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102 thing you need to know

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this free provides information and general advice about the law from the knowledge and viewpoint of a bankruptcy paralegal. however, laws and procedures change frequently, and they can be interpreted differently by different people. for specific advice geared to your particular financial situation, consult an expert. no book, software, or other published material is a substitute for personalized advice from a knowledgeable attorney licensed to practice law in your state.

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  1. 102 Things You Need to Know Before You File Bankruptcy Written and Published by Victoria Ring, Bankruptcy Paralegal Columbus, Ohio USA email: bankruptcy@columbus.rr.com website: http://www.victoriaring.com/bankruptcy/
  2. An Important Message to the Readers: This free ebook provides information and general advice about the law from the knowledge and viewpoint of a bankruptcy paralegal. However, laws and procedures change frequently, and they can be interpreted differently by different people. For specific advice geared to your par- ticular financial situation, consult an expert. No book, software, or other published material is a substitute for personalized advice from a knowledgeable attorney licensed to practice law in your state. Copyright © January 2001 by Victoria Ring. ALL RIGHTS RESERVED. No part of this publica- tion may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise for sale or profit, without prior written permission of Victoria Ring. Printing of this publication from the internet download version is permitted for private viewing only.
  3. TABLE OF CONTENTS Page Bankruptcy To Go Kit ........................................................................................................................... a Overview .............................................................................................................................................. a Free Forms Included ............................................................................................................................ b Paid Services ....................................................................................................................................... b Guidelines ............................................................................................................................................ 1 How Filing Bankruptcy Can Help You .................................................................................................. 1 Terms You Need to Know Concerning Bankruptcy .............................................................................. 2 Chapter 7 Bankruptcy .......................................................................................................................... 3 Steps That Occur in Filing a Chapter 7 Bankruptcy ............................................................................. 4 Chapter 13 Bankruptcy ........................................................................................................................ 5 Steps That Occur in Filing a Chapter 13 Bankruptcy ........................................................................... 5 Changes in Payments During a Chapter 13 Bankruptcy ...................................................................... 7 Chapter 11 Bankruptcy ........................................................................................................................ 7 Rules that Apply to All Forms of Bankruptcy ........................................................................................ 7 Debts That Cannot be Discharged ....................................................................................................... 8 The First Steps to Filing a Bankruptcy Petition .................................................................................... 8 How Your Credit Will be Effected by Bankruptcy ................................................................................. 10 Other General Questions and Answers ................................................................................................ 10 Websites to Help you Learn More About Bankruptcy ........................................................................... 13 Information-Gathering Forms for the preparation of Your Bankruptcy Petition .................................... 14 General Information ................................................................................................................. 1 Debt Sheet .............................................................................................................................. 2 Income History ........................................................................................................................ 3 Monthly Budget ....................................................................................................................... 4 Asset Checklist ........................................................................................................................ 5 Duty to Disclose All Assets ...................................................................................................... 13 Duty to Disclose All Creditors .................................................................................................. 14 Agreement ............................................................................................................................... 15 Additional Documents Needed to File Petition ........................................................................ 16
