Personalized Bankruptcy Report

8/6/2019 Personalized Bankruptcy Report

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PersonalizedBankruptcyReportfor[AnswerA]

Congratulations! You have taken a great step towards getting out of

debt. Far too often, people file for bankruptcy without understanding

whathappensinbankruptcyorhowbankruptcywillaffect,ornotaffect,

theirdebtsandassets. Throughthispersonalizedreport,youwillgainan

understandingofthebasicsofbankruptcyandwhatwillhappentoyour

major debts and assets in your bankruptcy case. Bankruptcy provides

greatbenefitsbut thesebenefitsare limiteddependingonyourunique

circumstances.

Whilethisreportprovidesyouwiththebasicsofwhatyouneedtoknow,bankruptcy lawandyoursituationchangeconstantly. Thispersonalized

report is for informationalpurposesonlyandcannotbereliedupon for

anythingotherthanwhatyoucangenerallyexpecttohappentoyouand

yourassetsbasedonotherdebtorsinsimilarsituationstoyours.

Goodluckonyourfightoutofdebtwhetheryoudecidethatbankruptcy

isyourbestrouteornot!


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I. ELIGIBILITYFORBANKRUPTCYOption1: [IfincomeislessthantheIRSminimumforstateinAnswerB]

Basedonyouraverage incomeforthe lastsixmonthsof[AnswerD]permonth,

youhaveachoicetofileeitherachapter7bankruptcyorachapter13bankruptcy.

NOTE: If your secured debts (debts backed by a pledge of property) exceed

$1,081,400oryourunsecureddebts(debtsbackedsolelybyyourpromisetopay)

exceed$360,475,youcannotfileachapter13bankruptcycase. Youcaneitherfile

achapter7bankruptcycaseorachapter11bankruptcycase.

Option2: [IfincomeisleftthantheIRSminimumforstateinAnswerB]

Basedonyouraverage incomeforthe lastsixmonthsof[AnswerD]permonth,

yourincomeexceeds[STATE]smedianincome. Asitexceedsthemedian,youfai

one part of the means test. The means test uses a standard mathematica

formulatodeterminewhetheryoucan file forchapter7bankruptcycase,or,as

set forth in the Bankruptcy Code,whetheryour filingof achapter7 bankruptcy

case

would

be

an

abuse

of

the

bankruptcy

system.

Havingfailedthe firstpartofthemeanstest,youmustthendeterminewhether

youcanpassthesecondpartofthemeanstest. Youpassthesecondpartofthe

meanstestifyouraggregatecurrentmonthlyincomeover5years,netofcertain

statutorilyallowedexpenses, ismore than (i)$11,725,or (ii)25%of theofyour

nonpriorityunsecureddebt,as longasthatamount isat least$7,025. Or,more

simply, if your current monthly income demonstrates that you can pay your

unsecuredcreditors$11,725($195.42amonth)over5yearsor$7,025($117.09a

month) over 5 years and that is at least 25% of what you currently owe your

unsecuredcreditors, then youcannot filea chapter7bankruptcycase. Youare

allowed certain, standard deductions based on the number of vehicles you

operate, the number of people in your household, and your cost of living. In

addition, to these standard deductions, you can also deduct the full amount of


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certainexpensessuchasyourmortgageand loanpaymentsforyourcarorother

vehicle.

Ifyoufailbothpartsofthemeanstest,youarepresumedtoberequiredtofilea

Chapter 13 bankruptcy case and there is a presumption of abuse if you file aChapter7bankruptcycase.

However, you can defeat this presumption of abuse that requires you to file a

chapter 13 bankruptcy case by a showing of special circumstances thatjustify

additional expensesoradjustmentsof currentmonthly income. Unless you can

overcome the presumption of abuse and you have filed a chapter 7 bankruptcy

case, your bankruptcy case will generally be converted to chapter 13 (if you

consent)orthecasewillbedismissed. Abankruptcylawyeristhebestpersontoassistyouindefeatingthepresumptionbasedonspecialcircumstances.

EXCEPTIONS:

IF you are a veteran, and you are disabled, and your indebtedness occurred

primarily during a period in which you were: on active duty, or performing a

homelanddefenseactivity,youareexemptfromthemeanstest.

IFyouareamemberofareservecomponentoftheArmedForcesandmembersoftheNationalGuardandyouwerecalledtoactivedutyafterSeptember11,2001,

foraperiodofatleast90daysoryouhaveperformedhomelanddefenseactivity

foraperiodofatleast90days, youareexcludedfromallformsofmeanstesting

during the time of active duty or homeland defense activity and for 540 days

thereafter.

NOTE: If your secured debts (debts backed by a pledge of property) exceed

$1,081,400oryourunsecureddebts(debtsbackedsolelybyyourpromisetopay)

exceed$360,475,youcannotfileachapter13bankruptcycase. Youwillhaveto

file a chapter 11 bankruptcy case unless you can defeat the presumption as set

forthaboveandcouldtheneitherfileachapter7bankruptcycaseorachapter11

bankruptcycase.


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II. BANKRUPTCYBASICSBankruptcy

stems

from

a

system

of

federal

laws

and

rules

of

procedure

which

theUnitedStatesCongresshasenactedpursuanttoitspowersundertheConstitution

of the United States. United States Bankruptcy Courts in the 94jurisdictions

whereafederalcourtislocatedadministerbankruptcycases.

Bankruptcycasescannotbecommencedinstatecourtsbutmustbecommenced

byfilingabankruptcypetitionwiththeclerkofthebankruptcycourt. Bankruptcy

isa legalprocedurewhichallows individualsandbusinessestoobtainrelieffrom

debts toobtaina freshstart in their financesand remedy financial injustices. If

you live in or have property in the United States, you can file a bankruptcy

petition.

Onceyoucommenceyourbankruptcycase (donebythe filingofapetitionwith

the bankruptcy court), you have a breathing spell from efforts by creditors to

collect debts. When the bankruptcy court enters a discharge order upon

successful completion of your bankruptcy case, you are released from your

obligation to repay debts. The discharge order has certain exceptions and

restrictions.

OverviewoftheProcess

Bankruptcy provides numerous protections and benefits but follows well

establishedrulesandlawsthatdictatewhathappenstoyouandyourproperty.

TheAutomaticStay

The moment you commence your bankruptcy case, an order of the bankruptcycourt called the automatic stay goes into effect. The automatic stay requires

cessation of all collection actions, lawsuits in which you are a defendant,

foreclosures,wagegarnishments,evictions,demandsforrepaymentofdebts,and

phonecallstocollectdebts. Ifacreditortakesactioninviolationofthestay,you


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may recover actual and punitive damages as well as attorneys fees from the

creditor.

Theautomaticstay isnotunlimited. Congresshasdeclared28exceptionstothe

automatic stay, including fines from the prosecution of criminal actions and thecollectionofalimonyandchildsupport. Thebankruptcycourtmaygrantacreditor

relief from the automatic stay upon the filing of a motion in which the creditor

gives the bankruptcy court good cause to lift the automatic stay as to its debt

Otherlimitationsontheautomaticstayarise,especiallywherethedebtorhashad

one or more prior bankruptcy cases which were dismissed within a year of the

currentfiling. Therearespecialprovisionsthatapplytoevictioncaseswhichgive

landlordsanddebtorsspecificrightsandobligations.

Actsundertakenbyacreditorinviolationoftheautomaticstayarenotonlyvoid,

butmayexposetheviolatortomonetarysanctions.

