CHAPTER 7 is a bankruptcy generally
used as a means for individuals to completely wipe out most
debts in a legal proceeding conducted under the jurisdiction
of The U.S. Bankruptcy Court. There is a small percentage of
Chapter 7's wherein a Trustee, usually an attorney, is
appointed by the U.S. Trustee Office who will sell off
non-exempt property of an individual(s) or liquidate a
business for the benefit of creditors. As a general rule,
most Chapter 7's are no asset cases wherein creditors do not
receive any money as payment for those debts listed in the
bankruptcy schedules and the debtor is relieved from any
obligation of paying back those creditors. However, there
are certain debts which cannot be discharged in bankruptcy,
including but not limited to: most, but not all government
taxes; most, student loans unless there is undue hardship;
child support; alimony; willful injury to another's person
or property; fraud or misrepresentation in obtaining goods
or services; government fines and penalties and certain
court-ordered restitution; and injury or death resulting
from the unlawful driving of a motor vehicle under the
influence of drugs or alcohol. Under the new bankruptcy law,
effective October 17, 2005, there are number of additional
requirements to satisfy in order to be eligible to obtain a
discharge of your debts in a Chapter 7 Bankruptcy, including
passing a means test or income test. For individuals with
income too high to pass the means test, you will be required
to pay back at least some of your debt in a Chapter 13
bankruptcy. A complete office consultation will be necessary
for an attorney to make that determination.
Go to Questions
2) What is the means test
all about?
The means test is a financial
analysis of your current monthly income that you receive
from all sources for the six month period prior to filing.
The income data obtained in combination with the number of
members of the household and your living expenses (part of
which is determined by statistical tables), will determine
if you fall below or above the Median Family Income. Only
competent legal counsel in an office consultation will be
able to make that determination and explain all of its
implications.
Go to
Questions
3) What is
credit counseling and financial education all about?
The new law requires that all
(with few exceptions) individuals filing for Chapter 7 and
Chapter 13 bankruptcy obtain a credit counseling certificate
within 180 days before the filing of the bankruptcy. This
may take the form of a telephone consultation or internet
session. As well, all individuals who have filed for
bankruptcy are required to take a financial education course
(by telephone or by internet) in order to obtain a final
discharge of one’s debt. We shall share with you the list of
approved credit counseling agencies. There are fees to pay
for these services.
Go to Questions
4) If I file a
Chapter 7, will I lose my personal property, including my
car which I must have for both work and pleasure?
An equity exemption of $2,400
in a motor vehicle is allowed. Thus, to determine your
equity, you must subtract any lien (car loan) attached to
the car from the market value of the property at the time of
the filing of the petition. For example, a car with a market
value of $10,000 with an outstanding car loan of $7,800 will
yield an equity of $2,200, falling within the allowable $2,400
exemption.
Some
of the other personal property exemptions include, but are
not limited to:
A.
$2,500 in total for cash,
savings, checking, money market and other deposit
accounts, US savings bonds, tax refund, provided you do
not use the residential property exemption noted in item
#C.
B.
$5,000 for all wearing
apparel and household furniture, less any amount listed
in item A. Thus, with $2,000 exempted in item A,
you would have only $3,000 to exempt in item B. If
nothing is exempted in item A, you can use the full
$5,000.
C.
$50,000 in a
residential property; a house, cooperative, condo, or
mobile home which is your primary residence.
D. Qualified
Pension, 401(k), Profit Sharing, IRA's (rollovers and
traditional) are generally exempt.
Go to
Questions
5) Does filing
bankruptcy mean I lose credit forever?
No, it means your
credit will be substantially hurt and there will be a
notation on your credit report for a period up to ten years.
However, you can take steps to repair your credit and
possibly even purchase real estate after a two year period.
Go to Questions
6) How can I
repair my credit?
One way to assist in
repairing your credit is to obtain secured credit cards.
You can generally place a minimum of $100.00-$300.00 into a
savings account and receive a credit line up to the value of
the account or even 150% of the value of the account, in
some cases. Timely payments of minimums or the timely
paying off of the entire balance each month will demonstrate
a new history that will enable you to better obtain future
credit. After a year of timely payments, that secured
credit card may become partially unsecured, or store cards
may become available to you to further repair your credit
history. Continuation of this disciplined approach to
the use of your credit cards will result in obtaining new
unsecured credit cards in a short period of time. If secured
credit cards are used wisely, they may be of great benefit
to you.
