get cash at thousands of locations. It
can be used anywhere that accepts MasterCard debit cards. Your card is protected by your
Personal Identification Number (PIN). Your card has federal consumer protection and your
funds are FDIC-insured. If your card is lost or stolen, it will be replaced. When a lost or
stolen card is reported promptly, your money is protected.

Can I use the card without any fees?
Yes. Most transactions are free. There is no sign-up fee and no monthly account fee. Many
other services are provided free of charge, including purchases, cash back with purchases,
cash withdrawals through bank or credit union tellers, and one ATM cash withdrawal per
month when using a Direct Express® card network ATM.

 How do I sign up?
Anyone receiving Social Security or SSI can enroll. It’s quick and easy to sign up for the
card. Call toll-free at 1-877-212-9991 or sign up online at www.usdirectexpess.com.

                 Used with permission of Central Virginia Legal Aid Society
LSNV's Debtors' Rights and Bankruptcy Manual Page 29

 
Social Security and Veterans Benefits are Exempt
Social Security income is exempt pursuant to 42 USC § 407 and remains
exempt from garnishment even after deposited in checking account. Philpott
v. Essex County Welfare Board, 409 U.S. 413, 93 S. Ct. 590, 34 L. Ed.2d 608
(1973).

Veterans Administration Disability income is exempt under 38 USC § 3101(A) even
after deposited in checking account. Porter v. Aetna Casualty & Surety Co., 370 U.S.
159 (1962)

Maintain a bank account into which only totally exempt funds are deposited,
and write a letter to the bank citing the above cases, so the bank is on notice
not to honor any garnishment of those funds. Retain all bank statements,
which will show that from the outset the funds were solely from totally
exempt sources.

Even if you do this, the bank may still freeze your account. Therefore, it is
important for you to prepare and send a letter to your bank advising them
that only exempt funds are deposited into your account. See Sample Letter to
Bank Where Accounts Contains Direct Deposited Social Security or Veteran’s
Income. Again, if your benefits come from the Social Security Administration,
you should probably have these benefits put in a special debit card that is
also exempt from garnishment. Call toll-free at 1-877-212-9991 or sign up
online at www.USDirectExpress.com. SeeThe Direct Express® Card: Safer
than a Bank Account for your Social Security or Supplemental Security
Income (SSI) Benefits.
Retirement benefits usually cannot be garnished until they are paid to you. If
you arrange for allotments to be paid directly to your creditors you regularly
pay, for example your landlord or utility providers, you may be able to protect
these funds.




LSNV's Debtors' Rights and Bankruptcy Manual Page 30

 
Sample Letter to Bank Where Account Contains Direct Deposited Social Security 
or Veteran's Income 

                                                 _________________________
                                                            Date


_______________________________________________
                      name of bank




_______________________________________________
                      Address of bank


Re: _____________________________________________________________
                               Type and number of account


Dear Sir:
I am writing to advise that the only source of funds in the above account is direct-
deposited Social Security or Veteran's Income. Federal law provides that this income is
exempt from garnishment.

Enclosed is a copy of a letter from the Social Security Administration confirming that I am a
recipient of        Social Security or           Veteran's Income.


______________________________________________________________________
             Printed name                                   Signature




______________________________________________________________________
                                                 Address



Enclosure




LSNV's Debtors' Rights and Bankruptcy Manual Page 31

 
                                IV. BANKRUPTCY
Most bankruptcy cases are “no asset” cases, which are cases where the debtor gets to
keep all of his property, subject to any liens.

LSNV represents low or no-income qualified individuals in Chapter 7 bankruptcy
proceedings for free except for the $320 in filing fees and a $30 [$50 for married couple]
charge for getting a credit report. Details regarding the fees are found below.

LSNV has guidelines for accepting clients for bankruptcy. If an individual does not meet
those guidelines, LSNV will not file a bankruptcy for the client. This does not mean that the
client cannot file a bankruptcy with representation by a for-fee attorney, only that LSNV will
not represent them. Details regarding those guidelines are set forth below.

The process, in three stages:
        1. attendance at the Debtors’ Rights Clinic;
        2. pre-bankruptcy meetings and homework; and
        3. a decision by LSNV whether to represent the applicant in bankruptcy.

Attendance at the Debtors’ Rights Clinic
Attendance at the Clinic is usually mandatory for those who understand English if an
applicant wants to file a bankruptcy. There are some exceptions, such as the applicant is
unable to understand English. Prior to coming to the Debtors’ Rights Clinic, attendees were
directed to bring with them a picture identification (for example, a driver's license). Prior to
the clinic you will be sent a letter and/or email telling you what to bring to the clinic and
telling you that you must be interviewed over the phone by a volunteer, who will prepare a
memorandum of your situation. These volunteers are both attorneys and non-attorneys.
The letter or email will include maps showing the location of the clinic and three pamphlets
for you to read prior to the clinic: Have You Been Sued in General District Court?’ Jow
Wage Garnishments Work; and Bankruptcy.

Pre­bankruptcy Proceedings 
At the clinic you will meet with a volunteer paralegal to review any documents you have
brought with you. The volunteer paralegal will also accompany you to your meeting with
the pro bono bankruptcy attorney who will give you advice based on the interview
memorandum and any other information you or the volunteer share with her. After the
consultation with the pro bono attorney, the volunteer will see that you are given the
documents the pro bono attorney decides you should get. The volunteer may also help
you understand [and perhaps help you fill out] the documents you are given. The
volunteer may help you in meetings after the clinic.


LSNV's Debtors' Rights and Bankruptcy Manual Page 32

 
At the end of the clinic, applicants seeking further assistance regarding debt management
or bankruptcy fill out a Request for Chapter 7 Bankruptcy (See the Appendix for a copy of
this Request] and receive a Status of Application for Legal Assistance form. After the clinic,
or within a day or so later, the applicant will be scheduled for an appointment with a LSNV
staff attorney. The volunteer will emphasize the need to obtain a number of financial
documents, answer numerous questions in a questionnaire and collate the information in
preparation for an appointment with a LSNV attorney.

If the needed handouts are not already printed, the volunteers may use the conference
room computer to print copies of additional documents that may be helpful to the
applicants [C:\extracts of manual], and may use the copier to duplicate documents that
should go into the client’s file. A client document should never be in LSNV’s file without
making a copy for the client to keep.

At the applicant’s meeting with LSNV staff attorney, s/he will review the documents
provided by the applicant and the recommendation of the pro bono attorney. At a later
meeting, the LSNV litigation staff will and decide whether the request for bankruptcy is
merited and if so, the LSNV staff attorney will tell the applicant that they will be considered
for representation for a bankruptcy;

Decision to Represent
After all of the information has been collected and reviewed by a LSNV attorney, the
decision is made whether to represent the applicant and file a bankruptcy petition.




                                 [Deliberately Left Blank]




LSNV's Debtors' Rights and Bankruptcy Manual Page 33

 
Chart: LSNV's Bankruptcy Procedures 
     Debtors' Rights Clinic                                          Interviews by LSNV Attorney
                                               Volunteer Pro
Applicant attends the Clinic. If              Bono Coordinator       The LSNV Attorney does a
they want a bankruptcy, they are                                     preliminary assessment and if
given an appointment with a                                          merited, directs the applicant to
LSNV Attorney                                                        collect documentation. After
                                                                     receiving the documents, the
                                                                     attorney decides whether to
                                                                     proceed to bankruptcy.
    Applicant is not eligible for
      bankruptcy assistance



Collection and Review of                                                  Attorney and Applicant sign
                                        Volunteer assists
 Bankruptcy Documents                                                     Representation Agreement
                                         applicant with
                                            collating
Applicant collects and
                                           documents
collates documents for final
review by the LSNV attorney.                                              Filing Bankruptcy Petition
A volunteer assists in
collating the documents.                                                      Attorney files petition
                                    Pre-Filing Credit Counseling

                                    Applicant takes the Pre-Filing
                                    Credit Counseling Course after              Bankruptcy
                                    LSNV has signed him/her up for              Proceedings
                                    the course




                                                                     Debtor Education Counseling
                                                                     after LSNV has signed him/her up
                                                                              for the course




LSNV's Debtors' Rights and Bankruptcy Manual Page 34

 
Documents and Financial Information You Must Get Before a Chapter
7 Bankruptcy
You attended a Debtors' Rights Clinic on _________________________ and you requested
a Chapter 7 Bankruptcy. You filled out a Preliminary Request for Chapter 7 Bankruptcy and
we advised you that after you provide us with the information below, we will tell you
whether we will represent you in a Chapter 7 Bankruptcy.

Gather the information identified below and fill out a three-part Bankruptcy Questionnaire.
Keep in mind, you are not represented by LSNV for a Chapter 7 Bankruptcy until you and a
representative of LSNV sign a Representation Agreement for Chapter 7 Bankruptcy.