PropertyoftheEstateandExemptions

Whenyoucommenceyourbankruptcycase,allyourlegalandequitableinterests,

including interests in real and personal property, become property of the

bankruptcyestate. Thetrusteeofthebankruptcycasewillthenadministerallof

thepropertyforthebenefitoftheyourcreditors.

Bankruptcy law entitles you to claim certain property as exempt. You keep

exemptyourexemptpropertyanditstaysoutofthehandsofhisorhercreditors

Some state law exemptions have been the law for hundreds of years and are

outdated, such as exemptions for church pews, the family Bible, two swine and

fourtonsofhay.

Propertywhichyouaretypicallyallowedtoexemptincludes:

Someoralloftheequityinadebtorspersonalresidence Someorallofthevalueinavehicle Adebtorstoolsofthetrade Householdgoods


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Jewelry Lifeinsurance Personalinjuryclaims

The list of exemptions available under the federal exemption scheme is morecurrentandprovidescategoriesofexemptpropertywithvaluesthatareadjusted

forthecostoflivingeverythreeyears. Intheeventacreditorhasacourtordered

lien which impairs an exemption, you may request that the creditors lien be

avoided and if so ordered, this judicial lien will be released. Your specific

exemptionsarelistedcompletelyinfullinSectionIV.

TheDischarge

TheUnited StatesSupremeCourt hasemphasized that bankruptcy gives to the

honest but unfortunate debtora new opportunity in life and a clear field for

future effort, unhampered by the pressure and discouragement of preexisting

debt.

The discharge orderof the bankruptcy court releasesyou from personal liability

fordebts. Dischargeprovidesapermanent injunctionpreventingcollectionofal

ofthedebtstowhichitapplies. Afteradischarge,youenjoyyourproperty(other

thanpropertyoftheestate)freefromtheclaimsofcreditors. Thebestexampleofpropertythatisfreefromthecreditorsafterdischargeisfutureearnings.

However,thedischargedoesnotapplytoallofyourdebts. Automaticexceptions

setforth intheBankruptcyCode,suchasmosttaxes,alimony,spousalandchild

support,criminalrestitutionandfines,andstudent loanswherethedebtordoes

notproverepaymentisanunduehardshipwillnotbedischarged(theentirelistis

setforthbelow). Moreover,acreditorcanbringaproceedingwithinabankruptcy

case(knownasanadversaryproceeding)todeterminethatadebtshouldbenotbedischarged ifthedebtwas incurredbyfraud,willfulandmalicious injury,and

otherlikecauses. Thebankruptcycourtmaydetermineafterlitigationthatadebt

will not be discharged or is nondischargeable. If you commit certain offenses,

suchasnotdisclosingallofyourassets,ormakingafalseoathinyourbankruptcy

case,thebankruptcycourtmaydenydischargeofallofyourdebts.


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Therearesix typesofbankruptcy reliefandeach type iscalledachapter for its

sectioninthebankruptcylegislation. Thetwotypesmostcommonforindividuals

arechapter7andchapter13.


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A. Chapter7BankruptcyCasesAChapter7bankruptcycase isa liquidationofbothyourdebtsandyourassetsunder the supervision of a trustee. Chapter 7 cases are, more often than not,

routine and the vast majority of them are discharged or released and

administratively closed without the trustee liquidating any assets or distributing

anyassetstocreditors. InamajorityofChapter7cases,youneverappearinfront

of the bankruptcyjudge but only attend a meeting of creditors conducted by a

trustee.

When

you

file

a

Chapter

7

case,

your

bankruptcy

case

is

controlled

by

a

trusteeappointed by the United States Trustee Office (a division of the Department of

Justice). In a Chapter 7 case, the trustee investigates your assets, determines

whether to object to any exemptions you have claimed (state and federal laws

protectcertainproperty),andhastheabilitytosellanyassetsthatarenotexempt

and distribute the proceeds of the sales to creditors. The trustee also has the

abilitytoobjecttocreditorsclaims. YoumustqualifyforChapter7relief.

To qualify for relief in Chapter 7, you must meet the eligibility criteria by

obtaining prepetition credit counseling briefing, and completing a means test to

determine whether your income and expenses are above or below the median

incomeascomparedtootherindividualsinthestate. Youmustfileascheduleof

assets, includingclaimsofyourexemptionsand liabilitiesandmustpaythefiling

fee unless excused by the bankruptcy court. Unless a creditor, the trustee or

another interestedpartyfilesanobjection,thecourtwillenteradischarge. The

dischargeofadebtor inaChapter7casemaynotaffectcertaindebts likeyour

mortgage

or

auto

loan

because

you

have

pledged

your

property

to

obtain

thedebt.

You can enter into reaffirmation agreements for the purpose of retaining your

securedcollateralsuchasyourhouseorcar(moreonthisoptionbelow).


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Youwillnotreceiveadischargeofdebtsexceptedfromthedischargeunderthe

Code,orifthebankruptcycourtcarvesoutaparticulardebtfromyourdischarge

after litigation. Moreover you can be denied a bankruptcy discharge if you are

found to have lied to the trustee or court, fraudulently transferred property, or

destroyed records. Inaddition, the dischargecanbe revoked if itwas obtained

throughfraud.


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court. Notonlydoesthebankruptcycourtscrutinizeyourfinancial life,butyour

financesaresubjecttomonitoringbythechapter13trusteeandcreditors. Ifyou

fail to make a payment under the plan, the trustee and creditors can seek to

dismissyourChapter13caseresultinginthelostopportunityforadischarge.

Inaddition, ifduring thetermof theplanyour incomeorassets increase, those

partiescan request that theplanbemodified to increasepayments. Moreover,

Chapter 13 cases are more costly than chapter 7. You must pay a trustees

commission approximately 10 percent of the plan disbursements. Your

attorneys fees are higher for Chapter 13 cases than Chapter 7 cases, usually

ranging from $ 2,500 to $ 3,500 plus filing fees, depending on thejurisdiction

AttorneysfeesforaChapter7rangebetween$1,000and$1,500.

Chapter13

ThePlanandPlanConfirmation

AsaChapter13debtor,youmustfileaplanthatproperlytreatsthedebtsowed

bythedebtoraccordingtothe legalpriorityofcreditorsclaims. Priorityclaims,

suchastaxes,mustbepaid in fulloverthetermoftheplan. Aplancancurea

defaultinamortgageorlease,bypayingtheamountinarrearsovertheplanterm,

while maintaining regular payments. Although home mortgages cannot bemodifiedunderaChapter13plan,andvehiclepurchaseloansobtainedwithin910

dayspriortocommencementofthecasemustalsobepaidinfull,sometypesof

secured claims can be modified and the debtor need only pay the value of the

collateral,plusmarketinterestrateoverthetermoftheplan.

Theplanneednotpayunsecuredclaimsinfullaslongitprovidesthatthedebtor

will pay all projected disposable income over an applicable commitment

period, and as long as unsecured creditors receive at least as much under theplanastheywouldreceiveunderchapter7. Inchapter13,disposableincomeis

definedasincome(otherthanchildsupportpaymentsreceivedbythedebtor)less

amounts reasonably necessary for the maintenance or support of the debtor or

dependents and less charitable contributions up to 15% of the debtors gross


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income. Ifyouoperateabusiness, thedefinitionofdisposable incomeexcludes

thoseamountswhicharenecessaryforordinaryoperatingexpenses.