  4. 102 Things You Need to Know Before Filing Bankruptcy Bankruptcy To Go Kit For instance, Matt down the street comes by one day to tell you how he filed bank- This file that you recently downloaded ruptcy last week and purchased a new car from the internet is a complete ebook this week. However, your brother dedicated to helping the following types Marshall filed bankruptcy last year and his of people: credit has been ruined ever since. Marshall can’t even get a check-cashing (a) Consumers -- people who are card at his bank. What happened? What interested in learning more about did Matt do that Marshall didn’t? Will the bankruptcy and/or interested in filing same thing happen to you? their own bankruptcy and saving $100’s of dollars in attorney fees. And what about when Debbie filed bank- ruptcy because her husband died and the (b) Paralegals -- legal professionals household income was reduced? When with an attorney/boss who is consider- she filed bankruptcy they came and took ing offering bankruptcy services to her home away! Of course there is no way clients. you would want that to happen to you. You don’t want to lose your home, car and (c) Attorneys -- legal professionals furniture just because you decide to file who do not normally offer bankruptcy bankruptcy. services to clients, but are interested in starting. The forms included in this Stories like these are certainly not unique. “Bankruptcy To Go Kit” can be printed All of these same fears surround almost and used in the office as master forms. everyone when they are thinking about filing bankruptcy for the first time. Fear of Overview the unknown is a natural reaction for human beings. However, this is precisely Thank you for downloading this free the reason why this book was written. It is book from the website located at http:// written to take the fear out of filing bank- www.victoriaring.com/bankruptcy/ ruptcy, but most importantly, it will educate book01.doc. This book is written by a you so you can make a more informed Victoria Ring, a bankruptcy paralegal, decision about whether filing bankruptcy is who is well aware of the confusion and in your best interest or not. multitude of questions that surround the subject of bankruptcy. Her experience Filing bankruptcy is not necessarily for of working with 100’s of clients filing everybody, as you will soon see; and after bankruptcy in the Columbus, Ohio area reading this ebook, you will be in a better has awarded her the ability to know position to make an educated decision what consumers really think and want about your present financial condition. If to know about this subject as well as all you decide to go ahead with the process the steps they need to take in order to of filing bankruptcy, at least you will know file. what to expect after reading this ebook.
  5. Free Forms Included ruptcy right now, you will have pertinent and important information gathered to help Beginning on Page 14 of this ebook, a you access your financial situation. Also, if variety of forms are provided for you to you should hire an attorney to file your print out, fill out and mail in at your bankruptcy petition, the forms will already convenience if you decide you want to be ready to hand to the attorney. He/She file your own bankruptcy. Or, if you are will greatly appreciate your preparedness an attorney, you can print out the and it will be quicker to process your forms, remove my name from them bankruptcy petition. and use them for your own office. However, if you want to save $100’s in I personally designed these forms for attorney fees, I can personally prepare you the two bankruptcy attorney’s that I a Chapter 7 or Chapter 13 bankruptcy and was employed with. At the time I hired submit it as a “non-attorney preparer.” (It at the law firm, they were still using old is legal in all 50 states to file your own 1960’s style forms. Because the bankruptcy with or without an attorney.) I bankruptcy laws had changed so will prepare your petition for $89.95 and dramatically, when we did intake send it back to you through the mail. You interviews with clients, we had to write then take the papers and file them in court, additional information on the side, attend your 5-10 minute 341 Hearing in bottom and back of the old 1960’s about 6 weeks and confirmation hearing forms to have enough information to which takes 2-3 minutes. It’s a simple prepare the bankruptcy petition. process, which I will walk you through if you decide to us my services. After several months of using these old, outdated forms I figured out the But ... let’s read on to discover those 102 best