Saturday, October 22, 2011

What is a bankruptcy trustee?

The bankruptcy trustee is a person assigned to your case to review your petition, statements and schedules and compare them to various source documents for accuracy.  A trustee's job is to administer your case, prevent fraud, and to collect assets and distribute money to your creditors.

There is always a trustee assigned to your case in chapter 7 and chapter 13.
In a chapter 11, you may serve as your own trustee.

The trustee presides over your meeting of creditors, which is usually held about four to eight weeks after your case is filed.  At that meeting, you are required to appear with picture id and original proof of  your social security number, usually a social security card.   Its rare for creditors to actually appear at this meeting.

The trustee will also as you a variety of questions.  The questions can vary depending on the trustee, but they usually ask the same base questions.

Have you taken the oath I administered?
How long have you lived in this jurisdiction/state?
Have you ever filed bankruptcy before?  If so, when and where.
Have you ever filed a bankruptcy using a different name or social security number?
Did you read your petition, statements and schedules?
Did you sign your petiton, statements and schedules?
Was the information in your petiton, statements and schedules true and correct?
Did you list all of your assets?
Did you list all of your debts?
Do you owe child support or spousal maintenance to anyone?
Have you repaid any family member loans in the year prior to filing your case?
Did you receive a tax refund in the last tax cycle, and if so, how much and what did you do with it?
Are you expecting to receive a tax refund this next tax season?

Monday, June 6, 2011

What is Chapter 9 Bankruptcy?

Chapter 9 is the municipal bankruptcy.  The term "municipality" is defined in the Bankruptcy Code as a "political subdivision or public agency or instrumentality of a State." See 11 U.S.C. § 101(40). This definition is broad enough to allow municipal bankruptcy filings by cities, counties, school districts, townships, public improvement districts and the like. It can also included organizations that provide services which are paid for by users rather than by general taxes.  These include bridge authorities, highway authorities, and gas authorities.

Chapter 9 bankruptcy filings are rare.  The most recent notable chapter 9 filing was by Orange County, California in 1994.  Although chapter 9 is similar to other chapters in many ways, in one notable way it is quite different. There is no provision in chapter 9 for the liquidation of the assets of a municipality and distribution of the proceeds to creditors. Like the other bankruptcies, the goal is to resolve outstanding debt issues.

Thursday, June 2, 2011

What is Chapter 12 Bankruptcy?

Chapter 12 is a bankruptcy for farmers.  It is not often used, and you will be hard pressed to find an attorney with experience in chapter 12.  However, chapter 12 is similar to chapter 13.  Whereas a chapter 13 is for folks with regular income and requires monthly payments, chapter 12 is geared to payments which come due when the crop comes in.  Payments can be quarterly or semi-annual depending on the type of farm.  Chapter 12 is intended to assist the distressed farmer cope with his debt obligations and keep his farm at the same time.

Sunday, May 29, 2011

What is an asset?

Often people are confused about what an asset is for purposes of bankruptcy.  In initial consultations, potential clients often tell me that they have no assets.  However, they are either mistaken or do not understand the concept.  An asset is anything you own, or that you have a right to.  Your bankruptcy schedules must reflect all of your assets.  So, whether it is your home, a timeshare, a bank account, or the clothes on your back, its an asset.  Depending on which type of bankruptcy you file, and what assets you own, you might be able to file bankruptcy and keep all of your assets. 
Something is an asset whether you owe money on it or not.  If you might possibly lose
an asset in your bankruptcy, you could lose it to a secured creditor, or you could lose it to the bankruptcy trustee who will sell it and give some money to your creditors.

Be sure to disclose all of your assets to your attorney before you file your case, so you can
be well informed on how your assets are to be treated. 

Friday, May 20, 2011

Do all creditors have to be listed in the bankruptcy?

People often tell me that they have a debt that they wish to continue to pay and that
they do not want to list it in their bankruptcy.  This is not possible.  Regardless of which
type of bankruptcy you file, you have to list all of your debts, whether you
desire to continue to pay them or not.  If you are filing a chapter 7, it may be possible
to "reaffirm", or agree to continue to pay the debt.  This is fairly common with cars.

When you sign your bankruptcy schedules you will be signing under oath, under penalty
of perjury, that the documents are true, correct, and complete.  If you intentionally
leave a debt off of your schedules, you are violating this oath and could subject yourself
to criminal or civil penalties, or as they say at the U.S. Trustee's offices, possibly jail time.

If you want to keep a debt, discuss it with counsel and we will advise you whether that is
possible, and how it works.  Don't put yourself in jeopardy by swearing your documents
are true and correct when they are not.

Saturday, May 14, 2011

What is Chapter 11 Bankruptcy?