       □   Get the following documents or information and request a meeting with a LSNV
             attorney;
             □   carefully complete the three-part Bankruptcy Questionnaire [make a note
                 to ask about any question you do not understand];
             □   get a free credit report (you were given information at the Clinic on how
                 to get a free credit report);
                 □ review your credit report and identify any bills (such as medical bills)
                 not included in the report, then collect copies of those bills, and get the
                 name and address and amount owed on all debts for which you do not
                 have a writing;
             □   collect, organize and make copies of all of your bills [remove bills from
                 envelopes];
             □   provide details of all vehicles you own, or on which you co-signed [Get
                 the Kelly Blue Book value from www.kbb.com];
             □   provide LSNV with $30 for a single debtor, $50 for a married couple, so
                 LSNV can obtain an online credit report (this is a special credit report for
                 use with the bankruptcy software);
             □   collect and provide LSNV with any medical bills for services you have had
                 within the last year not covered fully by health insurance;
             □   provide copies of any former or current court proceedings;

             □   provide copies of;



LSNV's Debtors' Rights and Bankruptcy Manual Page 35

 
                      □      (1) all paychecks, pay stubs, or other evidences of payment from
                                any employer received within the last six months (later you
                                will have to update this information if you are accepted as a
                                bankruptcy client.)
                      □      (2) last three months of bank statements;

                      □      (3) tax returns or transcripts for your most recent federal tax
                                return; and

                      □      (4) ___________________________________________.
                                                     Other information

After you have carefully completed the Bankruptcy Questionnaire and obtained all of the
other information above, call and make an appointment to meet with a volunteer who will
collect all of your information and give it to a LSNV attorney.

Until a Representation Agreement for Chapter 7 Bankruptcy is signed by both you and a
LSNV attorney, you are not represented by this organization.

Name of client: ___________________________________ Date: ________________

________________________________
             LSNV Attorney




LSNV's Debtors' Rights and Bankruptcy Manual Page 36

 
The Value of Medical Insurance when Filing for Bankruptcy
Clients who do not have medical insurance are at risk of incurring medical debts, should
they or one of their dependants, become ill and require serious medical care, after their
other debts have been discharged in bankruptcy. Medical debt incurred after a bankruptcy
is filed will not be dischargeable in a Chapter 7 bankruptcy for 8 years, making it very risky
for anyone to file a bankruptcy without this protection.

Although a chapter 13 bankruptcy could be filed in such an instance, LSNV is not able, at
this time, to offer chapter 13 bankruptcy representation to its clients.

Bankruptcy clients who can obtain employer-sponsored or private health insurance must
usually obtain it before LSNV will file a bankruptcy for them.

Please sign below to acknowledge that the risks of filing a chapter 7 bankruptcy without
health insurance, have been explained to you and that you are willing to accept that risk.


____________________________________             ______________________
                   Signature                                   Date


____________________________________             ______________________
            Attorney who explained the Risk                    Date




LSNV's Debtors' Rights and Bankruptcy Manual Page 37

 
Credit Counseling and Debtor Education Requirements of the
Bankruptcy Law
About the Pre-Filing Credit Counseling and Debtor Education Courses
Applicants for bankruptcy are required to take a pre-filing credit counseling course the
petition for bankruptcy is filed, and a debtor education course after you file, but before
they can get a bankruptcy discharge. Attendance at LSNV Debtors’ Rights Clinic does not
qualify as credit counseling.

If LSNV signs you up with the Institute for Financial Literacy to take the Pre-Filing Credit
Counseling course and the Debtor Education Course they is no fee. If you don’t wait for
LSNV to sign you up for the courses, you will likely have to pay $50.00 for each course.
Therefore, it is recommended that you not take the Pre-Filing Credit Counseling course
until a LSNV attorney advises you that you are a candidate for a bankruptcy, and that you
have been signed up to take the course for free.

The free courses are only in English. If you do not speak English adequately, you can
contact Money Management International Inc., 9009 West Loop South, 7th Floor, Houston,
TX 77096-1719, telephone number 877-918-2227, Website www.moneymanagement.org
that will waive the fee for if your gross income is no more than 150% of poverty. To apply
for this waiver, your attorney must FAX the appropriate completed pre-or post-filing form
to the number on the form, noting that the bankruptcy is being handled without charge,
and enclosing a copy of your schedule I [part of your bankruptcy papers that LSNV will help
you develop]. It takes two or three days to process the waiver. Call 877-918-2227 after two
or three days to find out if a waiver is approved.

When you contact the organization that will give you the pre-filing credit counseling course,
have the Three-Part Bankruptcy Questionnaire completed and your credit reports with you
so you can refer to them during the course. You should have figured out your income and
expenses carefully, so that any plan you develop will allow you to have enough funds left
over to meet your essential expenses.


The Institute for Financial Literacy offers these courses by telephone (in English only) or
the Internet. They also offer the Debtor Education course by a method they call home
study. Virginia Tech’s Virginia Cooperative Extension offers the Debtor Education course in
classrooms around the area.




LSNV's Debtors' Rights and Bankruptcy Manual Page 38

 
Pre-Filing Credit Counseling Course
You must complete the Pre-Filing Credit Counseling course at least 24 hours before your
bankruptcy petition is filed (but not earlier than 180 days before that filing). The course
takes approximately 90 minutes.

      Taking the Institute for Financial Literacy Course By Telephone
To take the Pre-Filing Credit Counseling course by telephone, call 1-866-662-4932.

       Taking the Institute for Financial Literacy Course By Internet
If you want to take the Pre-Filing Credit Counseling course on the Internet, you must first
contact LSNV, and advise that you want to take the course by Internet. Unless you make
this request, you will be signed up to take the Pre-Filing Credit Counseling course by
telephone.

Tell the Financial Literacy personnel you are calling to take the Pre-Filing Credit Counseling
course and that Russ Hatchl of LSNV signed you up. You should have gotten an email. If
you did not, call 1-866-662-4932.

As the counseling will likely take 90 minutes, you should make the call on a land line, not a
cell phone. Your account is ***, which is the same as your account number with LSNV.

       Taking the Institute for Financial Literacy Course Debtor Education Course
Within 15 to 17 business days, you should receive a workbook. When the workbook is
received OR 15-17 days has passed, you should call the Institute for Financial Literacy. The
telephone number is 1-866-662-4932. Call between 9:00 a.m. and 10:00 p.m. on a
weekday and choose Option 2 to schedule your telephone conference for the Debtor
Education course. [Keep the Affidavit Statement and the letter that came with the
workbook.]

You may have to wait 15 minutes for someone to get on the phone to counsel you. When
you get to talk to someone, tell them you are calling in order to take the Debtor Education
course and that Russ Hatchl of LSNV signed you up. As the counseling will likely take 3
hours, you should make the call on a land line, not a cell phone. Your account is
_____________ ***, which is the same as your account number with LSNV.

       Taking the Institute for Financial Literacy Course Online
If you requested that you take the Debtor Education course online, go to
www.freshstartonline.org and click on the box that says “all users click here to log in” on
the right side of the screen. Have your LSNV Case Number when you sign up, so they will
know to let you take the course for free. You can go to


LSNV's Debtors' Rights and Bankruptcy Manual Page 39

 
http://www.ext.vt.edu/personalfinance/ to learn the schedule and download the
registration form and the scholarship form.

Cricket Debt Counseling also provides the pre and post-counseling services for English and
other languages.

For Spanish, English, Romanian, Chinese, Korean, Tagalog (one of the major languages
used in the Philippines) and Vietnamese speaking applicants, go to www.cricketdebt.com
The telephone number is 1-866-719-0400.

Registration: Call or go online to register. Fill out the information. When you get to the
payments page STOP, send an email to waiver@cricketdebt.com to have the fees waived
with the following information:

    1.   Name;
    2.   State of Residence;
    3.   Number of Household Members; and
    4.   Current Gross Income.

You will then receive an e-mail approving or denying the request. If approved, you can
then log-in and complete the course. At the end of the course you will see a toll free
number to call and have the certificate of completion mailed or e-mailed to you or the
attorney.

There is another Website for both pre-filing and Debtor Education counseling courses:
www.solidstartfinancial.com. The telephone number is 1-866-467-4147

Registration: You must register again as this is a different company. Follow the same
instructions as the one above but email the information to waiver@solidstartfinancial.com .

Financial Documents Needed to File a Bankruptcy
Current Monthly Income Calculation
The bankruptcy law requires the completion of a calculation to determine whether you, the
debtor, have a household income greater than the median household income for your state
[Virginia].

The form required you to calculate your current monthly income by adding up all of your
income for the past six months and dividing by six. If you are married and not separated
from your spouse, your spouse’s income for that six month period must be included in the
calculation.



LSNV's Debtors' Rights and Bankruptcy Manual Page 40

 
Therefore, you must provide the LSNV lawyer with copies of all of your pay stubs for the six
months up to the date of the meeting. If your pay is always the same, and you do not get
any overtime, then you can provide your most current pay stub and your pay stub from six
months ago. When in doubt, bring in as many pay stubs as you can find. If you do not
have a good collection of your pay stubs, you will have to ask your employer to provide you
with a printout of your pay information for the last six months and bring that to your
meeting with the LSNV staff lawyer .