way to update them. I sat down things you need to know before filing one day and re-designed the forms to bankruptcy. That’s why you downloaded include virtually every piece of informa- this ebook for in the first place, right? tion needed for the paralegal to pre- pare a well-presented bankruptcy My best to you, petition to the Bankruptcy Court. However, the forms were not perfect Victoria Ring the first time out. We had to put them Victoria Ring through actual office use and work the Bankruptcy Paralegal “bugs out” before they were perfect. So be assured, the forms included in this Bankruptcy-To-Go Ebook Package have been previously tested by a law firm that does nothing but specialize in filing bankruptcy petitions. Paid Services If, after reading this ebook, you should contemplate filing bankruptcy, print out the forms and start filling them out. Even if you decide not to file bank-
  6. “102 Things You Need to Know Before You File Bankruptcy” Page 1 Guidelines 8. If you have withdrawn from your savings account for two months; bank- If you are considering filing for bank- ruptcy may be a consideration. ruptcy, you are not alone. Many people have and will continue to file for bank- 9. If you are depressed about your ruptcy based upon the times with financial situation, it may be time to con- corporate layoffs, downsizing and sider bankruptcy. continuing business failures. Although not inclusive, the general guidelines 10. If you have a severe financial set- below will help you determine if you back such as the loss of a job, major should consider filing bankruptcy. surgery without medical insurance, etc., it’s time to seriously consider bankruptcy. 1. You should file for bankruptcy when you cannot reasonably pay your Generally, people filing for bankruptcy are bills. dealing with the following situations: 2. If your income does not suffi- • Loss of their job or their primary ciently pay off or pay down your bills, means of support; it’s time to consider bankruptcy. • Been laid off from their job; • Been demoted or given a significant 3. If your monthly debt is 1.5 times pay cut; your monthly income. For example, if • Experienced major family problems you have a monthly net income of leading to divorce, child custody or separa- $2,800 but your monthly expenses are tion; about $4,200, it’s time to think about • Excessive major credit card prob- bankruptcy. lems; • Catastrophic medical-doctor bills 4. If you cannot budget yourself out from an uninsured major surgery or illness of the debt within four years, it’s time to such as terminal cancer; seriously consider bankruptcy. • Desperate financial situations with little hope. 5. If you are more than two months late on your bills, bankruptcy may be a How Filing Bankruptcy Can Help You consideration. 11. Filing bankruptcy is as simple as 6. If your loan or mortgage has been taking a set of papers down to the Bank- “called” or accelerated, it’s time to ruptcy court, standing in line at the Clerk of seriously consider bankruptcy. Court, paying a filing fee and having the papers date/time stamped and handed 7. If you get a foreclosure notice back to you. (The court keeps the origi- from the bank or a lender; it’s time to nal.) A Judge will also be assigned at this seriously consider bankruptcy. time. This simple process takes about 10
  7. “102 Things You Need to Know Before You File Bankruptcy” Page 2 minutes to complete. This set of 20. Secured Debt — This is a debt you papers that you filed with the court is owe for an item that could be taken away called a “bankruptcy petition.” The from you if you don’t pay the bill. For moment the Clerk of Court stamps instance, if you don’t make your house your bankruptcy petition, the following payment, the creditor (or bank) you owe good things can happen to you: can repossess your house. 12. Anybody you owe cannot contact 21. Unsecured Debt — This is a debt you in any way (once they receive you owe for something that cannot be notice in the mail from the court.) taken from you. For instance, anything you charge on a credit card is an “unsecured 13. Any wage garnishments taken debt.” If you don’t pay the MasterCard bill out of your check will cease to be this month, they cannot come and take lawful. If the garnishment is taken out whatever you bought with the credit card. of your check after you file bankruptcy All they can do is harass you on the tele- you may be entitled to a refund. phone until you pay the bill, turn the bill over to a collection agency, or attempt to 14. Any foreclosure action on your get a judgement against you (depending home or other real property is stopped. on the amount you owe them.) 15. Any Sheriff’s sales are stopped 22. Asset — This is something you own immediately. that has resale value. Your car, TV set, computer, stocks, bonds, bank accounts, 16. Any taxes you owe that are piggy bank, clothes, bed, etc. are all things currently being collected on by the that have some type of value that could be government are put on hold (while your turned into cash. These types of things debts are being reorganized.) are your assets. 