Chapter 11 Bankruptcy can be filed by an individual, married couple, corporation, or llc.  Chapter 11 is ideal if you do not qualify for chapter 7 or chapter 13, or if you are trying to retain property that you cannot retain in chapter 11.  Chapter 11 is a type of reorganization or repayment plan.  It is possible to strip liens or to modify mortgages in a chapter 11.  In most cases the chapter 11 debtor will greatly reduce its unsecured debt.

Unlike chapter 13, chapter 11 does not have a bankruptcy trustee assigned to the case to collect money. The Office of the United States Trustee will review the case but will not intervene unless the debtor or "debtor-in-possession" performs activities that endanger the estate or violate fiduciary responsibilities.  In chapter 11 a plan to repay creditors is proposed, and hopefully approved by the court.  The plan sets forth how creditors will be paid.  The debtor-in-possession will pay creditors directly in accordance with the plan.

Chapter 11 is more expensive than Chapters 7 or 13 and it has requirements to file monthly reports with the court and to pay quarterly fees to the Office of the United States Trustee.

Chapter 11 can be filed by large companies or by mom and pop wage earners, or anywhere in between.  If you do not qualify for chapter 7 or chapter 13, you should seriously consider chapter 11. 


Thursday, May 5, 2011

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is for folks with some sort of regular income who do not qualify for chapter 7, or cannot accomplish what they need to accomplish in chapter 7. 
Only individuals or married couples can file a chapter 13 case.  Companies cannot file for chapter 13. 
Chapter 13 is often referred to as the "wage earner plan", but your income does not have to be wages in order to file.  It could be retirement income, social security, self-employment income, rent, or even unemployment.  Your income has to be enough to accomplish the goals of the chapter 13 plan.
Common goals of filing a chapter 13 are 1) to stop a foreclosure and force your mortgage company to accept payments,  2) to strip off second or third mortgage liens,  3) to stop a vehicle repossession,  4) to stop lawsuits or wage garnishments, 5) to stop IRS or state tax levies, garnishments, or actions, 6) to stop high credit card interest, 7) to keep property that you might otherwise not be able to keep if you filed a chapter 7.
Chapter 13 requires you to make monthly payments to a chapter 13 trustee based on a plan created by your bankruptcy attorney.
Keep in mind that not everyone qualifies for chapter 13.  If  you do not have enough income to accomplish your goals, you may not be able to fund a chapter 13.  There are secured and unsecured debt limits.  

Thursday, April 28, 2011

What is Chapter 7 Bankruptcy?

Chapter 7 is the basic bankruptcy.  It is sometimes referred to as the "fresh start" bankruptcy or the "liquidation" bankruptcy.  Chapter 7 bankruptcy does not reorganize or restructure your debt, it eliminates your debt.     Depending on your situation, you may be able to keep homes or cars, but you will still have to pay any secured debts  associated with those assets.  Whether you can keep them or not will depend primarily on whether you are current on the payments, how much equity is in the asset, and what your exemption is.

In order to file a chapter 7 bankruptcy you must "qualify" on the Means Test.  Whether or not you will qualify depends on what your gross income has been for the six months before you file, and your household or family size.  If you do not qualify on the first test, you might qualify on the second test.  The second test is much more complicated and requires a review of your mortgage statements, secured car statements, whether you have back taxes, child support, spousal maintenance, child care, and the like.

Most chapter 7 cases last about four to six months and remain on your credit report for ten years after filing.  The goal is to get a discharge order, eliminating as much of your debt as the law allows.  Certain debts cannot be discharged.  These may include certain taxes, child support, certain marriage dissolution obligations, student loans and judgments resulting from drunk driving actions. 

If you qualify for chapter 7, it may be the best way to get a "fresh start", put most or all of your financial problems behind you, and start over.

Sunday, April 24, 2011

What is bankruptcy?

If you cannot pay all of your bills on time, and you are being harassed by creditors or collectors, you may be asking  "What is bankruptcy?"  Bankruptcy comes in different chapters.  Chapter 7 is the fresh start or liquidation bankruptcy.  Chapter 11 is a large scale reorganizing bankruptcy for individuals or companies. Chapter 12 is the farmer's bankruptcy.  Chapter 13 is a personal reorganizing bankruptcy and cannot be used by corporations or llcs.

In the United States bankruptcy is authorized by federal laws under 11 United States Code. 
Bankruptcy can assist an individual or company to reorganize or liquidate debt. 
Bankruptcy is a creature of law, created by congress for the express purpose of resolving
debt problems that cannot otherwise be resolved.

If you cannot handle your debt, you should consider bankruptcy.  We do not have debtor's prison in the United States so, if you need it,  you should consider bankruptcy.