Bankruptcy: The Roadmap - Beginning to End

When coming to our office for a consultation regarding bankruptcy, it is helpful if you provide us with the following information:

• The amount of income you have received in the past 6 months
• The amount of income that others in your household have received in the last 6 months
• If you own your home, the amount of equity that you have in it
• Information on any assets that you currently own
• Information on any assets you have sold or given away in the last 6 years
• Information on any claim that you have in regard to a personal injury matter
• Information regarding any other type of claims you have
• The total amount that you owe in bills
• Information on any bankruptcy you have filed in the last 8 years
• Information regarding the use and payments made on credit cards and credit lines over the last two years (including balance transfers)

We will consider all of your information and advise you of whether bankruptcy is an option for you and if so, which type of bankruptcy would be appropriate.

In some situations, bankruptcy may not be an option. If that is the case, filing bankruptcy may not only waste your time and money, but it may also cause you to lose your home, car or other assets. Further, filing bankruptcy when not appropriate may even result in your facing criminal charges. This is why it is essential that you provide us with complete, truthful and accurate information during your consultation. If bankruptcy is not available as an option, there may be other options available, which will be discussed during your consultation.

If bankruptcy is available to you as an option, in may be of great benefit to you. Bankruptcy can provide you with a fresh financial start and relieve you of stressful burden. Once you are free of most or all of your debts you can concentrate on saving money for a car, home or retirement.

The most common type of bankruptcy is Chapter 7. With several exceptions, Chapter 7 Bankruptcy eliminates most of your debts. The most common exceptions are student loans, most taxes and child support. Student loans in theory are dischargeable for extreme hardship; however extreme is interpreted as extraordinarily extreme. Although the general rule is that taxes are not dischargeable, under certain circumstances they may be discharged.

In a Chapter 7 Bankruptcy a debtor is allowed to keep "exempt" assets. Common exempt assets include $2,500 in cash, qualified retirement plan (for example a 401k or 403b), a car with up to $2,400 in equity, a home with up to $50,000 in equity and most ordinary household possessions. A married couple can file together and double these amounts.

The other type of bankruptcy that is available to consumers is Chapter 13. In a Chapter 13 Bankruptcy a repayment plan of some or all of your debts are made over a 3 to 5 year period. Chapter 13 is used when a person doesn't qualify for a Chapter 7 Bankruptcy. Common reasons for filing a Chapter 13 Bankruptcy instead of a Chapter 7 Bankruptcy are: earning too much income, over allowed equity in home, wanting to eliminate a second mortgage, nonexempt assets, debts not dischargeable in a Chapter 7 Bankruptcy. In a Chapter 13 Bankruptcy a debtor is allowed to keep all of his or her assets.

If bankruptcy is an option and you choose to proceed, you will sign a retainer agreement and pay a retainer fee. The retainer agreement states that we represent you in regard to the bankruptcy. The retainer fee is merely a deposit towards our total fee. We will give you a form to complete and instructions on what you need to do to prepare for your bankruptcy petition.

Once you retain us, you may inform your creditors that we represent you and that they should stop calling you and call us instead. You may pay us over a period of time. We will take the calls from your creditors while you are paying us.

All persons filing for bankruptcy must complete both mandatory credit counseling and an education course. The credit counseling and educational course can only be given by a court approved organization. We will provide you with a list of approved companies. The courses are given over the telephone and cost approximately a total of $100. The credit counseling must be taken no more than 180 days prior to the filing of the bankruptcy petition. The education class, known as Personal Financial Management must be taken after we file your bankruptcy petition and prior to your hearing.

Once you have completed paying us and have taken your credit counseling class, you will schedule an appointment with our office to prepare your bankruptcy petition with our paralegal. When you come in to prepare your petition, you will bring in the certificate that indicates you have completed the credit counseling class, as well as the completed form that we had provided you, along with the documentations that we had instructed you to bring.

Once your petition is completed and signed and you have provided us with all necessary documentation, we will file your petition with the Bankruptcy Court. A hearing, known as a 341 meeting (after section 341 of the Bankruptcy Code), will be held about a month after we filed your petition. On the day of the hearing we will meet with you prior to the hearing to review the questions that you will be asked and will be sitting at your side during the hearing.

At the hearing you will be questioned by the bankruptcy trustee. The trustee is an attorney, who is paid by the Bankruptcy Court to oversee your case. The trustee's job is to make sure that you have not committed any fraud and to discover any nonexempt assets that you may have. If you have any nonexempt assets, the trustee will receive an additional fee based upon the amount of the assets and distribute those assets to your creditors.

If you are filing a Chapter 13 Bankruptcy there will be a second hearing, called a "Confirmation Hearing".

In the typical Chapter 7 Bankruptcy you will receive your discharge about 3 months after the filing of the petition. In a Chapter 13 Bankruptcy you will receive your discharge when you finishing making your payments on the payment plan.