Theapplicablecommitmentperiod,referstotherequireddurationoftheplan,

and it depends on your current monthly income. The applicable commitmentperiodmustbethreeyearsifcurrentmonthlyincomeislessthanthestatemedian

for a family of the same size and five years if the current monthly income is

greaterthanafamilyofthesamesize. Theplancanbeaperiodshorterthanthe

applicablecommitmentperiod ifthedebtorproposes topayunsecureddebts in

full.

ThetrusteeandcreditorshavetherighttoobjecttoyourChapter13plan.

The discharge in your Chapter 13 bankruptcy case releases you from all debts

provided for by the plan or disallowed, subject to certain exceptions. The

discharge provides an injunction that prevents creditors provided for in the

Chapter13planfrompursuingyouonthedischargedobligations. Exceptionsfrom

dischargeincludecertainlongtermobligations(suchasahomemortgage),debts

foralimonyorchildsupport,certaintaxes,debtsformostgovernmentfundedor

guaranteededucational loansorbenefitoverpayments,debtsarising fromdeath

or personal injury caused by driving while intoxicated or under the influence of

drugs, and debts for restitution or a criminal fine included in a sentence on the

debtorsconvictionofacrime.


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III. FLOWCHARTSThe

two

attached

charts

demonstrate

the

steps

that

you

can

expect

to

occur

in

atypicalchapter7bankruptcycaseandatypicalchapter13bankruptcycase.


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IV. EXEMPTIONSAVAILABLETOYOUAs

discussed

briefly

above,

exemptions

are

assets

that

are

not

included

in

yourbankruptcy estate and therefore are not available to creditors to satisfy their

debts. Bankruptcy law allowed each state to choose whether to make federa

exemptionssetforth intheBankruptcyCodeavailabletoresidents in itsstate in

additiontoitsstatelawexemptionsortooptoutandallowitsresidentstoonly

choosestatelawexemptions. Besureyoudoublecheckoraskanattorneyabout

your state and bankruptcy law procedures to know when and how you have to

claimyourexemptionsinorderforthemtobevalidinyourbankruptcycase.

[IfAnswerBisanystateorterritorybesidesArkansas,Connecticut,theDistrictof

Columbia,Hawaii,Massachusetts,Michigan,Minnesota,NewJersey,NewMexico,

Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and

Wisconsin] [Answer B] has opted out of the federal exemptions under the

BankruptcyCodeandallowsyoutochooseonlytheexemptionsunder[AnswerB]

statelaw.

Theexemptionsavailabletoyouunder[AnswerB]statelawareasfollows: [Insert

theExemptionsavailableforthestatechoseninAnswerB]

[IfAnswerBisCalifornia] AlthoughCaliforniahasoptedoutanddoesnotallow

you to choose between state and federal exemptions, California allows you to

choosebetweentodifferentsetsofexemptionsunderitsstatelaws.

TheexemptionsavailabletoyouunderCaliforniastatelawareasfollows: [Insert

theExemptionsavailableforthestatechoseninAnswerB]

TheexemptionsavailabletoyouunderthealternativesetofCaliforniastate law

exemptionsareasfollows: [InserttheFederalExemptions]

[If Answer B is Arkansas, Connecticut, The District of Columbia, Hawaii,

Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania,

Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin]


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[AnswerB]hasnotoptedoutofthefederalexemptionsundertheBankruptcy

Codeandallowsyoutochooseeithertheexemptionsunder[AnswerB]statelaw

ortheexemptionsunderfederalbankruptcylaw.

The exemptions available to you under [Answer B] state law are as follows[InserttheExemptionsavailableforthestatechoseninAnswerB]

The exemptions available to you under federal bankruptcy law are as follows

[InserttheFederalExemptions]


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V. YOURDEBTSIn

bankruptcy,

debts

are

divided

into

four

categories:

secured,

priority,administrative,andgeneralunsecureddebts.

1) SecuredDebt: Asecureddebtisadebtthatcollateralizedbythedebtors property. A creditor whose debt is secured has a right to take its

collateral to satisfy the debt. For example, most people who buy new cars on

credit give the lender a security interest (or lien) in the car. The debt is

securedbythecarandthe lendercantake(repossess)thecar iftheborrower

failstomakepaymentsontheloan.

2) UnsecuredDebt: Adebt forwhichthecreditorhasno lienwithwhichtosatisfythedebt. Thedebtissaidtobegenerallyunsecurediftheclaim

is also not entitled to any priority of payment under the Bankruptcy Code. For

example,theamountowedonacreditcard.

3) Priority Debt: A priority debt is a debt entitled to priority inpayment,aheadofmostotherdebts, inabankruptcycase. Examplesofpriority

debts are some taxes, wage claims of employees, and alimony, maintenance orsupportofaspouse,formerspouse,orchild.

4) Administrative Debt: An administrative debt is a priority debtcreatedwhensomeoneprovidesgoodsorservicestoyourbankruptcyestate(this

canhappenonlyafterthebankruptcycaseisfiled). Examplesofanadministrative

debtarethefeesgeneratedbythetrusteeinrepresentingthebankruptcyestate.


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VI. NONDISCHARGEABLEDEBTSNon

dischargeable

debts

will

not

be

affected

by

a

bankruptcy

filing

and

you

wilstillhavetopaytheminfull.

[Answer B checked off] You have indicated that you have nondischargeable

debts. You must pay particular attention to your nondischargeable debts and

how they are affecting you financially. If your nondischargeable debts are the

root of your financial problems, filing a bankruptcy case may not be a good

alternativeforyou. Still,evenwhenyouhavenondischargeabledebts,youshould

evaluateyourentirefinancialpictureandthisentirereportandweighallthepros

andconsofabankruptcyfiling. Thefollowing isa listofthemostcommonnon

dischargeabledebts.

Domestic Support Obligations (alimony, maintenance and childsupport);

Certain types of taxes owed within 3 years of your bankruptcyfiling;

Debts incurred by the use of false financial statements or otherfalsepretenses;

Courtfinesandpenalties, includingcriminalfinesandrestitutiontocourtoravictimimposedincriminaltypeproceeding;

Cash advances on credit cards in last 60 days; credit cardpurchasesover$1,075forluxurygoodsorservicesinlast60days.

Debts arising from a judgment incurred from a DWI/DUconviction;


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Damages arising from willful or malicious injury to property orpersons;

Federally insured student loans, unless you can show unduehardship;

Debtsarisingfromfraudorembezzlementorfromthemisuseoffundswhenyouwereactingasa fiduciaryorcaretakerofother

peoplesfunds;

CreditcardchargesforpaymentoftaxestotheIRS; Debtsfrommaritalsettlementagreementordivorcedecree; debtsowedtocertaintaxadvantagedretirementplans, debtsforcertaincondominiumorcooperativehousingfees Debts you couldnt discharge in a previous bankruptcy that was

dismissedduetofraudormalfeasance.

[Answer B not checked off] You have indicated that you do not have non

dischargeable

debts.

This

means

that

all

of

your

debts

are

capable

of

beingdischargedinyourbankruptcycase,butexceptionsmaystillexistsuchassecured

loansandprioritydebts. Doublecheckthefollowinglistofthemostcommonnon

dischargeabledebtstoensureyouhavenonondischargeabledebts.

Domestic Support Obligations (alimony, maintenance and childsupport);

Certain types of taxes owed within 3 years of your bankruptcyfiling;

Debts incurred by the use of false financial statements or otherfalsepretenses;


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Courtfinesandpenalties, includingcriminalfinesandrestitutiontocourtoravictimimposedincriminaltypeproceeding;

Cash advances on credit cards in last 60 days; credit cardpurchasesover$1,075forluxurygoodsorservicesinlast60days.