Tax Returns or Tax Transcripts
Your most recent required federal income tax return [or, at your election, a transcript of
that return, which discloses less information] must be provided to Trustee 7 days before
the meeting of creditors [11 USC 527(e)(2)(A)(I)] and to any creditor who timely requests
it [11 USC 527(e)(2)(A)(I)]. You should immediately obtain a transcript of your federal and
Virginia tax returns for the last year, and any years for which you still owe money. You
must bring these with you to the meeting with the LSNV staff lawyer who is to review your
completed bankruptcy questionnaire. A transcript of federal tax returns can be obtained by
calling 1 (800) 829-1040 or filing Form 4506-T. A transcript of Virginia tax returns can be
obtained by calling 1 (804) 367-8031.

In addition, at the request of the court, the US trustee, or any party in interest, federal
income tax return [or, at your election, a transcript of that return, which discloses less
information] required for a year ending while the case is pending, and any amendment to
either that return or the one most recently required, must be provided. These documents
will not be available until your case has been taken over by a bankruptcy attorney.

Payments by Employers within 60 days of Bankruptcy Filing Date
Within 45 days after filing your bankruptcy, your bankruptcy attorney must file all
paychecks, pay stubs, or other evidences of payment from any employer received within
the 60 days before the bankruptcy filing date [11 USC 521(a)(1)(B)(iv)]. You should start
collecting all of those documents immediately. You should have a full 60 days worth of
these documents when you meet with the LSNV staff lawyer who is to review your
completed bankruptcy questionnaire. If necessary, you must ask your employer to provide
you with duplicates. After your bankruptcy case is filed, you will have to give your
bankruptcy attorney copies of all of those documents for the 60 days that ended with the
date your bankruptcy was filed.

Other documents You May have to Provide
You may be required to file:
• Deeds on your house or other real estate.
• Mortgages (Deeds of Trust) on your house or other real estate.
• Tax assessed values of real property worth more than $3,000.

LSNV's Debtors' Rights and Bankruptcy Manual Page 41

 
• Evidence of value on vehicles worth more than $3,000 (e.g., Kelley blue book value,
   NADA guidebook, tax tickets, appraisals, etc.).
• Evidence of value on personal property worth more than $3,000.
• For secured debts, a statement from the creditor of the current balance or payoff.
• For secured debts, all security agreements and financing statements.
• Titles or DMV certificates for all motor vehicles or mobile homes.
• If you and your spouse own real estate held as “tenants by the entireties,” evidence for
  each unsecured debt of the parties obligated on each unsecured claim.
• Summary Plan Descriptions for retirement or 401(k) plans.
• Federal income tax returns for the prior three years.
• Proof of cash value of life insurance policies.
• Recorded Homestead Deeds.
• Any complaint or claim you have filed as a debtor seeking money.
• Any Final Decree of Divorce or Property Settlement Agreement within the past year.
• Financial reports of any closely held business of yours.
• Your three most recent monthly bank statements on all accounts you have.

If your case is one of the 250 cases that is selected for a detailed audit by the US Trustee
system, you will need to produce six months of statements from creditors, so do not throw
those away for at least a year after you file your bankruptcy case. Making sure the most
recent documents are in the hands of your bankruptcy attorney.

Some of the documents you need to provide will already be in your LSNV file. The
documents described in this handout that are not in your LSNV file should be given to your
bankruptcy attorney at your first meeting. Documents received after that meeting should
be forwarded to your bankruptcy attorney when you receive them.

What is a Security Interest?
In most bankruptcy cases, the debtor can keep everything he or she owns. However, if
your property is subject to a “security interest,” whether you can keep the property usually
depends on whether you are able and willing to keep making the payments on time, by the
actual due date, not by the grace period due date.

It is a right that entitles a creditor to repossess your property if you do not pay the debt as
required. How do you know whether any of your property is subject to a security interest?
The most common form of security interest you will have seen is the security interest the
lender has when you finance the purchase of a motor vehicle. If you do not pay, the lender
can repossess the motor vehicle. Another common kind of security interest is the mortgage
(really a deed of trust) on you home. If you default, the lender can foreclose on your
home. While these two kinds of security interests require special documentation (e.g. the
lender's rights are on the DMV title, and the lender holds the title), a security interest in

LSNV's Debtors' Rights and Bankruptcy Manual Page 42

 
“consumer goods” (goods for which you are the ultimate consumer) other than property
like motor vehicles does not require anything more than a “security agreement” signed by
you. Department, furniture, jewelry and other stores often include in their credit granting
contracts a “security agreement” giving them the right to repossess the goods if you do not
make the payments.

What choices do you have if you own property that is subject to a security
interest? While secured creditors do not usually care to claim a security interest in your
clothing, they may well assert their rights in things like TVs and furniture. If you own
something in which a creditor has a security interest, you have four options:

       (1) You can surrender the property (give the property to the creditor holding
       the security interest in the property.

       (2) You can "redeem" the property by paying the creditor its fair market value. This
is usually very difficult for someone to do if they have to file a bankruptcy. However,
sometimes a lender will contact someone after they have filed a bankruptcy and offer to
lend the money they can use to redeem their motor vehicle. The new lender will charge a
high interest rate for this loan, but the loan may be worthwhile, if the amount of the debt
secured by the motor vehicle is much greater than the motor vehicle’s trade in value. You
must talk to your attorney to fully evaluate the offer being made by such a lender.

         (3) You can "reaffirm" the entire debt to the creditor, and continue to make
payments as if the bankruptcy was never filed. If you reaffirm and then later fail to make
the payments, the creditor can repossess the property and sue you for the "deficiency
balance," which is what you still owe after the property is sold by the creditor. If you file a
bankruptcy case and are represented by an attorney, it is unlikely that you will be able to
officially reaffirm the loan, and remain liable on the loan even after the bankruptcy. The
bankruptcy judge will not approve a reaffirmation agreement when a debtor is represented
by an attorney, unless the attorney certifies that remaining liable on the loan will not
impose an undue hardship on the debtor. Attorneys rarely will make that certification,
which means that unless the payments are made on time, by the actual due date, not by
the grace period due date, the debtor will not be able to keep the car. Frankly, it is rarely
in your interest to reaffirm a large debt just to keep household goods. See the discussion
below regarding the risks of reaffirmation.

Risks of Reaffirmation You may have a problem if you reaffirm a debt on a motor
vehicle and the motor vehicle is later “totaled” in a collision after the filing of your
bankruptcy case. Usually, the insurance company will only pay the value of the motor
vehicle, which may be less than the total amount still owed to the creditor. If that is the
case, you would still be liable for a “deficiency balance,” meaning the amount by which the

LSNV's Debtors' Rights and Bankruptcy Manual Page 43

 
payoff on the debt exceeds the amount paid by insurance. In deciding whether to reaffirm
the debt you must balance your need to keep the motor vehicle, even if the amount
reaffirmed is more than the motor vehicle is worth, against the risk that the motor vehicle
might be “totaled,” leaving you with a deficiency balance to pay (unless the creditor is
willing to let you apply the insurance proceeds to a replacement motor vehicle, which can
leave you even deeper in debt).

“Cross-collateralization” Problems If the lender of your motor vehicle loan is also the
issuer of a credit card, then you need to find out whether the lender has a security interest
in your motor vehicle to cover the debt. This is called cross-collateralization, and is
becoming more and more common, especially with credit union loans. If the motor vehicle
(or other) lender is also a credit card issuer, bring the papers you signed when you
purchased the motor vehicle and when you opened the credit card account, so the intake
attorney or paralegal can check for wording that might give rise to such a cross-
collateralization. If your motor vehicle loan and a credit card account are “cross-
collateralized,” then the lender has the right to insist that you pay both the motor vehicle
loan and the credit card account if you want to keep the motor vehicle, unless you have the
cash to be able to “redeem” the motor vehicle by paying its fair market value.

Renegotiation of the terms of the Secured Debt It may be possible to renegotiate the
terms of the secured debt, and keep the property secured by that debt. A secured creditor
usually does not want the property back. What is really wanted is the continuance of the
payments secured by the property. It may be possible for you to renegotiate with the
secured creditor to reduce the amount of the debt to be reaffirmed. Talk to your pro bono
attorney about whether this may be possible, and the procedures and risks involved.

Fraud Exceptions to Bankruptcy Discharge
Debts incurred by fraud can be “excepted” from a bankruptcy discharge under both chapter
7 and chapter 13. 1 There are three kinds of fraud that can be the basis for a debt to be
excepted from a bankruptcy discharge:

1. Debts for money, property, services or an extension, renewal or refinancing of credit, to
the extent obtained by false pretenses, a false representation, or actual fraud, other than a
statement about a debtor’s financial condition. 11 USC § 523(a)(2)(A) and [in chapter 13
cases] 11 USC § 1328(a)(2)(A).
                                                             
1 2Chapter 13 bankruptcy cases are “wage earner” bankruptcy cases, where the person who files pays money

to a Chapter 13 trustee for up to 5 years. If you need a Chapter 13 bankruptcy, you will have to pay a
private attorney to handle that.

 

LSNV's Debtors' Rights and Bankruptcy Manual Page 44

 
2. Debts for money, property, services or an extension, renewal or refinancing of credit, to
the extent obtained by a statement about a debtor’s financial condition that was all of the
following:
       a. in writing
       b. materially false
       c. reasonably relied upon by the creditor to whom the debtor is liable, and
       d. the debtor made with the intent to deceive.
11 USC § 523(a)(2)(A) and [in chapter 13 cases] 11 USC § 1328(a)(2)(B).

