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                            American Consumer Credit Counseling is a
                            national leading provider of consumer financial
                            education and debt management services.

                            Throughout the year our company provides many
                            educational workshops within the community that
                            covers a wide range of financial topics.

                            It is our mission to provide individuals with the
                            necessary information so they can make better
                            financial decisions in the future.

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                            This educational study course on Bankruptcy
                            has been developed specifically to educate
                            individuals within the community on:

                                    What to Know About Bankruptcy
                                    The Types of Bankruptcies
                                    How Bankruptcy Affects You
                                    Your Options in Bankruptcy
                                    Consequences of Unpaid Debts

Monday, February 07, 2011                                                 3
                            What is Bankruptcy?

                            Bankruptcy is a method of eliminating unsecured,
                            secured and other debts through the legal system,
                            therefore giving a consumer a fresh start in life.
                            Bankruptcy, in many cases, means that you walk away
                            from the current debt you owe your creditors.

                            Generally, there are two different types of personal
                            bankruptcy that an individual may use. They are:

                                           Chapter 7 bankruptcy
                                           Chapter 13 bankruptcy

Monday, February 07, 2011                                                          4
                            What is Chapter 7 Bankruptcy?

                            Chapter 7 is the full liquidation of debts more commonly
                            known as “straight” Bankruptcy. This is the most
                            common bankruptcy form that an individual will file.
                            Chapter 7 is only for individuals, not businesses or

                            Under Chapter 7, a trustee is appointed from the court to
                            collect and sell, if economically feasible, all property you
                            own that is not otherwise exempt, from liquidation.

                            Most individuals file Chapter 7 to completely eliminate
                            large credit card debt, personal loans and other
                            unsecured debts.

Monday, February 07, 2011                                                             5
                            Who qualifies for Chapter 7 Bankruptcy?

                            1) You must reside, or have a domicile, or a place of
                            business, or real property in the United States. Within
                            the last 6 years you could have not been granted a
                            discharge through Chapter 7.
                            2) Within the last 6 years you could not have completed
                            a Chapter 13 bankruptcy plan.
                            3) Within the last 180 days you couldn’t have had a
                            Chapter 7 or Chapter 13 dismissed for cause by the
                            4) If an individual has disposable income after paying
                            monthly living expenses, the courts will usually not grant
                            a Chapter 7 discharge.

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                            What should I do if my Chapter 7 is not

                            Our best advice to you is to immediately seek the help of
                            a non-profit consumer credit counseling agency.
                            A non-profit consumer credit counseling agency in most
                            cases, can help you re-establish payment plans with
                            those creditors that you tried to file bankruptcy against.

Monday, February 07, 2011                                                            7
                            What type of debts can be discharged in a
                            Chapter 7 bankruptcy?
                            In a Chapter 7 bankruptcy you can discharge almost any
                            consumer debt such as:
                                All credit card debt                       Auto Repossession
                                Personal loans (banks or credit unions)    Charge-off accounts
                                Finance companies                          Collection accounts
                                Automobiles (purchased or leased)          Eviction (rent) debt
                                Mortgage debt                              Old utility bills
                                Other motor vehicles                       Medical bills
                                Some student loans may qualify             Dental bills
                                Some past-due taxes may qualify            Attorney bills
                                Creditor lawsuits                          CPA bills

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                            What is a discharge?

                            The filing of a chapter 7 bankruptcy petition is designed
                            to result in a discharge of most, if not all, of the debts
                            you listed on your bankruptcy schedules.
                            Certain debts such as a mortgage or car loan will
                            continue to be paid by you if you elect to retain the
                            asset. A discharge is a court order that says you do not
                            have to repay your debts.
                            Creditors cannot ask you to repay any debts which have
                            been discharged in bankruptcy. You can only receive a
                            chapter 7 bankruptcy discharge once every six (6) years.

Monday, February 07, 2011                                                                9
                            Are there debts that I cannot discharge?