Debts arising from a judgment incurred from a DWI/DUconviction;

Damages arising from willful or malicious injury to property orpersons;

Federally insured student loans, unless you can show unduehardship;

Debtsarisingfromfraudorembezzlementorfromthemisuseoffundswhenyouwereactingasa fiduciaryorcaretakerofother

peoplesfunds;

CreditcardchargesforpaymentoftaxestotheIRS; Debtsfrommaritalsettlementagreementordivorcedecree; debtsowedtocertaintaxadvantagedretirementplans, debtsforcertaincondominiumorcooperativehousingfees Debts you couldnt discharge in a previous bankruptcy that was

dismissedduetofraudormalfeasance.


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VII. YOURHOMEAssuming

that

you

want

to

keep

your

home,

bankruptcy

should

only

be

used

as

alastresort.

A. Ifyouronlyfinancialproblem isyourmortgage,youshould likely lookto modify your mortgage to make it more affordable through your lender and

someofthegovernmentprograms. Youcanenter intoamortgagemodification

program, including HAMP (Home Affordable Modification Program) and others

established by the Obama administration, then you may be able to reduce the

principal,theinterestrateorbothandthenbringyourmonthlymortgagepayment

downtoamoreaffordablelevel. Thisisthebestresultifyouareanunderwater

homeowner.

Iffinancialproblemswithyourhomearecoupledwithoverallfinancialproblems

andmortgagemodification isnot workingoryour lenderwill notagree towork

withyou,youcouldconsidereitheraChapter7oraChapter13bankruptcycase.

B. YouwillonlybeabletokeepyourhomeinaChapter7bankruptcycaseif you are current on your mortgage, continue to make payments as contractedandentered intoaworkoutorreaffirmationagreementwithyour lender. Ifyou

cancontinuetomakepayments inaChapter7bankruptcycase,youcanreduce

anysecondmortgagesorhomeequitylinesthatarenotsecured(i.e.,alltheequity

ofthehouse iseatenupbythe firstmortgage) intogeneralunsecuredclaim for

whichpersonal liabilitycanbedischarged intheChapter7bankruptcycasewith

otherunsecureddebtsforaverysmallpercentageofthedebtorfornothingatall

However, the lien on the house remains so that when the house is sold, the

second mortgagee or home equity line lender could look for their payoff todischargeitsmortgage.

In a Chapter 13 bankruptcy case, you can retain your home by paying the

mortgage by its terms after filing your bankruptcy case. The advantage on a

Chapter 13 bankruptcy case is that you have the opportunity to pay off any


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defaultsonyourmortgageover3to5yearsthroughyourchapter13bankruptcy

plan. You also have the ability to stripoff any second mortgages and home

equitylinesthatarecompletelyunsecured,providedyoudonotdefaultduringthe

Chapter13plan.

C. While bankruptcy generally relieves some pressure and will give youtime to make some decisions, bankruptcy may not be the best option for a

homeownerandshouldonlybeconsideredasalastoption.

D. Ataminimum,bankruptcywillprovideyousomebreathingroomandtemporarilystallaforeclosuresale.

In a Chapter 7 bankruptcy case, the automatic stay temporarily prevents a

foreclosure process from continuing. Your mortgage lender can continue the

foreclosureprocesswiththepermissionofthecourtbutthatusuallytakesatleast

60days. Youcanusethistimetoworkoutaloanmodification.

InaChapter13bankruptcycase,theautomaticstaylikewisetemporarilyprevents

your lender from continuing a foreclosure process so that you can regroup and

workoutawaytokeepyourhome. Inaddition,youcancureadefaultorpayoff

themortgageininstallmentspaymentsovertimethroughachapter13plan.

In all bankruptcy cases, you may be able to raise defenses to your mortgage

lendersclaimsabouthowmuchyouowe.


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VIII.YOURCAR,TRUCK,RV,ORBOATBecause

of

the

automatic

stay,

filing

a

bankruptcy

case

stops

your

lender

fromseizingyourvehicle. Bankruptcyhaltsallattemptstotakeanyofyourproperty,

evenpropertyonwhichyour lendershave liens. Moreover, ifyourcarhasbeen

repossessedbutnotsold,bankruptcymayhelpyougetyourcarback. Bankruptcy

alsoprovideswaystokeepyourcarforthelongterm.

Chapter7BankruptcyCase

At the beginning of your Chapter 7 bankruptcy case, you must file a document

calledaStatementof Intention. InthisStatement,youmusttellthecourtwhatyouplantodowithanysecuredcollateralsuchasyourcar.

In a Chapter 7 bankruptcycase,youcanredeem yourvehicle, reaffirm your

debt,orsurrenderthevehicle. Afourthoption,todonothingandkeeppayingthe

loanmayalsoexistbuttheexistenceisquestionableanddependsonobtainingthe

consent of the lender. Ifyou donotact in accordancewith theStatement, the

lenderwhoholdsthesecurityinterestonthatcollateralwillnotbebarredbythe

automatic stay of picking up that collateral after 30 days after the Section 341creditorsmeeting.

Moreover,bankruptcyalsoprovidesyoutheabilitytochallengeyourautodebtor

arepossessiontoensurethattheywerelawfulinformandexecution.

Redemption

Toredeemyourcarinbankruptcy,youpayyourlenderonlywhatthecarisworth,

not what you owe on your loan. Redemption in bankruptcy can save youconsiderable amounts from redemption outside of bankruptcy. Outside of

bankruptcy, to redeem you have topay yourentire loan, includingallcostsand

fees in order to redeem. In bankruptcy, you redeem at the replacement value

withoutdeductingforthecostsofsale. Ifyourcarisworth$10,000butyoustil


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owe $15,000 on your loan, you only have to pay $10,000 to redeem the car in

bankruptcy.

ExampleVehicleRedemptionIfyouowneda2007F150,thevehicleredemptionmightbeasfollows:

KellyBlueBookValue: $12,000

OutstandingBalanceonLoan: $17,000

YoupaytoRedeemOutsideofBankruptcy: $17,000

YoupayinfulltoRedeemduringBankruptcy: $12,000

You must pay the entire redemption amount in cash. Some creditors let you

redeemininstallmentpaymentsbutthebankruptcycourtcannotrequirealender

toacceptinstallmentpayments. Also,somelendersmayofferyoualoanforthe

presentvalueofyourcarsoyoucanredeem inyourbankruptcycase. Theseare

called redemption loans. You may find this new loan with a much lower

principalthatwhatyouoweveryappealing,especiallyifyoucanvalueyourcarat

averydepressedlevelandmaybeabletorefinanceagaininthefuture. However,

bewareofinterestrateandfeesincludedintheredemptionloan.

Reaffirmation

Whenyouenter intoa reaffirmationagreement,youagree to repayadebt that

wouldotherwisebedischargedinyourbankruptcycase. Yourpersonalliabilityon

yourautoloanwouldnormallybedischargedinbankruptcybutyourlenderwould

continuetohavetherighttorepossess. Youwouldreaffirmanautoloaninorder

tokeepacarinwhichalenderhasasecurityinterest.