3. Debt for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or
larceny. 11 USC § 523(a)(4) and [in chapter 13 cases] 11 USC § 1328(a)(2)(B).

Has debtor engaged in activities that might permit a single creditor from exempting his
debt from the discharge?
   • 11 USC § 523(a)(2)(A) obtaining money on false pretenses, false representation, or
       actual fraud, other than a statement respecting the debtor’s financial condition
   • 11 USC § 523(a)(2)(B) a false financial statement, in writing, on which the creditor
       reasonably relied and which the debtor made with the intent to deceive
   • 11 USC § 523(a)(2)(c) luxury goods purchases or cash advances on credit to a single
       creditor aggregating more than $1,150 within the 60 days prior to the bankruptcy
       filing

Is the client at risk for a substantial abuse action [11 USC § 707(b)] by the US Trustee
(excess of income over expenses sufficient to permit substantial payment of unsecured
debt)?

Are non-dischargeable debts sufficient to make bankruptcy not worthwhile?
   • Student loans (broadly defined) are not dischargeable unless hardship (narrowly
      defined, may only get a discount)
   • 11 USC § 523(a)(8)Taxes except when non-fraudulent tax return was timely filed
      (three years from tax filing deadline before bankruptcy filing Date; 240 days after
      assessment; not 941 taxes)
   • 11 USC § 523(a)(1)Fraud while acting in a fiduciary capacity
   • 11 USC § 523(a)(4) [may suggest chapter 13]Child and spousal support 11 USC §
      523(a)(5) [unless assigned to a non-governmental entity]Debt for willful and
      malicious injury by the debtor to another or the property of another
   • 11 USC § 523(a)(6) [may suggest chapter 13]Court fines & penalties not imposed to
      compensate for actual pecuniary loss
   • 11 USC § 523(a)(7) [may suggest chapter 13 except if restitution or criminal fine
      ordered as part of a criminal conviction]Equitable distributions obligations where

LSNV's Debtors' Rights and Bankruptcy Manual Page 45

 
        harm to non-debtor would exceed harm to debtor
    •   11 USC § 523(a)(15) [may suggest chapter 13]Death or personal injury while driving
        intoxicated on alcohol, drugs, etc.
    •   11 USC § 523(a)(9)Criminal restitution order 11 USC § 523(a)(13)


If you think that one of your creditors may think its debt should be excepted due to fraud,
you must discuss this with us.

 

 

 




LSNV's Debtors' Rights and Bankruptcy Manual Page 46

 
 

 




                                  V. APPENDICES




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual   Page I 

 
Report by the Volunteer Following the Interview of the Applicant  
 

                                   Place Original in LSNV File

This report is prepared by a pro bono attorney or volunteer who met with an applicant who
is seeking bankruptcy. The volunteer goes over all of the financial and related documents
gathered by the applicant to ensure that the collected documents are ready for the LSNV
attorney to commence the bankruptcy. The report is given to Russ Hatchl, the Pro Bono
Coordinator.

                                                        Date: _______________


TO:            LSNV Pro Bono Coordinator

FROM:          _____________________________________________________________
                                     Printed Name of Pro Bono Volunteer



__________________________________________/___________________________
                                      Client Name and Kemp’s Case No.

□       Time Pro Bono Volunteer Spent with Client _________

□       Time Attorney ___________________, Esq. Spent with Client _________

□       Client was assisted in:

        □      completing the 3-part bankruptcy questionnaire;

        □      organizing bills;

        □      obtaining Kelly Blue Book printout[s] of vehicles;

        □      obtaining online credit reports for use with Best Case bankruptcy software;

        □      obtaining information for creditors [such as medical bills] not included in credit
               report;
        □      understanding the need for health insurance to qualify for bankruptcy (See
               The Value of Medical Insurance when Filing for Bankruptcy above);
        □      determining whether all medical bills are covered fully by health
               insurance;
        □      determining the status of any pending litigation, including garnishment;



Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                 Page II 

 
       □      calculating whether client is eligible for earned income tax credit
              http://www.irs.gov/individuals/article/0,,id=130102,00.html.
□      A LSNV Attorney Collected $_____________ from client to cover:

       □      $299.00 Chapter 7 bankruptcy case filing fee;

       □      $100.00 Initial installment on the $299 chapter7 bankruptcy filing fee;

       □      $21.00 Homestead Deed filing fee (sole debtor);

       □      $42.00 Homestead Deed filing fee (joint debtors);

       □      $30.00 received for Electronic Credit Report fee (sole debtor);

       □      $50.00 received for Electronic Credit Report fee (joint debtors).

□      Additional Information:

_________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                               Page III 

 
Status of Application for Legal Assistance
Prepared by the Pro Bono Attorney or Volunteer after meeting with the applicant

                   Place Original In LSNV File, Make Copy for Client

□      You are not a proper candidate for bankruptcy. Therefore, the assistance you have
       been provided today, is all of the assistance you will receive. Due to limited
       resources, we cannot provide assistance for everyone who wants a bankruptcy.
                                               or
□      Your request for assistance with a chapter 7 bankruptcy cannot be granted until you:

       □      Get and provide us with proof of health insurance coverage for you [and your
              dependents];

       □      Gather the following documents or information and schedule yourself for
              another Debtors’ Clinic Follow Up Meeting;

              □      complete your questionnaires;

              □      organize all of your bills;

              □      details of all vehicles owned;

              □      provide us with $______ [$30. for an individual and $50. for joint] so
                     we can obtain an online credit reports for use with Best Case software;
              □      information for all possible medical bills not covered fully by health
                     insurance;
              □      information for creditors [such as medical bills] not included in credit
                     report;
              □      copies of all court case pleadings, especially garnishment;

              □      copies of;

                     □      (1) all paychecks, pay stubs, or other evidences of payment from
                            any employer received for the past 6 months;
                     □      (2) bank statements covering the filing date provided by debtor;
                            and
                     □      (3) current tax returns or transcript.
Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                Page IV 

 
□      $_____________ was collected from you to cover:

       _______       $299.00 Chapter 7 bankruptcy case filing fee

       _______       $21.00 Homestead Deed filing fee (sole debtor)

       _______       $42.00 Homestead Deed filing fee (joint debtors)

       _______       $30.00 received for Electronic Credit Report fee (sole debtor)

       _______       $50.00 received for Electronic Credit Report fee (joint debtors)

       _______       $100 Initial installment on the $299 chapter 7 bankruptcy filing fee

□      A LSNV attorney will advise you if you if you will be represented by LSNV for
       bankruptcy. If you have not been contacted within 30 days of today’s date, please
       call Robin (703) 532-2525 extension 201.

□      Additional Information __________________________________________________

Until a Representation Agreement for Chapter 7 Bankruptcy is signed by LSNV Staff, you are
not represented.

If you disagree with any decision about your application for assistance, you can request an
appointment with the executive director of LSNV. The receptionist has information about
the grievance procedure available for applicants like you.

Name of applicant: ___________________________________               Date: ______________

ID #: _______________________

Signature and name of pro bono volunteer: ___________________________________




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                               Page V 

 
Representation Agreement for Chapter 7 Bankruptcy
        1. It is hereby agreed by and between ________________________________("the
client"), and LSNV (“LSNV”), for          Client’ s Name
assistance with a chapter 7 bankruptcy case on a pro bono [no fee] basis. LSNV, the
attorney, is retained to represent the client in a bankruptcy proceeding.

       2. Services covered are:

         a. Analysis of the client's financial situation, and rendering of advice and
         assistance in determining whether to file a petition under the Bankruptcy Code.

         b. Preparation and filing of the client's petition, schedules of assets and liabilities,
         statement of affairs, statement of executory contracts, and statement of current
         income and current expenses.

         c. Representation of the client at the first meeting of creditors.

         d. Filing the client's homestead deed.

         e. Conversations with client regarding the foregoing.

         f. Filing Suggestions of Bankruptcy.

         g. Filing pleadings to obtain the release of funds currently subject to a
         garnishment lien.

      3. Legal services not covered by this agreement, which are not be undertaken unless
an additional written Representation Agreement is signed by LSNV and the client:



         a. Representation of the client concerning any adversary proceedings or other
         bankruptcy proceedings actually brought on behalf of the client to recover
         preferences or setoffs or to avoid the fixing of a lien on exempted property, or to
         determine the amount to be paid to a creditor to redeem property subject to a
         security interest.

         b. Representation of the client concerning any adversary proceedings actually
         brought by or on behalf of any of the client's creditors to have a debt held to be
         non-dischargeable or to have the client held not to be entitled to a discharge,
         including any investigation apparently looking toward such a proceeding.



Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                  Page VI 

 
         c. Representation of the client involved in adding creditors omitted or
         inaccurately listed (name or address) in the initially filed bankruptcy
         pleadings.

       4. Cooperation with the attorney. The client agrees to cooperate with the attorney in
locating witnesses, securing testimony, and in any other manner desired, and the client
expressly agrees that no effort will be made to induce such witnesses to false or misleading
testimony, or in any other manner interfere with the securing of a fair and impartial trial or
hearing.