                            Yes. You should first understand that not all debts are
                            dischargeable in a bankruptcy case.

                            Examples of debts that are not able to be discharged
                                    Most state and federal taxes
                                    Child support
                                    Alimony support
                                    Most student loans
                                    Criminal fines, restitution or penalties
                                    Debts obtained through fraud or deception
                                    Personal injury debts
                                    Credit card charges made within 40 days of filing

Monday, February 07, 2011                                                                10
                            What are the potential effects of a discharge?

                            The fact that you filed bankruptcy will appear on your
                            credit report for as long as 10 years. Thus, filing a
                            bankruptcy petition may affect your ability to obtain credit
                            in the future.
                            Generally speaking you may not be excused from
                            repaying any debts that were not listed on your
                            bankruptcy schedules or that you incurred after you filed

Monday, February 07, 2011                                                            11
                            In a bankruptcy do I have to give up all my
                            personal property?

                            No. Federal and state laws provide exemptions for your
                            Exempted property is property such as household
                            goods, furniture, clothes, and personal belongings,
                            which you may keep even if you file bankruptcy.

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                            What are the effects of reaffirming a debt?

                            After you file your bankruptcy petition to the courts, a
                            creditor (that you owe) may ask you to voluntary reaffirm
                            a certain debt or you may seek to do so, on your own.
                            Reaffirming a debt means that you will sign and file a
                            legally enforceable document with the court, which
                            states that you promise to repay all or a portion of the
                            debt that may otherwise have been discharged in your
                            bankruptcy case.
                            Once reaffirmed, the debt becomes a renewed
                            obligation, which survives bankruptcy.

Monday, February 07, 2011                                                              13
                            What is Chapter 13 Bankruptcy?

                            Chapter 13 generally permits individuals to keep their
                            property by repaying creditors out of their future income.
                            Each chapter 13 debtor (you) submits a plan of
                            repayment for 3 to 5 years, which must be approved by
                            the bankruptcy court.
                            Chapter 13 is only available to individuals with regular
                            income whose debts do not exceed $1,077,000
                            ($269,250 in unsecured debts and $807,750 in secured

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                            How do I determine if a Chapter 13 is best for

                            Chapter 13 is best for people who have too much
                            disposable income and also have the kind of consumer
                            debt (like student loans, taxes, etc.) that cannot be
                            discharged in a Chapter 7.
                            People that are behind in their mortgage payments and
                            want to avoid foreclosure on their property may also file
                            a Chapter 13.
                            Chapter 13 allows a person to make up past due
                            payments over a specific time period, therefore
                            reinstating the creditors original agreement.

Monday, February 07, 2011                                                           15
                            Will a bankruptcy filing, stop any collection or
                            legal action against me?

                            Yes. A bankruptcy filing under federal law imposes an
                            automatic stay, which stops your creditors from
                            collecting on the debts and/or obtaining a court judgment
                            while your bankruptcy is pending and awaiting approval
                            of a discharge.
                            For example: If one of your creditors serves you with a
                            lawsuit the bankruptcy filing will stop the lawsuit.

Monday, February 07, 2011                                                         16
                            Will bankruptcy stop wage garnishments or
                            repossession from creditors?

                            Yes. Creditors must stop any wage garnishments or
                            repossession efforts under a bankruptcy filing.

                            A creditor can only proceed against you once your
                            bankruptcy is over and that specific debt was not
                            discharged in your bankruptcy.

Monday, February 07, 2011                                                       17
                            When do my creditors get notified of my
                            bankruptcy filing?

                            Once your bankruptcy petition has been filed with the
                            courts, the bankruptcy court clerk will mail a notice within
                            10 to 14 days of your bankruptcy filing on your behalf to
                            all your creditors, which will impose an automatic stay.
                            Therefore, your creditors must stop all collection efforts
                            on the debt. If a creditor does not stop collection efforts
                            the courts can impose sanctions against them.