Go to Questions
7) Do I have to
go to Court and see a judge?
In a typical Chapter
7 bankruptcy, there is generally no need to appear before a
Judge. You are required to attend what is called a
section 341(a) hearing in front of a Trustee who is not a
judge but an attorney whose job it is among other things is
to review your Petition and your financial status (asset,
liabilities, income, expenses) and determine that you have
complied with the Bankruptcy laws. In the typical no
asset bankruptcy case, the five-ten minute hearing is
generally non-confrontational and the case is closed at the
conclusion of the hearing provided all necessary documents
have been submitted. You then wait approximately 3-5
months from the date of your hearing to receive formal
notice in the mail that you have been discharged from your
listed debts.
Go to Questions
8) Do I have to list all
of my debts? I am current on some of my debts.. I would
love to keep one or two just in case there is an emergency?
You are required by law to
list all of your debts. Failure to list a creditor
will result in the inability to receive a formal discharge
from that debt. Thus, when your bankruptcy case is
closed or sooner, that unlisted creditor will seek to
collect on that debt. Consequently, it is vital that
all creditors with their proper correspondence addresses be
ascertained and listed. Failure to list a creditor can
also be a double whammy. You may not only have to pay
the debt, but you will most probably have your credit card
privileges cancelled, if it is a credit card debt. To
ensure that all creditors are listed, we recommend a current
credit report.
Go to Questions
9) How can I obtain a
free credit report to protect myself against creditors?
OBTAINING A CREDIT REPORT:
The fastest and
easiest way to get a free credit report is to go to
www.annualcreditreport.com.
Once you're there, select your state,
and click on “Request Report”.
Fill out the form with the required information then
click on "Continue".
You should choose the "Experian", "Equifax",
and "Transunion" credit
reports. You are entitled to one free
credit report from each of the three reporting agencies.
You must go to this site to obtain the free report.
In the alternative, print the application form by
clicking on the following link and mail to the directed
address.
Click here for your
Free Credit Report by Mail or Phone.
Go to Questions
10) What documents are
necessary to gather to bring into your office to get
started?
You will need to bring in six months of current pay
stubs, if working; tax returns or tax transcripts for the
last three years, if available; your bills, (one for each
credit card, store card, personal loan, medical bill, car
loan, mortgage loan, student loan, IRS & NYS Department of
Tax bill(s), and other assorted bills); your driver’s
license or non-driver’s photo identification; your social
security card; your bank statements for the past sixty days;
and a $100.00 retainer. It is required for you to sort and
organize your bills by eliminating for us all envelopes and
attachments, and duplicates. We do want to see any
collection letters, attorney letters, and legal notices.
Go to Questions
11) Can you guarantee me
that my bankruptcy will go through?
There is no guarantee in life about anything, other
than death & taxes, they say. Your creditors have sixty
(60) days from the date of the section 341(a) hearing to
file an objection through the initiation of an Adversary
Proceeding. It is rare for a creditor in a typical
individual Chapter 7 case to file an Adversary Proceeding.
However, it can occur if there has been "loading up" (going
on a substantial shopping spree or taking substantial cash
advances near the time of the filing of the bankruptcy with
respect to any one creditor), recent substantial debt
consolidation or balance transfers, the use of new credit
cards or obtaining new loans with little or no repayment to
that creditor, or any fraud, or misrepresentation in
obtaining credit cards or loans. These problems are the
exception rather than the rule. Make sure that you
thoroughly discuss with our office if any of these problems
apply to you. Even with these problems just noted, we will
be able to assist you by explaining your options if you give
us full disclosure of your activities. For most creditors,
once this sixty (60) deadline has passed from the date of
your hearing, creditors are forever barred from collecting
on this debt. Exceptions to this are student loans and some
taxes.
Go to Questions
12) How are government
student loans treated differently than other debt?