The client authorizes the attorney to review any and all files and records, wherever situated,
in the conduct of the representation of the client. The client agrees to accept and follow
advice by the attorney and to refrain from asserting positions or engaging in a course of
conduct the attorney reasonably considers to be illegal, unjust, frivolous, or unreasonable.
The client is advised that ethical rules require the attorney to reveal any fraud perpetrated
by a client on a tribunal during the course of the attorney's representation and related to
the subject matter of the attorney's representation of the client. A breach by the client of
the obligations set forth in this paragraph is grounds for the attorney's withdrawing from
the representation of the client.

      5. The client has the right to end the representation of the attorney at any time, for
any reason, stated or unstated. The client agrees to cooperate with the attorney’s efforts to
withdraw from a pending court case, should the client decide to take this course of action.

       6. The attorney agrees to send the client a copy of all pertinent written materials
sent or received by the attorney pertaining to the client's case.

       7. The attorney is authorized consult with other attorneys on a confidential basis if it
is appropriate for the proper handling of the client’s case.

____________________________________________________/_____________________
                       Client's signature                                    Date



ACCEPTED:

____________________________________________________/______________________
                    LSNV                                       Date

If you are not satisfied with the services provided by LSNV, the following is the
grievance procedure:


    1. Call (703) 532-2525 or write to the above address to obtain an
       appointment with the Executive Director. The appointment may be by
       telephone or in person at the offices of LSNV. The Executive Director, or a

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                              Page VII 

 
       designee, will listen to your complaint and review all pertinent facts
       regarding your grievance. The Executive Director will respond to you
       within 5 business days of the appointment.


    2. If disagree with the decision of the Executive Director, you can appeal to
       the Chair of the Board of Directors of LSNV, Inc. LSNV staff will assist you
       in contacting the Board of Directors, if necessary, to appeal the Executive
       Director’s decision. You must appeal the decision of the Executive Director
       within one week following the decision of the Executive Director.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                   Page VIII 

 
Preliminary Request for Chapter 7 Bankruptcy Appointment
You have attended the Debtors’ Rights Clinic and you want to be considered for a Chapter 7
Bankruptcy. Based on the information provided at the Clinic, you believe you qualify for
representation by a LSNV (LSNV) for bankruptcy. Please note that if you are collection
proof, (See “Are you Collecton Proof?” in this manual) there must be special circumstances
before LSNV will file a bankruptcy for you.

Please answer the following questions. After you complete this request, you will be given an
appointment with Ms. Marta Nyein, LSNV’s Volunteer Pro Bono Coordinator; a volunteer or a
LSNV attorney.

If it appears that you may qualify for bankruptcy, you must fill out completely the 3-Part
Bankruptcy Questionnaire that you were given at the Debtors’ Rights Clinic. After you fill out
the Questionnaire and collect all of the financial information, you will be given an
appointment with a LSNV attorney who will make the determination whether you will be
represented by LSNV in a bankruptcy. Until you sign a Representation Agreement for
Chapter 7 Bankruptcy, you are not represented by LSNV.

Please answer the following questions:

Name: ______________________________________________

Address: ______________________________________________________________

Telephone No.: __________________________

Date: ___________________

Employer: ___________________________________________________

What are your wages? _________________


Do you have medical insurance through your employment?        □ Yes         □ No
If not, when are you eligible to get medical insurance through your employment?

______________________________________________

Do you and your dependents have Medicaid or Medicare health insurance?  □ Yes □ No
If you own a motor vehicle, are you making motor vehicle payments? □ Yes □ No
Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                              Page IX 

 
About how much do you owe on the following types of debt, to the nearest $5,000?

$ ____________ credit card

$ ____________ student loan

$ ____________ house mortgage

$ ____________motor vehicle loan[s]

______________________________________________________________________
                                    Describe any other type of debt



If you own a home, is it in foreclosure or has it been foreclosed?    □ Yes □ No
Have you ever filed for bankruptcy?  □
                                    Yes              □ No
If Yes, when? ___________________




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                          Page X 

 
 

Defaulted Student Government Loans 
This material is for a student or his or her parents who have defaulted on a government
student loan. It provides information on:
   • how to find the loan documents;
   • how to identify the specific government loan program; and
   • options for financially-challenged borrowers in default.

Most of this information applies to government student loans throughout the country.
Defenses and repayment opportunities regarding private loans (non-government) are not
covered in this material.

There   are links to:
   •    how to get your free credit report;
   •    Authorization to Release Information to a Third Party; and
   •    Office of the Ombudsman – Privacy Release Statement.

Most people seek help regarding their defaulted student loan after they receive a
communication from a bill collector or they are being sued. Others confirm they have a
defaulted loan from other resources such as their credit report. They may not have specific
knowledge of the loan, or they may know about the loan and have some or no documents.

The first step is to locate which entity has the documents regarding the defaulted loan.
These documents are identified below. After you have copies of the documents, you must
determine whether the loan was directly from the government, guaranteed by the
government or was a private loan. If the loan is directly from the government or
guaranteed by the government, there is a chart that provides information that identifies
each specific type of loan.

What Loan Documents Are You Looking For?

Whatever the reason the student or parent of a student is seeking help with a defaulted
loan, the first step is to obtain and review at least four documents that pertain to all student
loans. They are the:
   1. Promissory Note;
   2. Disclosure Statement;
   3. collection history; and
   4. payment history.

Together they are often referred to as the “docs.” For a defaulted loan they may be in a
number of different locations. If a bill collector is trying to collect the debt, then the entity


Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                   Page XI 

 
that referred the debt to the collector should have the documents. See Bill Collector
below.

If the student or parent is being sued, then the entity that is bringing the suit should have
the documents. See Law Suit.

If there is no bill collector or suit, then go to No Bill Collector or Suit. See how to request
the records on-line or by telephone.

If the borrower is being assisted by someone else, including a lawyer, go to Authorization to 
Release Information to a Third Party.

Bill Collector

Where the borrower is being pursued by a bill collector, contact the collector by telephone
and find out where the documents identified above are located. If possible, also get the
address of the documents custodian and make the request in writing. Keep in mind that this
can take an extended period of time. The borrower should get copies of all four of the
documents.

Law Suit

If the student or parent is being sued in Virginia’s General District Court, request, on the
return date, that the judge order the plaintiff to file a bill of particulars. Specifically request
copies of the above four documents. You can also motion the court to order the bill of
particulars before or after the return date.

If the case is in Virginia’s Circuit court you can use the discovery process to request these
documents. Also, you may want to consider a subpoena duces tecum directed to the
custodian of the records.

No Bill Collector or Suit

Go to loan histories on-line at the Website for the National Student Loan Data System
(NSLDS) http://www.nslds.ed.gov to try to locate information regarding the loan.

Provide the following:
1. student aid PIN;
2. Social Security Number (SSN);
3. the first two digits of your last name; and
4. your date of birth.



Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                   Page XII 

 
Also go to the loan-holder by calling 800-4-FED-AID (800-433-3243) - Option 3.
Again, you need the student aid PIN and SSN.

The Education Department will not discuss loan data with a borrower’s representative, for
example an attorney. However, they will allow third parties to be on the telephone at the
same time, so you can set up a conference call.

Federal Direct Loan
If the borrower has a Direct Loan, contact the Direct Loan Servicer.
Contact information for Direct Loans is:
Direct Loan Servicing Center
Borrower Services Department
P.O. Box 5609
Greenville, TX 75403-5609

http://www.dlservicer.ed.gov

The borrower information telephone number is (800) 848-0979. Defaulted borrowers need
to call Debt Collection Service, telephone (800) 621-3115, 8 a.m. – 10 p.m. – Eastern time
– Monday through Saturday.
Like the Education Department, the Direct Loan Servicer will not discuss loans data with
borrowers’ representatives.

Federal Family Education Loan Program (FFELP) Loans

Most government student loans are FFELP loans. The loan is made by a financial institution
and guaranteed by the government. Most FFELP holders will honor the borrower's written
request to discuss loan information with a third party. If you authorized your lender to
discuss your loan with a third party before your default, you may have to provide another
authorization to the guarantee agency.

If the loan was guaranteed by the Virginia guarantee agency
Contact: Educational Credit Management Corporation,
Boulders, Building VII, 7325 Beaufont Springs Drive,
Suite 200, Richmond, VA 23225
Telephone 888-775-3262
    www.ecmc.org

If the loan was sold to the U.S. Department of Education under the 2008 financial recovery
legislation, then contact the Department at (800) 508-1378.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                          Page XIII 

 
Authorization for Release of student Loan Information or Records

Click here for an example of an Authorization to Release Information to a Third Party. Fax
this completed form to numbers (319) 665-7646 or 665-7647.

If you are making an inquiry with Student Loan Ombudsman, you will have to use their form
for this purpose - Office of the Ombudsman – Privacy Release Statement.

Which Government Loan Program Made the Loan?

After you get the above-described documents, use the information below to determine
which government agency made the loan.

Programs

Direct Loans or William D. Ford Loans (The loan comes directly from the U.S. Treasury)
Federal Family Education Loan Program (FFELP) (Here there is both a lender and guarantee
agency. However, under the 2008 financial recovery legislation, the Department of
Education has begun buying FFELP loans. When this happens, the guarantee agency no
longer plays a role in loan collection.)
Perkins Loans

Under the Direct Loan or the Federal Family Education Loan Program (FFELP) there are
three types of loans:

Stafford Loans (for the student)
PLUS Loans (Parental Loans for Undergraduate Students) Beginning in 2008, PLUS loans
were also made to graduate students who had exhausted their eligibility for Stafford Loans.
Consolidation Loans

If the loan is not made or guaranteed by the government, then it is a private loan, and this
material does not cover these types of loans.