Monday, February 07, 2011                                                             18
                            How long does a bankruptcy take to be
                            A Chapter 7 bankruptcy can take anywhere from 3 to 5
                            months to be fully discharged.
                            A Chapter 13 bankruptcy can take anywhere from 3 to 5
                            years to be fully completed. A Chapter 13 takes longer
                            because you are setting up re-payments plans with your

Monday, February 07, 2011                                                          19
                            Once I file a bankruptcy petition do I continue
                            paying my creditors?
                            No. If you plan to reaffirm your auto loan and mortgage
                            loan and keep it out of your bankruptcy you need to
                            continue making those monthly payments on time.
                            You also need to continue making your monthly
                            payments on your daily living expenses; rent, utilities,
                            telephone, gasoline, insurance, etc.
                            If you plan to include all your credit card debt in your
                            bankruptcy to be discharged, you can stop making those

Monday, February 07, 2011                                                              20
                            Should I hire a bankruptcy attorney or a
                            paralegal to prepare my bankruptcy?
                            Everyone’s situation is different. As a rule of thumb, you
                            should hire a bankruptcy attorney if you:
                                       Own a home
                                       Are self employed
                                       Have substantial amount of assets
                                       Receiving a settlement from a lawsuit
                                       Have over $15,000 of cash in savings,
                                        stocks, bonds, mutual funds, etc.
                                       Receiving an inheritance

Monday, February 07, 2011                                                            21
                            Will I lose my car or home when I file

                            If you do not include these debts into your bankruptcy for
                            discharge, you must reaffirm these debts and keep them
                            out of your bankruptcy.
                            If you plan to keep them out, you must continue to make
                            monthly payments on time to the creditors.

Monday, February 07, 2011                                                          22
                            Do I have to include all my credit cards in my

                            No. You can reaffirm a credit card debt if you have a
                            balance on it. In most cases the credit card issuer will
                            agree to keep it open for you as long as you continue to
                            make the agreed minimum monthly payment as required
                            on the monthly statement.
                            If you have a credit card with a zero balance on it you
                            will not include that credit card in your bankruptcy filing.

Monday, February 07, 2011                                                              23
                            Can I charge on my credit cards before I file

                            No. If you charge or take cash advances within 90 days
                            on credit cards that you plan to include in your
                            bankruptcy, you may be liable for those charges and
                            cash advances and the courts may not discharge those
                            credit cards.
                            In addition, the courts may fine you under the basis of
                            fraud. You should seek legal advice from a bankruptcy
                            attorney if you have recently incurred large amounts of
                            debt on credit cards you plan to bankruptcy.

Monday, February 07, 2011                                                             24
                            Who will know about my bankruptcy filing?

                            All bankruptcy filings are public record. Your close
                            friends, your family members, your boss, your co-
                            workers, etc. will not find out about your bankruptcy filing
                            unless you tell them.
                            Bankruptcy filings are not usually published in the
                            newspaper. The only people who will know about your
                            filing are the courts and your creditors.

Monday, February 07, 2011                                                            25
                            Will I lose my job if I file bankruptcy?

                            No. Your employer cannot fire you for filing bankruptcy. It
                            is against federal law for an employer to discriminate
                            against an employee for filing personal bankruptcy.
                            Your bankruptcy filing is none of your employer’s

Monday, February 07, 2011                                                            26
                            Will a bankruptcy filing destroy my credit?

                            If bankruptcy is your only option, your credit is already
                            damaged due to late or non payments to your creditors.
                            A bankruptcy can stay on your credit report for up to 10
                            This does not mean that your life is over. Once your
                            bankruptcy has been discharged, you will receive credit
                            card offers in the mail that will help you reestablish your
                            Most people can rebuild their credit within 2 years from
                            the time their bankruptcy is discharged.

Monday, February 07, 2011                                                             27
                            Once I file my bankruptcy petition, what
                            happens next?