Government-backed student loans, in
whole or in part, are generally not dischargeable. As of
October 8, 1998 student loans shall not be dischargeable
unless it can be established in a separate proceeding that
there is undue hardship. This is a particularly tough hurdle
to overcome. You must seek specific legal advice with
respect to this. The previous law permitted a discharge for
student loans under certain circumstances.
Go to Questions
13) How are tax debts
treated differently than other unsecured debt?
Tax debts are
treated generally as priority unsecured debts, meaning they
are not dischargeable but payable in full at the conclusion
of your bankruptcy case. However, tax debts for years in
which a tax return was filed on time and where there was no
fraud or willful evasion to pay the tax may be dischargeable
if three (3) years has elapsed from the filing due date of
that taxable year. For example, a tax return filed for the
2005 tax year would be due by April 15, 2006. Such a tax
debt may be dischargeable if a bankruptcy is filed after
April 15, 2009, assuming no fraud or willful evasion
exists. There are other rules relating to late filed tax
returns, non-filed tax returns and tax assessment dates which
may have applicability. Only a careful review of the
particulars of your case would enable our office to
determine the likelihood of discharge for your tax debts.
In the above example, if the April 15th due date, fell on a
Sunday, the due date would be extended to the next
business day. IRS sometimes extends the due date even further
in a given year. Only competent legal counsel should
advise you. These dates are very tricky.
Go to Questions
14) How much does it
cost to file bankruptcy and can it be paid out over time?
Our fee for a Chapter 7 is reasonable. This fee is payable over a
six (6) month period. However, the petition cannot be filed until payment is made in full. The fee for a Chapter 13 will vary depending upon complexity but it is significantly more than a Chapter 7 because of the need for at least one appearance before a judge in addition to the appearance in front of a Trustee, as well as the substantial time involved in the review of creditor claims and preparation of motion(s) and order(s) for the Court.
Go to Questions
15) Creditors are making
my life miserable. They are calling me 7 days a week and
even calling my job. What can you do to help me?
Once you have come into our office, brought in the
requested documents and a $100.00 retainer, you may direct
creditors to contact our office to confirm or verify that we
have been retained to file a bankruptcy on your behalf. We
will provide you with our own office identification number
for you to provide to your creditors. You are only required
to give our name and telephone number pursuant to the Fair
Debt Collection & Practices Act, as creditors are prohibited
thereafter by law from calling you at home or work.
Go to Questions
16) I just received a
garnishment notice (formally known as an Income Execution
Notice) from the Marshall. What is a garnishment ? Can this
be stopped or if they started taking money out of my check,
can you stop it? Is it too late?
A
garnishment is a legal device to enforce a judgment obtained
by a creditor. It allows a Marshall to require your employer
to deduct 10% of your gross wages to begin to satisfy your
obligation to pay back that debt. It is never too late
to stop a garnishment. It can be stopped before it gets to
the Marshall, after it gets to the Marshall, or even after
it is actually executed by your employer. Once the
bankruptcy is filed, which means all documents had been
brought in and the entire fee had been paid, notification by
our office will be sent to the Marshall, the Employer (if it
is in that stage), and the creditor's attorney
simultaneously on the same day the petition is filed. The
garnishment legally stops on the day of the filing and no
future deductions as of that date may be made from your pay
check. Any inadvertent deductions that occurred will
be returned to you.
Go to Questions
Do
you have any questions based on this informational packet?
Please feel free to
contact our office for a free follow-up
telephone consultation or call to schedule an appointment.
BRONX DIRECTIONS:
2525 Eastchester Rd., private
house, white brick with white awning,
BUS:
#26 bus to Allerton Ave., walk south (towards Pelham Parkway
direction) but go only one long block. #31 to
Eastchester Rd. & Mace Ave.
CAR:
Bronx River Parkway, take Pelham Parkway to Eastchester Rd.;
left on Eastchester Rd.; go three blocks and proceed slowly
past Mace Ave., left hand side. If coming on
Hutchinson River Parkway, exit on Pelham Parkway West. Right on
Eastchester Road, go slowly past Mace Avenue, left hand
side.
THANK YOU FOR YOUR
INQUIRY. I LOOK FORWARD WORKING WITH YOU!