You must meet certain requirements to enter into a reaffirmation agreement

First, you reaffirmation must be effective under nonbankruptcy law and the

creditormustmakenumerousdisclosuresofthecostsofreaffirmation. Second,

youmustenterintothereaffirmationagreementbeforeyoureceiveadischargein

yourbankruptcycase. Inaddition,thebankruptcycourtwilloftenapproveyour


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reaffirmationonlyifyouappearbeforethebankruptcycourtforahearing. Atthis

time, you will be told that no discharge debt, such as your auto loan, must be

reaffirmed. In addition, the bankruptcyjudge will tell you the consequences of

entering intoa reaffirmationagreement, including repossessionandadeficiency

judgmentifyoudefault.

Becausebankruptcy lawseeks toprotect lenders frompressuringdebtors intoa

reaffirmationofanautoloan,reaffirmationrequirementsinclude:

Anagreementbeexecutedbeforedischarge; Thedebtorsrighttorescindfor60days; Lendersprovidespecificdisclosures; Anagreementbefiledwiththebankruptcycourt; Thatthedebtorappearatahearinginfrontofabankruptcyjudge

ifnotrepresentedbyalawyer;

Alawyerssignatureifrepresentedbyalawyer.Make

sure

that

you

can

make

the

monthly

payments

because

if

you

breach

anapprovedreaffirmationagreement,youwillstillowetheentiredebt,includingany

deficiencyafterthesaleofthevehicle,notwithstandingthebankruptcydischarge.

If you have an attorney your attorney must file an affidavit stating that your

reaffirmation is voluntaryanddoesnot imposeanunduehardshiponyou. You

must disclose your income and expenses reflecting your ability to pay the

reaffirmed debt, except if the lender is a credit union. If you are without an

attorney,thebankruptcycourtmustevaluatewhethertheagreementwillimpose

unduehardshiponyouandthattheagreement is inyourbest interests,andthe

courtwillnotapprovetheagreementifitisnotinyourinterest.

Bankruptcycourtsaregenerallyreluctanttoallowyoutoenterintoareaffirmation

agreementwhenyouwanttoreaffirminordertokeepdrivingaluxurycar. Also

they hesitate to allow you to enter into reaffirmation agreement if you seek to


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25

protect the guarantee of a friend or relative. Even if you meet all the

requirementsofareaffirmationagreement,yougeta60daycoolingoffperiodin

whichyouarefreetorescindthereaffirmation.

Consider all alternatives before reaffirming a debt such as an auto loan andseriouslyconsidersellingyourcarandreplacing itwitha lessexpensiveusedcar

beforeyouenterintoareaffirmationagreement.

TreatmentofVehicleLoansinChapter13

InaChapter13case,yourbestbetistopayoffyourcarinmonthlypaymentsin3

5yearsthroughyourChapter13plan. Youmaybeabletoreduceyour interest

rate intheplanandpotentiallyreducewhatyouowetothecurrentvalueofthe

carifyourloanisnotapurchasemoneysecurityinterestonacarpurchasedwithin

910daysbeforethebankruptcy.

For purchase money security interests on vehicle purchases less than 910 days

beforebankruptcy,thevehicleloanmustbepaidinfulleitheroverthelifeofthe

plan, or according to the terms of the loan agreement. You should determine

whichoptionpresentsthemostaffordablemethodtopayyourvehicledebtsand

drafttheChapter13planaccordingly.

VehicleLeasesinBankruptcy

Beforeyoutakeanyactionsinbankruptcyregardingyourvehiclelease,youmust

makesurethatyouhaveatrueleaseratherthenarenttoowntransaction.

You likely entered into a true lease if your financing entity actually owns the

vehicle and at the end of the term, you have nothing. You have to return the

vehicleandyoucannotsellthevehicle. Underatrueleaseagreement,theterms

of the lease contract govern the rights and obligations between you and thelender. Typically your vehicle lessor has the right to repossess the car for any

default, such as nonpayment of an installment or lack of insurance, the same

mannerasasecuredpartywould.


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Inabankruptcycase,youcanassumethevehiclelease meaningyoucanagreeto

continuewiththe leaseandcuredefaults orrejectthe lease meaningthatyou

cansurrenderthevehicleandhavenofurtherobligationtopayleaseinstallments

Ifyoudonotexpresslyrejectorassumeyourvehicleleasewithin60daysoffiling

in a Chapter 7 bankruptcy case, the lease is rejected by operation of law. Your

vehicle lessor isentitledtorepossessthevehiclewithoutseekingrelief fromthe

automatic stay. In bankruptcy cases in all chapters, you must indicate in your

initialbankruptcydocumentsyourintenttoassumeyourvehiclelease.


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27

IX. CHECKLISTFORFILINGYOURBANKRUPTCYCASE

Credit

Counseling

Briefing

Beforefilingabankruptcypetitionunderanychapteryoumustobtainabriefingby

a credit counseling agency approved by the United States trustee or the

BankruptcyAdministrator. Thebriefingmustbeobtainedwithin180daysbefore

commencement of your case, and a certificate of proof of completion must be

filedwiththecourt. Thecostofthebriefingisabout$50,anditcanbecompleted

over the internet,by telephone,or inperson. Thebankruptcycourtcanexcuse

you fromtherequirement ifyouarephysicallyormentallydisabledoronactive

militaryduty. Also,thecourtcanapproveadelayinobtainingthebriefingifthere

are exigent circumstances preventing you from obtaining the counseling before

filingthepetitionbutthesearedifficulttoobtain.

FilingFeesBankruptcy petitions must be accompanied by a filing and administrative fee

payabletothecourt. Currentlythefeesforbankruptcycases: $299forChapter7

cases;$279forChapter13and12cases,and$1,039forChapter11cases. Filingandadministrativefeesareinadditiontoattorneyfeesandcounselingfees. You

may file an application to pay the filing fees in installments, and courts usually

allow payment over time, in four to five segments. In a Chapter 7 case, the

bankruptcy court may approve a waiver of the filing fee upon application that

conformstoOfficialForm3Bandproofthatyourincomeislessthan150percent

oftheofficialpovertylinebasedonthesizeofyourfamily.

Filing

Documents

Youmustfilecertaindocuments. Youcommenceyourbankruptcycase. Ifthese

requireddocumentsarenotfiled,thecourtwilldismissthecaseandyouwilllose

thebenefitsofbankruptcyprotection.

Tocommenceacase,thedebtormustfilethefollowingdocuments:


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OfficialForm1: thevoluntarypetition OfficialForm21:the statement of social security number. The socia

security statement must contain your full number. Pursuant to the

privacy policy of the United States Courts, the full social securitynumber does not become a public record, and only creditors wil

receivethefullnumbertoenablethemto identifythedebtor intheir

records.

Alistofcreditorsnamesandaddresses: The list of creditors, oftenknownasthemailingmatrix, isnotanofficial formbut isoften the

subjectofalocalform.

Acertificatefromanapprovedcreditcounselingagencythatthedebtorhadtherequiredbriefing

Atthesametimeorshortlyafteracasebegins,youmustfile: OfficialForm7: Schedulesofassets,liabilities,incomeandexpenses OfficialForm7,cont:Statementoffinancialaffairs Form22A,B,orC: themeanstestcalculation(dependingonyour

bankruptcyChapter).

FormB203: theattorneysdisclosureofcompensation Chapter 7 case only Official Form 8, a statement of intention with

respecttosecureddebts.

Chapter13caseonly Chapter13plan. Noofficialformexistsforthechapter13plan,butmanyjurisdictionshaveaformofchapter13planthat isrequiredorsuggested. AmodelChapter13bankruptcyplan is

attachedbelow.