                            Within 30 to 45 days you will be required to attend a
                            hearing of creditors in front of a court-appointed trustee.
                            At this hearing, the creditors will have an opportunity to
                            ask you questions about merchandise that you
                            purchased on credit with them. In most cases if you do
                            not have assets, creditors will not appear at this hearing.
                            When you appear for this hearing usually there will be a
                            lot of other people in the room, all there for the same
                            reason as you. Therefore, there is no need to be

Monday, February 07, 2011                                                            28
                            Once I file my bankruptcy petition, what
                            happens next?


                            In most cases, if your petition was filled out correctly by
                            your attorney or paralegal the trustee should have few

                            If your petition passes the trustee’s questioning, your
                            bankruptcy will be normally discharged within 3 to 4
                            months from the time you filed.

Monday, February 07, 2011                                                             29
                            How does bankruptcy affect a co-signer on a
                            If the debt qualifies by the courts to be discharged, then
                            the co-signer on the debt will become primarily
                            responsible to pay the debt.
                            The person filing the bankruptcy should list the co-signer
                            as a creditor in their bankruptcy petition.
                            For example: A husband and wife separate and divorce.
                            The wife decides to file bankruptcy on several credit
                            cards that are joint accounts with both their names on it.
                            If the husband does not participate in the bankruptcy
                            filing then he will become solely responsible for those
                            joint accounts once the wife’s bankruptcy has been
Monday, February 07, 2011                                                            30
                            Can I go to jail if I file bankruptcy?

                            No. There is no such thing as a debtor’s prison in the
                            United States. Every consumer has the right to file a
                            bankruptcy petition every 6 years.

Monday, February 07, 2011                                                            31
                            Can a bankruptcy remove a lien?

                            Under some circumstances, your attorney can file a
                            special motion to remove the lien.
                            The bankruptcy court will have to issue a court order to
                            remove the lien.
                            This procedure is complicated and you need a
                            bankruptcy attorney who understands this area of the

Monday, February 07, 2011                                                          32
                            Will a bankruptcy filing stop a home
                            Yes. You need to keep in mind that a home is an asset
                            secured by a deed of trust.
                            The mortgage company has the right to petition the court
                            for relief from the “automatic stay” provision. In most
                            cases, an individual may be able to prolong the
                            foreclosure until they have received a discharge from the
                            bankruptcy court.

Monday, February 07, 2011                                                           33
                                     OTHER BANKRUPTCY OPTIONS

                            Besides chapter 7 and chapter 13 bankruptcy there are
                            two additional choices within the Bankruptcy Code. They
                                        Chapter 11 bankruptcy
                                        Chapter 12 bankruptcy

Monday, February 07, 2011                                                        34
                            What is Chapter 11 Bankruptcy?

                            Chapter 11 is the reorganization chapter most commonly
                            used by businesses, but it is sometimes available to
                            The debtor submits a plan of reorganization and
                            creditors vote on whether to accept or reject a plan,
                            which also must be approved by the court.
                            While the debtor normally remains in control of the
                            assets, the court can order the appointment of a trustee
                            to take possession and control of the business.

Monday, February 07, 2011                                                           35
                            What is Chapter 12 Bankruptcy?

                            Chapter 12 offers bankruptcy relief to those who qualify
                            as family farmers.
                            Family farmers must propose a plan to repay their
                            creditors over a three to five year period and the court
                            must approve it.
                            Plan payments are made through a chapter 12 trustee
                            who also monitors the debtor’s farming operations during
                            the course of completion.

Monday, February 07, 2011                                                              36
                            What types of debts can be affected if unpaid?

                            When financial problems arise, consumers need to
                            understand the consequences of the different type of
                            debts and how they can be affected if not paid.
                            There are 7 different types of debts. They are:

                                               Secured debts
                                               Unsecured debts
                                               Foreclosure
                                               Eviction
                                               Auto repossession
                                               Utility shut-offs
                                               Lawsuits

Monday, February 07, 2011                                                          37
                            What are the consequences of secured debts?