Options for Financially-Challenged Borrowers in Default
First review the Department of Education – Options for Financially-Challenged Borrowers in
Default.

Next   select the form or forms to apply for the option that best addresses your situation:
   •    Options for Financially­Challenged Borrowers in Default
   •    W­9 Request for Taxpayer Identification Number and Certification
   •    Statement of Financial Status (for determining Affordable Monthly Payment Amount)
   •    Statement of Financial Status For Wage Garnishment Hearings Only
   •    Loan Discharge Application: School Closure

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                              Page XIV 

 
    •    Loan Discharge Application: False Certification of Ability to Benefit
    •    Loan Discharge Application: False Certification (Disqualifying Status)
    •    Loan Discharge Application: Unauthorized Signature/Unauthorized Payment
    •    Total and Permanent Disability Cancellation Request
    •    Loan Discharge Application: Unpaid Refund
    •    Teacher Loan Forgiveness
    •    Teacher Loan Forgiveness Forbearance Form
    •    Declaration of Caregiver Services
    •    Administrative Wage Garnishment Request For Hearing
    •    Example Third Party Disclosure Authorization Form

Conditions for Cancellation

Four circumstances will allow you to cancel a government student loan:

    1.   bankruptcy (with special showing of undue hardship);
    2.   death;
    3.   school closure;
    4.   school fraud; or
    5.   total, permanent disability.

Bankruptcy

In Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), No. 04-2553, United States Court
of Appeals for the Fourth Circuit, 2005 U.S. App. LEXIS 29018, September 20, 2005, the 4th
Circuit officially adopted the Brunner test for determining whether a debtor has
demonstrated that payment of the student loan debt will impose an undue hardship on the
debtor and the debtor’s dependents. 11 USC § 532 (a)(8). The Bruner test was devised by
the 2nd Circuit, and has been adopted by most of the other federal circuits. In Brunner v.
New York Higher Education Services Corp, 831 F.2d 395 (2d. Cir 1987) there are three
factors:

    1. the debtor cannot maintain a minimal standard of living, based on the debtor’s
       current income, if the debtor is forced to repay the student loan;
    2. there are factors present which indicate that this condition is likely to persist for a
       significant portion of the repayment period; and
    3. the debtor has made a good faith effort to repay the student loan.

School Closure

The student will:
   • complete the Loan Discharge Application.


Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                 Page XV 

 
    •   agree to cooperate with the Department regarding any enforcement actions related
        to her/his request for loan discharge.
    •   understands that her/his request for loan discharge may be denied, or the discharge
        may be revoked if she/he fails to provide testimony, a sworn statement, or
        documentation upon request, or if he/she provides testimony, a sworn statement, or
        documentation that does not support the material representations she/he has made,
        or if she/he completed or is in the process of completing the program of study or a
        comparable program at another school through transfer of credits or hours from the
        closed school or by any other means by which she/he benefited from the training
        provided by the closed school.

The student further understands that if her/his loan(s) are discharged based on any false,
fictitious, or fraudulent statements that she/he knowingly made, she/he may be subject to
civil and criminal penalties under applicable federal law.

        School Closure Form

School Fraud

Loans may also be discharged if the school committed a fraud in connection with the loan,
such as misrepresenting the applicant’s eligibility. The procedure for obtaining this
discharge is similar to that described under School Closure.

Total Permanent Disability

Fax numbers are: (319) 665-7646 or 665-7647 and the telephone number is 1-888-869-
4169.

How Can I get out of Default and Repay My Government Student Loan?

There are a number of repayment options (choices), but for most poor debtors, the best will
be a Direct Loan Consolidation with an Income Contingent Repayment Plan.

Even though its name – Income Contingent Repayment Plan – suggests that you have to
have an income, this is not always the case. Under the income contingent plan, what has
not been paid at the end of 25 years is written off.

To qualify for this plan you must first make three monthly payments on your defaulted loan.

If the debtor has enough income to pay going forward, then a graduated or level plan with
an extended term may be appropriate. But most of these options are lost after the loan has
been in default for a year...that's about when the Department of Education refers the loans
out to collection agencies.

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                          Page XVI 

 
The first step in getting a direct loan consolidation is to call the Department of Education at
800-557-7392 or go to http://www.loanconsolidation.ed.gov/borrower/borrower.shtml

Conditions for Deferment of a Government Student Loan

When can a borrower have a temporary (short term) excuse not to pay? This is called a
deferment. During deferments, interest is paid by the government if the borrower has
subsidized loans, so it gives the borrower breathing room. Also, deferments can be applied
retroactively for a year or two.

Some   common deferments are:
  •    enrolled in school half time or more;
  •    temporarily, totally disabled;
  •    unemployed looking for work;
  •    active duty military service; or
  •    economic hardship.

Economic hardship is a broad category that covers a large number of situations, such as:
   • receiving public assistance;
   • earning minimum wage; or
   • earning too little to support massive student loan payments

A loan in default status is not eligible for deferment. Deferment eligibility is reinstated when
a borrower completes the steps for Loan Rehabilitation.

Loan Rehabilitation
In order to rehabilitate your loan, you must make 9 voluntary, consecutive, on-time
payments, in an amount negotiated with the guarantee agency or Direct Loan Servicer.
Payments made through wage withholding or income tax refunds are not considered
voluntary. On-time means at least 8 of the 9 payments were received by the servicer no
more than 20 days after the due date.

After a loan is rehabilitated, the borrower’s negative credit mark is removed and the
borrower enjoys all the rights and privileges of a borrower who never defaulted, including
eligibility for a new student loan. However, a borrower may only take advantage of this
program one time.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                              Page XVII 

 
How to Deal with Collections Efforts by a Collection Agency

A collection agency gets paid more for collecting $$ than for getting a borrower to
consolidate the loan, so they may not tell the borrower about that option. There is a split of
opinion in the courts whether federal student loans are subject to Fair Debt Collection
Practices Acts. Most collectors follow the rules where they can, but collection activities are
highly regulated, so asking them to stop calling may not be fruitful.
Collection agencies do not have much discretion to compromise principal or interest, but
they may compromise the post-default collection charge (which can be huge). They
are supposed to require payments sufficient to retire the debt in 3 years.

Other Information

Minority Status/Truth-in-Lending Act
Minority status and Truth-in-Lending Act violations are not defenses to repayment.

Student Loan Ombudsman
U.S. Department of Education
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144

Telephone 877-557-2575
Fax 202-275-0549
http://www.ombudsman.ed.gov/

About the Author

The author of this treatise on The Defaulted Government Student Loans is Catherine Mayes,
Esquire. Her private law practice is primarily devoted to student-loan matters. Ms. Mayes is
a retired Associate General Counsel at Sallie Mae and has extensive experience in this area
of the law.
 




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                           Page XVIII 

 
Legal Terms


           ABCDEFGHIJKLMNOPQRSTUVWXYZ

A

B

C

capias                                                       A writ and process
                                   commanding the sheriff to take the person into custody.

charge off                        The removal of an account from a credit card issuer's
                                  books as an asset after it has been delinquent for a period
                                  of time, usually 180 days. See e.g. Black's Law Dictionary
                                  (8th ed. 2004).

civil action                       A case brought for determination enforcement or
protection                         of a right, or redress; or prevention of a wrong; every
                                   action other than a criminal action.

collection proof                   Collection proof means that one’s assets cannot be
                                   touched by creditors. See “Are you Collecton Proof? in this
                                   Manual.

confession of                      An acknowledgement by the defendant that
judgment                           plaintiff is right and that judgment should be
                                   entered in favor of the plaintiff.


creditor                           A person or corporation to whom a debt is owing by
                                   another person who is the “debtor.”

D

debtor                             One who owes a debt to a creditor.

Debtor Education                   See "Credit Counseling and Debtor Education
Requirements                       of the Bankruptcy Law"


Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                             Page XIX 

 
default                           “…neglect or failure of any party to take step required of
                                  him in progress of cause.” Black’s Law Dictionary (Revised
                                  4th ed., West 1968). For example, the defendant may fail
to                                appear at the return date or may fail to timely file a court-
                                  ordered Grounds of Defense.

E

ERISA                              Employee Retirement Income Security Act


F

fair market value                  Price at which a willing seller and a willing buyer will
                                   trade.

foreclosure                        The termination of a property owner’s rights in property
                                   that has a mortgage.
G

H

Hatchl, Russ Esq.                  Pro Bono Coordinator, (703) 532-2525,
                                   rhatchl@LSNVlegalaid.org

I

J

K

L

M

N

net gain                           An increase in the value of a capital asset.



O

P

Pre-Filing Credit Counseling      See "Credit Counseling and Debtor Education
Requirements                      of the Bankruptcy Law"

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                Page XX 

 
Q

R

Report by the Volunteer            Report prepared by a volunteer after they have met with
Following the Interview            an applicant and reviewed their financial documents.
of the Applicant
S

security interest                  A right that entitles a creditor to repossess your property
                                   if you do not pay the debt as required.