Many of the required documents must be signed by you under the pain and

penaltyofperjury. Ifyoumakefalsestatementsontheforms,oromitinformation


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30

Afteryourbankruptcycase iscommenced,youwillreceivenoticeofthemeeting

ofcreditorswhich iscommonlyreferredtoastheSection341meeting,afterthe

BankruptcyCodesectionrequiringthemeeting. Youmustattendthismeetingin

person. Youwillbeadministeredanoathbythetrusteeandthetrusteewillask

youquestionsaboutyourassets,liabilities,income,andexpensesunderoathand

the proceeding is recorded. The purpose of the trustees questions are to

ascertainwhetheryouhavemadeacompleteandaccuratelistofyourassetsand

liabilitiesandwhetheryouhaveanyassetsthatcanbeliquidatedfordistribution

tocreditors.

The Section 341 meeting is recorded and is held in a public place, usually with

otherdebtorspresent. Creditorsmayattendthemeeting. However,creditorsare

notrequiredtoattendandusuallydonotattend. Thetrusteewillusuallyexamineyouforfivetotenminutes,butmaycontinuethemeetingonanotherdateifthere

is insufficient time and the examination is not concluded. You are required to

bring tothemeetingapicture formof identification,proofof thesocialsecurity

number,recentbankaccountstatements,andproofofcurrentincome,suchasa

pay stub. Some trustees will send you a letter requesting that additiona

documentsbebroughttotheSection341meeting. It is inyourbest interestto

satisfyallofthetrusteesrequeststothebestofyourability. Ifyoudonotspeak

English,aninterpretermaybeprovidedfortheSection341meeting.

BankruptcyCourtMostdebtorsneversee the insideofabankruptcycourtroom. TheSection341

meetingisusuallytheonlyeventthatyouwillhavetoattendinperson.

PersonalFinancialManagementCourseYou must complete a personal financial management course after thecommencement of your bankruptcy case and file with the court a certificate of

completionofthecourse. Thecoursemustbegivenbyaninstructorapprovedby

theUnitedStates trusteeprogram. InaChapter7case, thecertificatemustbe

filedwithin45daysaftertheSection341meeting,andinaChapter13case,bythe

lastplanpayment. Thecostoftheinstructionvaries,butgenerallydoesnotcost


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31

morethan$100. Youmayaskthecourtforawaiverofthecourserequirementon

thegroundsthatyouarementallyorphysicallydisabled,orareonactivemilitary

duty.

BankruptcyDischargeOnce you have performed your required duties, your bankruptcy discharge wil

routinely enter unless a creditor or the trustee files an adversary proceeding

againstyouseekingtoexemptadebtfromdischargeordenyingyourbankruptcy

discharge.

LegalAdviceYoumaybeaskingwhetheryoushouldfilethebankruptcycasewithorwithoutanattorney. Therulesandstandardsyoumustadheretoarethesamewhetheryou

have a lawyer or not. You will have to comply with the requirements of the

BankruptcyCodeandtheRules. Youmustproperlyfileyourbankruptcycaseand

handleitproperlythroughoutthecase.

Bankruptcyiscomplicated. Understandingbankruptcylawandbankruptcyrulesis

often beyond the ability of a person not educated in the law and even many

lawyerswhodonotregularlypracticebankruptcylaw. Thelegalrightsavailabletoyouunderyourpersonalsituationwillvary. Theconsequencesofmakingmistakes

inabankruptcycasecanbedrastic.

PayingforanAttorneyIronically, most debtors need to save money to file a bankruptcy case with a

lawyer. Attorneysgenerallychargeanupfrontcash feeoracombinationofan

upfront fee withyourbalance tobe paidover time. Remember that you must

alsopayafilingfeewithyourbankruptcypetitionunlessthecourtwaivesthefeeor allows it to be paid in installments. If you simply can not pay, pro bono

programs and agencies provide free legal services to debtors. Lawyers have a

professionaldutytoprovidelegalservicestothosewhoareunabletopay.

ProfessionalHelp?


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Whenanyoneisplaguedbyfinancialtroubles,heorsheisnotalwaysinthestate

ofmind tomake thebestdecisionsabout their financial condition. Whetheror

not you plan on working with an attorney, you should likely seek advice from a

competent professional about whether or not to file for bankruptcy. Consumer

bankruptcylawyerswilloftenprovideaconsultationtoprospectiveclientsforlittle

ornofee. Seekaconsultationbeforeyouembarkonabankruptcycasetotryand

seeiftherearelessdrasticalternativesthatcouldworkforyou.

AssetforthinthisGuide,therearemanyreasonstostayoutofabankruptcycase

and there are reasons to choose to file. If the choice to file is made, there are

further issuesastotheappropriatechapterforrelief,thetimingofabankruptcy

filing,aswellastechnicalrequirementsaffectingyourrights. Thesedecisionsare

extremelycomplicatedandrequireanevaluationofthefactsofaparticularcaseand an assessment of the applicable law. Good representation by a qualified

professionalmaybecritical.


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X. SAMPLECHAPTER13BANKRUPTCYPLANSet

forth

below

for

you

reference

is

a

sample

chapter

13

plan

from

the

UnitedStatesBankruptcyCourtfortheDistrictofMassachusetts.

Mostbankruptcycourtsthroughoutthecountryhavepreferredformswhichyou

canobtainfromthebankruptcycourtoronlineatthebankruptcycourtswebsite

Call or go online to see if the bankruptcy court where you must file your

bankruptcy case has a local form and use that form if you do decide to file a

chapter13bankruptcycase.

SampleChapter13Plan

DEBTOR(S):

(H)________________________________ SS#:_____________________

(W)________________________________ SS#:_____________________

I. PLANPAYMENTANDTERM:

Debtor(s)shallpaymonthlytotheTrusteethesumof$__________forthetermof:

36Months. 11U.S.C. 1325(b)(4)(A)(i);

60Months. 11U.S.C. 1325(b)(4)(A)(ii);

60Months. 11U.S.C. 1322(d)(2).Debtoraversthefollowingcause:

__________________________________________________________________________________________________

__________________________________________________________________________________________________

________

;or____Months. TheDebtorstatesasreasonstherefore:

__________________________________________________________________________________________________

_______________________________________

II. SECUREDCLAIMS:

A. Claimstobepaidthroughtheplan(includingarrears):

CreditorDescriptionofClaimAmountofClaim

(prepetitionarrears,purchasemoney,etc.)

_____________________________________________ $________________

_____________________________________________ $________________

_____________________________________________ $________________

TotalofsecuredclaimstobepaidthroughthePlan: $________________


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B. Claimstobepaiddirectlybydebtortocreditors(NotthroughPlan):

CreditorDescriptionofClaim

__________________________________________________________________________________________________

__________________________________________________________________________________________________

___________

C. ModificationofSecuredClaims:

CreditorDetailsofModificationAmt. ofClaimtoBe

(AdditionalDetailsMayBeAttached)PaidThroughPlan

____________________ __________________________ _________________

____________________ __________________________ _________________

D. Leases:

i. TheDebtor(s)intend(s)torejecttheresidential/personalpropertyleaseclaimsof

__________________________________________________________________; orii. TheDebtor(s)intend(s)toassumetheresidential/personalpropertyleaseclaimsof

____________________________________________________________________.

iii. Thearrearsundertheleasetobepaidundertheplanare______________________.