                            Most secured debts are backed by collateral. Collateral is
                            property that can be seized in the event of a debt
                            payment delinquency.

                            Secured credit cards. If you don’t pay on your secured
                            credit card the card issuer who has control of your
                            collateral (savings deposit) can seize your savings
                            deposit and suspend your privileges to charge on that

Monday, February 07, 2011                                                          38
                            What are the consequences of secured debts?


                            Home mortgage. If you should fall behind on your
                            mortgage payments, the mortgage lender can seize your
                            home (foreclosure), leaving you with nothing. All current
                            and future equity accumulated in the property would now
                            belong to the mortgage lender.

                            Automobile Loan. If you should fall behind on your car
                            payments, the bank or financial institution has the right
                            to legally repossess your car without your permission. If
                            the car is repossessed, the car is now the property of the
                            bank or financial institution that holds title.

Monday, February 07, 2011                                                          39
                            What are the consequences of unsecured

                            Banks and other financial institutions that provide
                            unsecured credit to consumers do not have the legal
                            power that secured lenders have.
                            Lenders that cannot collect on unsecured delinquent
                            debt, must first file and obtain a court judgment before
                            they can seize money or property.
                            Unsecured credit cards are by far the hardest to collect
                            on. Most collection agencies generally will make threats
                            to sue for monies or garnish wages for monies owed, but
                            in most cases these threats are not carried out, because
                            litigation is a costly and timely process.

Monday, February 07, 2011                                                              40
                            What are the consequences of a foreclosure?

                            If you miss one or two payments on your mortgage, your
                            lender will send you a letter and in most cases call you
                            and ask you to send in the missed mortgage payments
                            plus late fees.
                            If you fall behind 60 to 90 days on your monthly
                            mortgage payments, your lender will send you a written
                            notice in the mail, which is referred to as the Notice of
                            Default. This Notice of Default is the first step in the
                            foreclosure process.

Monday, February 07, 2011                                                           41
                            What are the consequences of a foreclosure?


                            If you do not make up the missed mortgage payments
                            and late fees, the lender will send another written notice
                            in the mail. This is referred to as the Notice of
                            Acceleration. The homeowner at this point must pay the
                            full mortgage off to avoid a foreclosure sale by the lender.

                            If the full mortgage amount is not paid in full, a court
                            summons will be delivered to the property as well as a
                            Notice of Sale. This Notice of Sale will outline the time
                            and date that the property will be foreclosed on.

Monday, February 07, 2011                                                               42
                            What are the consequences of an eviction?

                            Being evicted from a rented apartment, condo or home
                            can be disruptive and dangerous, knowing that you could
                            be homeless should you have no where else to live.
                            If you do not pay your rent, the first step that your
                            landlord will take to start the eviction is to send you (the
                            renter) a written Notice to Quit or Notice to Vacate.
                            These written notices basically tell you to either pay the
                            rent or vacate the premises within a specific time.

                            If you do not pay the past-due rent within the Notice to
                            Quit time frame, the landlord will seek and file a court
                            order to evict you from the premises.

Monday, February 07, 2011                                                              43
                            What are the consequences of an eviction?


                            If you choose to not appear in court, the court will
                            automatically enter a default judgment against you and
                            you will be evicted from the premises, in most cases by
                            a sheriff or another law enforcement person.
                            When you are forced to move against your will, you are
                            considered a refugee. Your belongings can be removed
                            and put on the streets.
                            In addition to being evicted, the landlord can file suit
                            against you for all past-due rent, plus court fees and

Monday, February 07, 2011                                                              44
                            What are the consequences of an automobile

                            If you miss one payment a lender must send you a
                            Notice of Default letter giving you an opportunity to
                            bring the loan current.
                            If payments are not brought current, a lender can
                            schedule your car for repossession as well as place a
                            lien on your car and sell it in order to pay back the
                            money you borrowed.
                            Repossession means that a “repo man” can take your
                            car at anytime without your consent, open your car and
                            drive it away.

