CONSUMER BANKRUPTCY
People get overwhelmed with debt for many reasons. It may be because they lost their job or found things did not go as planned and for others it may be that circumstances just got beyond their control. For almost everyone, the deteriorating economy is pushing more and more people into financial conditions they never predicted.
Whatever the reason, the existence of signficant debt with no hope in sight leaves people feeling helpless and out of control. It is important to know that there are options, there are choices, and there is hope.
Despite the sweeping changes to the US Bankruptcy Code in 2005, relief is still available.
It is important to know about the protections afforded by any bankruptcy chapter: the automatic stay. When a bankruptcy petition is filed, Section 362 of the US Bankruptcy Code imposes a stay on all collection activities. Foreclosures must stop in their tracks; automobiles cannot be repossessed; and collection activities must cease. However, the stay is not always available: the 2005 amendments to the Bankruptcy Code imposed limitations on the availability of the automatic stay. This is especially true in cases where someone has had another bankruptcy case pending in the past year. In some cases, the stay will only be available for 30 days, and in other cases, the stay will not be available at all. To be sure that you enjoy the benefits of the stay, please contact us.
Chapter 7
A Chapter 7 bankruptcy, often referred to as a “straight bankruptcy,” is a liquidation. In this chapter, the debtor files a petition with the court, listing his or her debts, expenses, assets and income. Any property that is not exempt from bankruptcy is liquidated (i.e., sold off) to pay off the debts. If the debtor has no assets, the debts are simply wiped clean through a discharge.
What happens when I file?
Once you receive your credit counseling certificate, your petition is filed with the bankruptcy court and assigned to a trustee on the Chapter 7 trustee panel. Usually, the trustee is a local lawyer. The trustee represents the creditors and is responsible for ensuring your petition is correct and accurate and that you are entitled to a discharge. The trustee also is responsible for collecting any non-exempt property, selling it and disbursing the proceeds to the creditors.
Within about 30 days, you meet with the Chapter 7 Trustee (along with your attorney) at what is called a “Meeting of Creditors” or a Section 341 meeting. Your attorney will be able to explain what you can expect at that meeting.
How can I keep my property?
Property that is exempt from Chapter 7 bankruptcy may not be liquidated or sold to pay creditors. When we say “exempt” we mean that it cannot be sold to pay creditors. Federal and state laws protect some types of property for their full value. (For example, under state law, you can exempt an individual retirement account.) Other types of property, however, are protected only up to a certain amount.
Only a qualified and experienced bankruptcy attorney can determine what property may be exempted—and do so while trying to protect as much of your property as legally permissible.
What information should I bring with me to my consultation?
To get the most out of your first in-office consultation with us, you should have the following information:
• 6 months of pay stubs and income information
• an estimate of your debt, both secured and unsecured (or just bring your bills)
• an estimate of your monthly expenses
• information concerning all assets: real estate, automobiles, etc.
What other information will I eventually need?
You will need copies of your tax records to obtain necessary information for your petition. This would include returns or if you do not have returns, transcripts from the IRS and the Massachusetts Department of Revenue. You will require an appraisal of your real estate or any other assets you have as well as copies of bank statements, including canceled checks.
Why do I need a lawyer? Isn’t it just paperwork?
There are document preparation services that will prepare the documents necessary for a bankruptcy filing for a lesser cost than what you would pay an attorney. However, they are forbidden by law to give you legal advice. There are other duties debtors have, including disclosing important real estate documentation and income information, as examples.
Additionally, the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, imposed additional requirements on debtors that if not met can result in the case being dismissed.
Contact Attorney Merrill J. Atkins if you are considering personal bankruptcy, and to learn more about what he can do for you.