III. PRIORITYCLAIMS:

A. DomesticSupportObligations:


__________________ ________________________ $______________

__________________ ________________________ $______________

B. Other:


____________________ ___________________________ $______________

____________________ ___________________________ $______________

____________________ ___________________________ $______________

____________________ ___________________________ $______________

TotalofPriorityClaimstoBePaidThroughthePlan: $______________

IV. ADMINISTRATIVECLAIMS:

A. AttorneysFees(tobepaidthroughtheplan): $______________

B. MiscellaneousFees:

CreditorDescriptionofClaimAmountofClaim__________________ _________________________ $______________

__________________ _________________________ $______________

__________________ _________________________ $______________

C. TheChapter13TrusteesfeeisdeterminedbyOrderoftheUnitedStatesAttorneyGeneral. Thecalculationofthe

Planpaymentsetforthutilizesa10%Trusteescommission.

V. UNSECUREDCLAIMS:


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Thegeneralunsecuredcreditorsshallreceiveadividendof______%oftheirclaims.

A. Generalunsecuredclaims$_______________

B. Undersecuredclaimsarisingafterlienavoidance/cramdown:


__________________ _________________________ $_______________

__________________ _________________________ $_______________

__________________ _________________________ $_______________

C. NonDischargeableUnsecuredClaims:


__________________ _________________________ $_______________

__________________ _________________________ $_______________

__________________ _________________________ $_______________

TotalofUnsecuredClaims(A+B+C): $_______________

D. Multiplytotalbypercentage: $_______________

(Example: Totalof$38,500.00x.22dividend=$8,470.00)

E. Separatelyclassifiedunsecuredclaims(coborrower,etc.):


__________________ _________________________ $_______________

__________________ _________________________ $_______________

__________________ _________________________ $_______________

Totalamountofseparatelyclassifiedclaimspayableat_____%: $_______________

VI. OTHERPROVISIONS:

A. Liquidationofassetstobeusedtofundplan:

__________________________________________________________________________________________________

________________.

B. MiscellaneousProvisions:

_____________________________________________________________________

VII. CALCULATIONOFPLANPAYMENT:

a)Securedclaims(SectionIATotal): $_________________

b)Priorityclaims(SectionIIA&BTotal): $_________________

c)Administrativeclaims(SectionIIIA&BTotal): $_________________

d)Regularunsecuredclaims(SectionIVDTotal): +$_________________

e)Separatelyclassifiedunsecuredclaims: $_________________

f)Totalofa+b+c+d+eabove: =$_________________

g)Divide(f)by.90fortotalincludingTrusteesfee:

CostofPlan=$_________________

(ThisrepresentsthetotalamounttobepaidintotheChapter13Plan.)

h)Divide(g),CostofPlan,byTermofPlan,_____months

i)RounduptonearestdollarforMonthlyPlanPayment: $________________

(Enterthisamountonpage1)

Pursuantto11U.S.C. 1326(a)(1)unlesstheCourtordersotherwise,debtorshallcommencemakingthepayments

proposedbyaplanwithinthirty(30)daysafterthepetitionisfiled. Pursuantto11U.S.C. 1326(a)(1)(C),thedebtorshal

makepreconfirmationadequateprotectionpaymentsdirectlytothesecuredcreditor.


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VIII. LIQUIDATIONANALYSIS

A. RealEstate:

AddressFairMarketValueTotalAmountofRecorded

Liens(ScheduleD)

____________________ $___________________ $_____________________

____________________ $___________________ $_____________________

____________________ $___________________ $_____________________

TotalNetEquityforRealProperty: $_____________________

LessTotalExemptions(ScheduleC): $_____________________

AvailableChapter7: $_____________________

B. Automobile(Describeyear,make,model):

______________Value$________Lien$_________Exemption$_____________________

______________Value$________Lien$_________Exemption$_____________________

TotalNetEquity: $____________________

LessTotalExemptions(ScheduleC)$____________________

AvailableChapter7: $____________________

C. AllotherAssets: (AllremainingitemsonscheduleB): (Itemizeasnecessary)

__________________________________________________________________________________________________

______________________________________. TotalNetValue: $_____________________

LessExemptions(ScheduleC): $____________________

AvailableChapter7: $_____________________

D. SummaryofLiquidationAnalysis(totalamountavailableunderChapter7):

NetEquity(AandB)plusOtherAssets(C)lessallclaimedexemptions: $__________________

E. AdditionalCommentsregardingLiquidationAnalysis:

__________________________________________________________________________________________________

________________________________________

IX.

SIGNATURES

PursuanttotheChapter13rules,thedebtororhisorherattorneyisrequiredtoserveacopyofthePlanuponthe

Chapter13Trustee,allcreditorsandinterestedparties,andtofileaCertificateofServiceaccordingly.

_________________________________________ ________________________________

DebtorsAttorneyDate

AttorneysAddress:_______________________________________________________________

Tel. #()_______________________

EmailAddress:_________________________________________________________

I/WEDECLAREUNDERTHEPENALTIESOFPERJURYTHATTHEFOREGOINGREPRESENTATIONSOFFACTARETRUEAND

CORRECTTOTHEBESTOFOURKNOWLEDGEANDBELIEF.

_________________________ _______________________

Debtor Date

_________________________ _______________________

Debtor Date


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XI. ALTERNATIVESTOABANKRUPTCYCASETOCONSIDER DoNothing

Doing

nothing

seems

unusual,

but

it

is

often

the

least

expensive

and

easiestoptionforsomeone infinancialtrouble. Ifyouhavenoassets

thatcreditorscanget,youarejudgmentproof. Ifyouarejudgment

proof,youshouldconsidernotfilingbankruptcyatallbutinsteadwrite

letterstoyourcreditorsstatingthatyouarejudgmentproof. Although

onlyabankruptcywillstopcollectioneffortsasamatterof law,many

creditorscanbepersuadedwithaletterthattheyshouldabandonthe

effort to collect assets from ajudgment proof individual. The letter

shouldsaythatyourcreditorshouldstopcontactingyou,thatyoumayfile for bankruptcy, in which event your case will be closed as a no

assetcase,andthatitisfutileforthecreditortocontinueitscollection

efforts. Failureofacreditortoceasecollectioneffortsafterthe letter

may subject the creditor to liability for violating Fair Debt Collection

PracticesAct(FDCPA).

CreditCounselingManygoodcreditcounselorswilldotheirbesttohelpyouavoidfiling

forbankruptcy. However,somecreditcounselorsarebadandwilljust

collect money for you without providing any valuable services. Be

carefulwhenhiringacreditcounselor.

WorkoutsDirectworkouts,i.e. negotiationsdirectlywithcreditors,maybeaway

to

resolve

your

financial

problems.

There

are

numerous

types

of

workoutsthatoftendependoncreditorspolicies. Youmaybeableto

workoutarepaymentplanforsomeorallofthedebtovertimewitha

reduced interest rate that could include forgiveness ofsome or all of

yourdebt.


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LoanModificationsAs a homeowner, you can try various measures to avoid foreclosure

outsideofbankruptcy,however,allrequiresometypeofconcessionby

thehomemortgagecompany. Loanmodificationsarespecifictoeach

homeownerandlenderandinvolveanegotiationofworkoutterms.

RefinancingRefinancingdebtsthroughtheequity inyourhomesuchasthrougha

second mortgage, reverse mortgage, or home equity line are also

alternativestobankruptcy. Bewareofthemanyrisks.