T

U

V

W

write off                          To cancel from accounts as a loss. This does not mean
                                   that the creditor that is doing the write off will not try to
                                   collect on the debt or sell the debt to an entity that will
                                   try to collect the debt.

X

Y

Z
 




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                Page XXI 

 
The Three­Part Bankruptcy Questionnaire in English and Spanish. 
 

 

                            Homestead Deed for Real*****Personal Property 

Each *** in the Homestead Deed identifies a place where text should be inserted or 
deleted.  For example, is the deed for personal or real property? Remember that the 
signature of the Householder and of the Notary Public MUST be on the same page. Delete 
this information before filing the deed. 

Name of Householder: *** [Underline first letter of last name.
Is the householder a disabled veteran entitled to claim the additional exemption under § 34-4.1? ***
Address of Householder: ***
Name(s) and age(s) of dependent(s): ***
County/city in which real property claimed as exempt is located: ***
County/city in which homesteader resides: ***
Description of property claimed as exempt under VA. CODE § 34-4 and its value:


    Description of Property                 Specify Law Providing Each    Value of Claimed             Current Market Value of
                                            Exemption                     Exemption                    Property Without Deducting
                                                                                                       Exemptions
    $5,000.00 plus $500.00 for each
    dependant who derives support
    primarily from the householder and no
    other person)
    Total exempted under prior homestead
    deed filed in *** County
    Total exempted under prior homestead
    deed filed in *** County
    Accrued wages (*** x .25)               VA. CODE § 34-4
    Cash on hand                            VA. CODE § 34-4
    miscellaneous jewelry                   VA. CODE § 34-4
    checking account at *** ending in ***   VA. CODE § 34-4
    savings account at *** ending in ***    VA. CODE § 34-4
    income tax refund from IRS              VA. CODE § 34-4
    income tax refund from Virginia         VA. CODE § 34-4
                                            VA. CODE § 34-4
                                            VA. CODE § 34-4
                                            VA. CODE § 34-4
    subtotal                                                              0.00
    Total value exempted under VA.                                        0.00
    CODE §34-4
    Total property claimed as exempt                                      0.00




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                                    Page XXII 

 
    Witness the following signature and seal this ________ day of ________________________, 20_______.


                          _______________________________________________(SEAL)


Commonwealth of Virginia                     )

County/City of _______________________ ) to wit:

           I, ________________________________________, the undersigned, a Notary Public in and for the City/County

and State aforesaid, do certify that ________________________________________, whose name is signed to the

foregoing writing, bearing the date of the ________ day of ________________________, 20_______, has acknowledged

the same before me in the jurisdiction aforesaid.

           Given under my hand this ________ day of ________________________, 20____.

My Commission Expires: ______________________________

           ________________________________                  Notary Registration Number _________
                  Notary Public

Return to:
[Name of Attorney *******]
LSNV
6066 Leesburg Pike, Suite 500
Falls Church, Virginia 22041




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                                Page XXIII 

 
Pre­Filing Checklist 

______           Personal Information Sheet

______           Property Ownership Checklist 2

______           List of Debts

______           Credit Report(s)

______           Tax Return for most recent year

______           Pay-stubs (6 months immediately prior to the filing of the petition)

______           Self-employed clients must provide bank statements for past six months

______           Other Proof of income for past six months (SSDI, Food Stamps)

______           Credit Counseling Certificate (LSNV will arrange for free) (must be taken no
                 later than the day prior to planned filing date, but no more than 179 days
                 prior)

______           $350 or $371 (joint) fees [unless filing fee to be paid in installments]:
                 ($299 BR, $21 or $42 (joint) homestead deed, $30 Credit report)

______           adequate health insurance [if obtainable from employer]

_____            Signed retainer agreement




                                                             
2 If the client has or will surrender a motor vehicle or suffer a repossession, those listed as owners on the title

of a motor vehicle must maintain hazard insurance on the motor vehicle until DMV has removed that
obligation. The client must be instructed to check with DMV to be sure the client can safely end hazard
insurance on a vehicle surrendered or repossessed. The lack of hazard insurance on a motor vehicle can
result in a non-dischargeable $500 penalty and the revocation of the driver’s license. The same obligation
exists with respect to a vehicle that is sold. The back of the registration card can be used to make this
notification in the event of a sale. However, with respect to a repossession or a surrender, the client must
make actual contact with DMV to be safe.

 

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                               Page XXIV 

 
Filing Checklist 


Main Eastern District of VA bankruptcy court web site: http://www.vaeb.uscourts.gov/

_____ calculate current monthly income by adding up all income for the past six months
      and dividing by six

_____ filing date balances for all financial accounts

_____ Up-to-date pay-stubs and statements of all other income

_____ $_______ received

_____ client signed bankruptcy pleadings

_____ client sign homestead deed

_____ scan signed petition

_____ copy of all documents given to client

_____ Application for fee waiver and Application to Paying Filing Fee in Installments must
      be docketed separately, under motions/applications, after opening the application,
      printing it as pdf, with file name form 3b

_____ notice to foreclosing attorney

_____ notice to garnishing attorney and garnishee

_____ email or mail to client [if not given at time of filing] Your bankruptcy was assigned
      case number ***

_____ scan and forward to Sherri copies of documentation noting payments made on
      LSNV’s credit card

_____ motions/applications

______garnishment relief also needs draft order in text version WITH THE FILE NAME
BEING THE CASE NUMBER AND THE SUBJECT LINE BEING THE CASE NUMBER,
WITHOUT THE JUDGE’S INITIALS emailed to orders@vaeb.uscourts.gov



Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                            Page XXV 

 
        remember to put “/s/Person’s Name”
        -NO LONGER must deliver hard copy of order and stamped addressed envelopes for
clerk’s use if addresses are shown on separate copies to list

do not file Statement of Social Security Numbers - just keep the original

re orders to be signed by court:
       -Judge Mitchell prefers text version, so he can print it out and manipulate it
       -submit both text and .pdf versions

________ Prepare the Disbursement for Client Trust Account form
http://www.probono.net/va/civillaw/library/attachment.133934 to request Sherri Armstrong to
prepare a check in the amount of $21 payable to “Clerk, Circuit Court” from the trust funds held for
***.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                 Page XXVI 

 
Post­Filing Checklist 


All Trustees will accept emails of documents that must be provided to the trustee.
The Trustees are:

Richard A. Bartl and Robert Ogden Tyler - only need to send email to paralegal Ann
Semerjian (703) 549-5000 x 136 asemerjian@tbrclaw.com

Don King - only need to paralegal Kathie Lyons (703) 218-2167 Kathie.Lyons@ofplaw.com

Gordon P. Peyton – only need to send to paralegal Jenny Myers at
gppsec@rpb-law.com Gordon’s other assistant is paralegal Kay Farrell, kfarrell@rpb-law.com

H. Jason Gold - jgold@wileyrein.com; VA19@ecfcbis.com; pmccarthy@wileyrein.com;
jgold@ecf.epiqsystems.com

If filing fee waiver is denied, the first payment $100 must be made by a FAX to the clerk
using specified language and accompanied by a signed Credit Card One Time Authorization
Form [together with a copy of the front and the back of the credit card] to (703) 258-1206,
calling financial deputy Martin Jones (703) 258-1233 first to make sure someone is standing
by the FAX machine to receive the FAX.

_____ sign debtor up for DE course - telephone - online - home study

_____ forward Order to Debtor to client

      Please review the attached Order to Debtor and let me know that you have done so
and that you understand it. If you do not understand it, contact me.
      Please review the enclosed Order to Debtor and let me know that you have done so
and that you understand it. If you do not understand it, contact me.

_____ 341 date and time received: __________________________________

_____ email or write the following to the client:
Enclosed or attached is a notice I received from the Bankruptcy Court, notifying me of ***
the date and time of the meeting of creditors you must attend at the Office of the U.S.
Trustee, 115 South Union Street, Suite 206, Alexandria, Virginia.

You must bring (1) a photo ID, (2) a copy of a document that shows your Social Security or
other Tax ID number, and (3) a copy of the last pay stub you have received. You must also
bring a copy of the monthly bank statement covering *** the date your bankruptcy was

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                            Page XXVII 

 
filed for each bank account you have. Be on time. Your failure to appear at the meeting of
creditors will result in the United States Trustee's Office seeking to have your bankruptcy
case dismissed.

I have enclosed or attached two maps that show the location of the meeting of creditors.

Remember that you need to provide me with copies of all paychecks, pay stubs, or other
evidences of payment from any employer received within the 60 days before the bankruptcy
filing date. You do not need to provide me with what you have already provided. However,
you must promptly provide me with all pay stubs and bank statements you receive since the
time you filed your bankruptcy petition, in time for me to provide them to the trustee who
will be reviewing your paperwork and conducting the meeting of creditors. Your failure to
provide those documents to me in a timely manner could result in your case being
dismissed.

Call or email me to let me know you have received this information.