Monday, February 07, 2011                                                           45
                            What are the consequences of an automobile


                            When your repossessed car is sold at auction, in most
                            cases a Deficiency Balance will occur. At auction sales,
                            auto dealers bid on repossessed cars at drastically
                            reduced prices.
                            For example: Your car may be valued at $10,000, but
                            through an auction sale the lender sells it to an auto
                            dealer for $6,000. Immediately, your repossessed car
                            now has a $4,000 Deficiency Balance which you must
                            pay to the lender.

Monday, February 07, 2011                                                            46
                            What are the consequences of an automobile


                            In addition to the $4,000 Deficiency Balance, you will owe
                            the lender for repossession fees, storing and all auction
                            cost for the sale of your repossessed car.

Monday, February 07, 2011                                                          47
                            What are the consequences of a utility shut-

                            If you don’t pay your bill, utility companies don’t send you
                            to collections, they simply shut off your service.

                            By law a publicly owned utility company must send you a
                            termination notice, stating that if you don’t pay the
                            amount due your service will be turned-off.
                            Privately owned utility companies do not have to send
                            you a termination notice and they can turn off your
                            service due to non-payment at anytime without warning.

Monday, February 07, 2011                                                            48
                            What are the consequences of a utility shut-


                            Whether you’re dealing with a publicly or privately owned
                            utility company, getting your utility service turned back on
                            can be costly.
                            You will have to pay the past due amount in full, plus late
                            charges and a re-installment fee, and in some cases, a
                            security deposit.
                            Some utility companies may allow you to make monthly
                            installment payments over time to make up past-due

Monday, February 07, 2011                                                            49
                            What are the consequences of a lawsuit?

                            If you are a consumer who had unsecured credit
                            extended to you and you where unable to make the
                            monthly payment obligations, the lender has a legal right
                            to file suit in a court of law against you in order to collect
                            on that unsecured debt.
                            If a lender successfully files suit and wins, it can result in
                            the following:

                                           Judgment Liens
                                           Wage Garnishment and
                                            Bank Account Seizures

Monday, February 07, 2011                                                               50
                            Judgment Liens:

                            A judgment lien allows a lender to place a lien against
                            your property (home, car, boat, etc.). This lien prohibits
                            the owner of the property to sell or re-finance until the
                            lien is cleared (debt is settled).
                            Once a judgment lien has been won in court, the lender
                            has the right to inspect and examine your property. The
                            lender must further file a formal request in court to seize
                            or sell the property.

                            The law states that certain possessions, like household
                            items are exempt from seizure. You should contact an
                            attorney in your state for legal advice on judgment liens
                            and what can be seized.
Monday, February 07, 2011                                                                51
                            Wage Garnishment and Bank Account

                            If a lender successfully files suit and obtains a court
                            order, that lender may garnish up to 25% of your take-
                            home pay without your consent.
                            A lender can take more of your take-home pay if it
                            involves unpaid child support. A court order wage
                            garnishment can be served directly to your employer or
                            to your bank.

                            Note: Not all states allow wage garnishment. Speak to
                            an attorney in your state on wage garnishment and
                            whether it’s enforceable in your state.

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                               This concludes our educational study
                            course on Bankruptcy and Unpaid Debts.

                                  Thank you for attending!

Monday, February 07, 2011                                         53
                                      Corporate Address:
                            American Consumer Credit Counseling, Inc.
                                 130 Rumford Avenue, Suite 202
                                       Newton, MA 02466

                                    Contact Information:
                                  Toll Free: 1-800-769-3571
                                    Main: 1-617-559-5700
                                     Fax: 1-617-244-1116
                             Web Address:

Monday, February 07, 2011                                               54

Description: File Bankruptcy document sample