ForeclosureRescueScamWatchout. Neverpursueaforeclosurerescuetransaction inorderto

avoidbankruptcy. Nevertransferyourhousetoanother individualor

company,whopromisestorefinanceitandpayyourmortgage. These

dealsarealwaysscams. Transferringthetitletoyourhomeorproperty

ispermanentandfraughtwithdanger.


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39

XII. RESOURCESThis

personalized

report

gives

you

the

basics

of

what

you

need

for

a

bankruptcy filing so thatyou fullyconsider a bankruptcycase. While

thisreportgetsyouonyourwayandputsyouaheadofmostdebtors,

this report does not cover all possibilities in a bankruptcy case and

cannotbereliedupontoensureasuccessfulbankruptcycase.

Manyothervaluableresourceswillhelpgetoutofdebt,eitherbyfiling

abankruptcycaseoroutsideofbankruptcy.

Inparticular,recommendedare:

TheRoadOutofDebt: BankruptcyandOtherSolutionstoYourFinancialProblems, byJoanN.FeeneyandTheodoreW.Connolly(Wiley&Sons,Inc.2010);www.roadoutofdebt.com

Additionally,youcanconsultthefollowingsources:

BankruptcyandDebtBasics

AmericanAssociationofRetiredPersons(AARP):

www.aarp.org

AmericanBankruptcyInstitute:www.abiworld.org.

Bankrate.com:www.bankrate.com

TheCenterforResponsibleLending:

www.responsiblelending.org/

ElizabethWarrensworks(HarvardLawprofessorand

bankruptcyexpert):

www.law.harvard.edu/faculty/directory/facdir.php?id=82)

IHateDebt:www.ihatedebt.com


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40

Jump$tartCoalitionforPersonalFinancialLiteracy:

www.jumpstartcoalition.org

Mahalo:www.mahalo.com/howtodealwithdebt

collectors

MSNMoney:http://articles.moneycentral.msn.com.

PracticalMoneySkills:www.practicalmoneyskills.com

SmartMoney:www.smartmoney.com

U.S.BankruptcyCourts:

www.uscourts.gov/bankruptcycourts/bankruptcybasics.ht

ml

ConsumerCreditDebt

NationalFoundationforConsumerCredit(NFCC):1(800)

3882227orwww.nfcc.org.See

www.nfcc.org/FirstStep/firststep_01.cfmforalistof

NFCCapprovedcounselors.

AssociationofIndependentConsumerCreditCounseling

Agencies(AICCCA):1(866)7038787orwww.aiccca.org.Seewww.aiccca.org/find.cfmforalistofAICCCA

approvedcounselors.

BetterBusinessBureau(BBB):1(703)276.0100or

www.bbb.org.Seewww.bbb.org/us/toensurethatother

consumershavenothaddifficultieswiththecredit

counseloryouareconsideringhiring.

CreditAbuseResistanceEducation(CAREprogram):

www.careprogram.us

FairDebtCollection.com:www.fairdebtcollection.com

FederalTradeCommission(FTC):Visitwww.ftc.govorcall

tollfree,1(877)FTCHELP(18773824357);TTY:1(866)


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41

6534261tofileacomplaintortogetfreeinformationon

consumerissues.

Stopreceivingprescreenedcreditcardoffersby

notifyingeachofthethreemajorcreditbureaus,Equifax,

Experian,andTransUnion,throughtheirWebsites:

Equifax:www.equifax.com

Experian:www.experian.com

TransUnion:www.transunion.com

LegalHelp

Contacttheclerkofthebankruptcycourt,theU.S.Trustees

Officeortheofficeofthebankruptcyadministratorinyourarea

andaskfornamesofcompetentconsumerbankruptcylawyers.

AmericanBarAssociation:www.abalawinfo.org

/find1.htmland

www.abanet.org/legalservices/findlegalhelp/home.cfm

(AmericanBarAssociationlistofresourcesincluding

foreclosureresourcesandinformation)

AmericanBoardofCertification:www.abcworld.org

AmericanBankruptcyInstitute:www.abiworld.org

AmericanCollegeofBankruptcy:www.amercol.org

MartindaleHubbelllawyerratingservice:

www.martindale.com

NationalAssociationofConsumerBankruptcyAttorneys:

www.nacba.org

NationalConsumerLawCenter:www.consumerlaw.org

orwww.nclc.org.

ThomsonWestPublicationsattorneylocatorservice:

www.findlaw.comandbankruptcy.findlaw.com


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FilingforBankruptcywithoutanAttorney:Thisresource

providesmoredetailedinformationabouttheprocedures

forfilingforbankruptcyfortheindividualwhochoosesto

representhimorherself.

www.uscourts.gov/bankruptcycourts/prose.html

MortgageDebt

Thefollowingresourcesareusefulindealingwithmortgage

debt,foreclosure,ormortgagescams.

ComptrolleroftheCurrencyU.S.Departmentofthe

Treasury:www.helpwithmybank.govwww.occ.treas.gov.

FDIC:www.fdic.gov;(FHA):1(800)CALLFHAor

www.fha.com

FederalTradeCommission(FTC):

www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.sht

m

FederalReserveBoard:

www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

ForeclosureSelfDefenseBlog:

http://foreclosureselfdefense.com

HomeownerCrisisResourceCenter:

www.housinghelpnow.org

HomeownershipPreservationFoundation(HPF)and

HOPENOWhotline:1(888)995HOPEor

www.hopenow.com

MakingHomeAffordable:

www.makinghomeaffordable.gov

NoloPress:www.nolo.com/legal

encyclopedia/bankruptcyforeclosuredebt/


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43

NeighborWorksAmerica:

www.nw.org/network/home.asp

TheOfficeoftheComptrolleroftheCurrency(OCC):

www.helpwithmybank.govand

www.occ.gov/customer.htm.

U.S.DepartmentofHousingandUrbanDevelopment

(HUD):1(800)5694287orwww.hud.gov.See

www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfmforalist

ofHUDapprovedcounselors.

TaxDebt

InternalRevenueService(IRS):1(800)8291040or

www.irs.gov,See

www.irs.gov/individuals/index.html?navmenu=menu1for

manyresourcesforindividualsand

www.irs.gov/localcontacts/index.htmlforcontact

informationforyourlocalIRSoffice.Donthaveyourmost

recenttaxreturn?Transcriptsareavailableforthecurrent

andthreepriorcalendaryears.Toobtainacopy,contact

theIRSbyphoneorsubmitForm4506Tbymailorfax.

TheCollectionProcess:www.irs.gov/pub/irs

pdf/p594.pdf

OfferinCompromiseBooklet:www.irs.gov/pub/irs

pdf/f656b.pdf

TaxpayerAdvocateService(TAS):1(877)7774778or

www.irs.gov/advocate/.Seewww.taxtoolkit.irs.gov/helpwithtaxproblemsii/tas/

forcontactandotherinformation.


44/44

This report is a product of BankruptcyRoute.com

BankruptcyRoute.com is a Debt Relief Agency dedicated to helping

people understand the debt relief available to them under the

BankruptcyCode.

DISCLAIMER: This report is intended as a general discussion of legal

issues regardingyourassetsanddebtandnotasastatementof fact,

legal advice or a legal opinion. Personal opinions may also be

expressed.Noattorneyclientrelationshipiscreatedbythisreport.Do

not act or rely upon lawrelated information in this report without

seeking the advice of an attorney licensed to practice in debt andbankruptcyareas,preferablywithexperiencewithbankruptcycases.