_____ post tasks to Outlook: send trustee documents by ***, ***call client day before 341
      meeting, Debtor Education Certificate by ***, discharge by ***

_____ calendar 341 meeting

_____ arrange for pro bono attorney to cover the hearing?
nancyryanlaw@yahoo.com
nraum@aol.com
callarson99@yahoo.com
tysonlaw111@aol.com
uptonlaw@gmail.com
counselor@cyberlawoffice.com
rbordenlaw@hotmail.com

Dear Nancy, Nora, Cal, Ilaine, Ron and Randall:

Will you be attending the 341 meeting scheduled ***? If so, can you cover for me with
regard to ***? My assistant Marta or one of LSNV’s paralegals will attend the meeting with
the client's entire file.
Please "reply all" to this email so that others will know their help is not needed for this
client.

Russ
_____ debtor notify LSNV that s/he received notice of the date and time of the meeting of
      creditors?


Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                       Page XXVIII 

 
_____ ECF file Debtor Education Certificate {DEC} Certification of Completion of Post-
      Petition Instructional Course [under miscellaneous]

_____ file suggestions of bankruptcy

_____ file-stamped copies of suggestions of bankruptcy received

_____ Fairfax Circuit Court cover sheet for homestead deed – directions

_____ File homestead deed - Date:______________________

_____ file-stamped homestead deed received back from court
_____ original homestead deed received back from court

_____ copies of (1) all paychecks, pay stubs, or other evidences of payment from any
employer received within the 60 days before the bankruptcy filing date and (2) bank
statements covering the filing date provided by debtor, and (3) current tax returns or
transcript?

_____ tax return/transcript and subsequent pay stubs and bank statements provided to
trustee
       no later than ____________

       Date: ________________ Mailed _____ Emailed ______

_____ CALL CLIENT NIGHT BEFORE HEARING!!

_____ assist client's friends and relatives to file proofs of claim in asset cases

HEARING:
_____ Filed homestead

_____ Photo ID

_____ Social Security #

_____ Bank Statements

_____ ECF Debtor Education Certificate

_____ discharge entered

_____ close case, noting amount of debt discharged and write or email client:

Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                            Page XXIX 

 
Attached is a copy of the discharge entered in your case. This will end our representation
of you. Please complete and return to me the attached survey.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                          Page XXX 

 
Authorization for Release of Financial Records 
 
 




          I, _________________________________________, the undersigned, hereby declare my
authorization for the release of any documents and information pertaining to my financial records
with any person or institution to the Legal Services of Northern Virginia. I further request that such
records be provided in response to a request providing a photocopy, facsimile or copy of the original
of this document, as if it was the original.



______________________                  __________________                   ___________________________
      Signature of Requester                    Date                              This Consent Expires on (date)



____________________________                    __________________                ___________________________
Requester’s Social Security Number (optional)    Requester’s Date of Birth          Other Identifying Information (Optional)




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                                                          Page XXXI 

 
If you are collection proof and you receive a Warrant in Debt 


You cannot be put in jail for not paying your debts. The only possible way you could be
arrested is if you ignore a summons to answer oral interrogatories that a judgment creditor
uses to get a chance to ask you about your income and assets after first getting a judgment
against you. Don’t ignore a summons to answer oral interrogatories and you will never face
the prospect of being arrested and held by the sheriff until you do answer questions about
your assets.

If you get a warrant in debt, and you are collection proof because your only source of
income is direct deposited federal benefits, you might want to go to court on the return
date noted on the warrant in debt, and in the courtroom [before the judge comes in] ask
[out loud] who is representing [name of creditor suing you]. When you get a chance to
speak with the creditor’s attorney, you can tell him that you are collection proof and show
him the proof [for example, your latest Social Security benefit statement you have and a
copy of your latest bank statements, if they show that the only deposits are direct deposited
Social Security benefits]. If you do that, it is quite possible that the judgment creditor’s
attorney will take a judgment against you and close the file.

You can do the same thing if your only source of income is child support, which is exempt
from garnishment in Virginia starting July 1, 2008.

If you get a warrant in debt, and you are collection proof because you are unemployed, or
the only source of garnishable wages you have is under the amount that can be garnished
[explained in How Garnishments Work], you can do what is described in the preceding
paragraph. However, the judgment creditor’s attorney may wait a while and serve you with
a summons to answer oral interrogatories to see if you are then employed and earning
enough that your wages can be garnished. If and when you do become employed so that
your wages can be garnished, you should complete your bankruptcy homework and make
an appointment with an LSNV consumer attorney to review what you have prepared.

Here is an overview of the usual steps in the legal debt collection process:

1. The creditor or a hired debt collector calls and writes letters in an effort to get you to
pay them something.

       A. Don’t be fooled by offers that sound urgent and give you only a little time to
accept an offer [such as paying $3,000 on a $6,000 debt IF YOU ACT WITHIN 10 DAYS]. If
you are collection proof you have no way to pay $3,000, so just ignore the letter if you have
no ability to pay.


Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                             Page XXXII 

 
       B. If you are pestered by phone calls, you can exercise your rights under the Fair
Debt Collection Practices Act. You will receive a separate handout [Abusive Debt Collection
Tactics] about that. One thing you can do is have all calls go directly to voice mail, and pick
up only when you want to speak to the person calling.

2. The creditor files a lawsuit against you. In Virginia, most collection lawsuits are filed in
General District Court. The pleading that will be served on you is titled warrant in debt. In
the upper right corner is a date called the return date. Sometimes the copy of the warrant
in debt you receive in the mail will not have a return date, because that copy will be mailed
to you before the lawsuit is actually filed and the return date is actually selected. The copy
of the warrant in debt that the sheriff hands to you or tapes to your door should have the
return date. You can always call the clerk’s office to find out the return date. You do not
have to go to court on the return date. However, if you do not go to court, it is likely that
the creditor will get a judgment against you. A judgment is not an order of the court for
you to pay the amount of the judgment. It is up to the creditor to collect on the judgment.

3. After getting a judgment, a creditor might have the sheriff serve you with a summons to
answer oral interrogatories. The return date on the summons to answer oral interrogatories
is a date on which you must go to court, or risk subsequent court actions that might lead to
your being arrested and held by the sheriff until you do answer questions about your
assets.




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                           Page XXXIII 

 
Income Testing (Means Testing)  

Since the 2005 Bankruptcy Amendments by Congress there are two types of "Income
Testing" (to see whether you will be allowed to file a Chapter 7 Bankruptcy or not.

Your Current Budget 
First: The first "income test" is your current "budget". This is based on your actual
disposal income at present and as projected forward over the coming months. If there is a
significant "surplus" in your actual budget after paying living expenses and secured creditors
your will not be "eligible" for Chapter 7 Bankruptcy filing. What they are doing is
encouraging you to file a Chapter 13 Bankruptcy where you pay that budget "surplus" to
the bankruptcy court for 5 years, after which you will be granted a bankruptcy "discharge"
for whatever remaining dischargeable debt is left after the 5 years of payments. Some
expense categories might be challenged by the Trustee or creditors, and excluded from the
calculations, such as college expenses and tuition for a child, and 401k loan repayments,
etc. And the "amounts" in all categories is subject to challenge based on its
"reasonableness".

Statistical “Means Testing”  
Second: The second "income test" we call "Means Testing". The Bankruptcy Code, since
the Amendments of 2005, arbitrarily looks at the prior 6 calendar months prior to your
bankruptcy filing. For example, if your bankruptcy filing was in a January, the 6 months for
"means testing" would be the prior July through December. For that 6 months you must
accumulate and document the "gross" income from every source of income in your
household. That total number is then compared to the gross incomes of every other
household that size in the State of Virginia and in the County or City where you reside. The
midline is called the "median".

If your total gross household income for that 6 month period is in the lower half, ("below
median"), of that statistical group, you pass "Means Testing". If your gross household
income for that 6 month period is in the upper half, ("above median") of that statistical
group, you initially fail "Means Testing". If you continue to have "disposable income" after
the "long form" calculations, then you are not eligible for a Chapter 7 Bankruptcy filing. In
the "long form" calculations you are allowed some deductions, (such as secured debt
payments, taxes and social security). Unfortunately the living expenses you are allowed in
the calculation are "capped" to amounts which may have no realistic relationship to your
actual expenses. "Above median" individuals who go forward with a Chapter 13 filing, may
find that the required "means testing" adversely effects the amounts of monthly payments
they must make in Chapter 13, frequently creating a hardship by requiring them to make
payments above what their actual budget shows they can afford to make. One of the big
Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                          Page XXXIV 

 
disadvantages of Chapter 13 is that you are in "credit limbo" for 5 years. You can not
effectively begin rebuilding your "credit" until you get your "discharge" which in Chapter 13
is not until the end of the case (usually 5 years!).

Virginia Gross Income Medians by Total Household Size:

1 HH $49,600.00 New 3/2009

2 HH $65,300.00 New 3/2009

3 HH $73,100.00 New 3/2009

4 HH $85,700.00 New 3/2009

5 HH $92,600.00 New 3/2009

6 HH $99,500.00 New 3/2009

Used by Permission of Leonard E. Starr, III, Esq. 804 737-5216 Lstarr@Starr-Law.Com




Appendices - LSNV's Debtors' Rights and Bankruptcy Manual                           Page XXXV 

 

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:78
posted:1/17/2011
language:English
pages:81
Description: Debtors Rights Outline document sample