17. Anybody coming to repossess your 23. Discharge — This is what happens auto, boat, furniture, appliances, or any- when your debts are erased and you have thing else are stopped immediately and completed your bankruptcy. cannot remove anything without the Bankruptcy Court’s permission. 24. Exemption — There are exemption allowances allowed by the Bankruptcy Terms You Need to Know Court to protect the assets you own that Concerning Bankruptcy you need to keep in order to live a normal life. For instance, you need a house to live 18. Creditor — This is the person or in, a car to drive, transportation to maintain company you owe money to because the car, clothes to wear, medicine refills, they extended credit to you. personal care items, etc. The law allows you to keep these types of items by allow- 19. Debtor — This is YOU. You owe ing you exemptions on them. When debts, so you are a debtor. anything you own is totally exempt from
  8. “102 Things You Need to Know Before You File Bankruptcy” Page 3 the bankruptcy, no one can take it 29. Conversion — This is when you away from you. start out by filing one chapter of bank- ruptcy and decide later to file another 25. Automatic Stay — The moment chapter. For example, you originally file a a bankruptcy is filed, all creditor activity Chapter 7 but decide to convert to a to collect debts, obtain judgments, or Chapter 13. obtain property of a debtor to satisfy a debt is completed stopped. This is the 30. Dismissal — Among other things, protection provided to you as a con- your bankruptcy case can be dismissed at sumer under the Bankruptcy law in the any time if you fail to comply to any rules, United States. don’t turn over asset monies that are requested by the Trustee or if you convert 26. Relief From Stay — This is a from one Chapter of bankruptcy to an- court order, requested by a creditor, other. Your case is “discharged” if you who asks the court to lift the Automatic completely pay off your Chapter 13 or Stay that was immediately put in place when your Chapter 7 is legally finished. when the debtor filed the bankruptcy petition. If a creditor is granted a Relief Chapter 7 Bankruptcy from Stay, the debtor will receive notice from the court of its existence and the 31. In order to be eligible to file a Chap- bankruptcy attorney can prepare a ter 7 bankruptcy, you must be able to meet Motion on the debtor’s behalf to re- these guidelines: quest the court to remove the Relief from Stay. (Of course, there must be a • You must reside or have a domi- lawful reason to do so.) cile, a place of business, or property in the United States. 27. Reaffirmation Agreement — This is what you file with the court if • You must not have received a you decide to pay a creditor outside bankruptcy discharge within the last six (6) your bankruptcy. For example, you years or have had a bankruptcy case may want to reaffirm with Bob’s Auto dismissed within the last 180 days. Sales when you file your Chapter 7 bankruptcy petition, because you want 32. People who file a Chapter 7 bank- to keep making payments on your car ruptcy do so in order to discharge their since you need it to get back and forth debts and get a “fresh start” in life. There from work. are no income requirements to file a Chapter 7 and people who file this type of 28. Trustee — This is a real “live” bankruptcy are those who can no longer person that works for the Bankruptcy afford to repay all their debts due to illness, Court who normally oversees the entire unemployment, marital problems, unex- process from beginning to end con- pected medical expenses, over-extended cerning your bankruptcy. credit or other large expenses. However, not all debts can be discharged. For
  9. “102 Things You Need to Know Before You File Bankruptcy” Page 4 example, alimony, student loans, child Trustee is the person who is responsible support and taxes that are less than 3 for overseeing your bankruptcy until the years old are non-dischargable and Meeting of Creditors, at which time you will must be repaid in full. be appointed a new Trustee or the interim Trustee will be assigned to your case. 33. Most consumers file a Chapter 7 bankruptcy and then reaffirm on the 36. If you plan to reaffirm on a debt debts they want to continue paying. For (which means you want to continue paying instance, you can file a Chapter 7 and the bill on your own after the bankruptcy is reaffirm on your house. This could over), your attorney or paralegal needs to possibly erase your other debts and submit a Reaffirmation Agreement to the you would continue making your house creditor, obtain their signature and file this payments like you normally do now, with the court. However, you can still pay outside the bankruptcy. the bill on your own without filing a Reaffir- mation Agreement; but it is best to file one (Note: There is pending legislation if the creditor you owe can repossess currently being debated in Washington something you want to keep (i.e., car, D.C. to change this law, making it house, TV, computer, tools, etc.). harder for people to file a Chapter 7 and forcing them to file a Chapter 13, 37. The Trustee will send a notice to all but the law has not been enacted as of the creditors (people/companies you owe the date this ebook is written.) money to.) This notice is normally sent 5 days after you file your petition. Steps That Occur in Filing a Chapter 7 Bankruptcy 38. The court will normally send you a notice informing you that you are eligible to 34. In order to be eligible to file a file bankruptcy. You don’t have to do Chapter 13 bankruptcy, you must be anything with this notice but keep it in your able to meet these guidelines: personal file. • Have a steady source of in- 39. The Trustee will then send all your come so that you can make regular creditors, including you, a notice informing payments to the Trustee. you of the hearing date when you should appear in court. This hearing is often • The total amount of your debts referred to as the “Meeting of Creditors.” cannot exceed $750,000.00 and unsecured debts cannot be more than 40. At your Meeting of Creditors NO $250,000.00. judge will be present. The Trustee will ask you some of the same questions you 35. When your bankruptcy petition is answered when you first filled out the prepared and signed by you, it is filed paperwork for the attorney or paralegal; with the Bankruptcy Court. You are who originally prepared your bankruptcy assigned a case number and a Trustee petition. or “interim” Trustee. An interim
  10. “102 Things You Need to Know Before You File Bankruptcy” Page 5 41. In actual practice, creditors rarely 45. A Chapter 13 is NOT a bill consolida- appear at these hearings; however, a tion loan, although many people look at it representative from one of the compa- that way. Although it is a similar concept, a nies you owe, or a person you owe, bill consolidation loan is money actually may show up at this meeting. They loaned to you to repay other creditors. In a normally only appear to ask where the Chapter 13, no money is loaned to you secure item is and if it is insured. because you make your monthly payments to the Trustee, who disburses the money 42. If your bankruptcy case is a “no among your creditors. asset” Chapter 7 bankruptcy, the meeting will normally only last 5-10 46. Your priority claims are paid first in a minutes. Chapter 13. Priority claims include debts for things like taxes, child support, etc. 43. If your bankruptcy case is a “no asset” Chapter 7 bankruptcy; you 47. The amount you owe unsecured normally will not have to appear in creditors, like medical bills, credit cards, court again. Essentially, you will re- etc. can normally be paid back as low as ceive a discharge through the mail and 5¢ on the dollar. (This figure is not written all your allowed debts are forgiven. in stone. It is subject to change depending on your individual State laws, type of debt Chapter 13 Bankruptcy it is, as well as the income and budget of the debtor.) 44. People who file a Chapter 13 bankruptcy do so in order to keep 48. You are normally allowed to keep property in which a creditor has a lien your home, car and everything else you — like a house or car, or if payments own when you file a Chapter 13 as long as are behind and the creditor is about to you make regular payments to the Chapter foreclose or repossess the property. 13 Trustee. The filing of a Chapter 13 will stop the foreclosure sale and allow the person 3 Steps That Occur in Filing a to 5 years to repay some, but not all of Chapter 13 Bankruptcy their debts. Rather than wiping out all their debts in a Chapter 7 proceeding, 49. When your bankruptcy petition is Chapter 13 allows a person to reorga- prepared and signed by you, it is filed with nize and pay a certain percentage of the Bankruptcy Court. You are assigned a their debts over a period of 3 to 5 case number and a Trustee. Normally, years. The unpaid balance is dis- there is only one Chapter 13 Trustee who charged after the payment plan is makes decisions on all Chapter 13’s filed completed. Payments are made from in his/her jurisdiction. In a Chapter 7, there each paycheck to the Chapter 13 may be more than one Trustee, called an Trustee, normally through employer “interim” as well as a “trustee.” wage deduction.
  11. “102 Things You Need to Know Before You File Bankruptcy” Page 6 50. Your attorney or paralegal will ask you some of the same questions you also file a Chapter 13 Plan with your answered when you first filled out the bankruptcy petition that details the paperwork for the attorney or paralegal; amount of your monthly payments and who originally prepared your bankruptcy the length of time you are going to be petition. in the Chapter 13 Plan. 56. In actual practice, creditors rarely 51. This amount you pay each month appear at this hearing because they know to the Trustee is determined by the they will be getting paid through the amount of money you currently make Trustee; however, a representative from and how much money you need to live one of the companies you owe, or a on each month. A good Chapter 13 person you owe, may also show up at this bankruptcy attorney or his paralegal is meeting, but they normally only appear to skilled at balancing these two figures ask where the secure item is and if it is so you can easily afford the Chapter 13 insured. payment each month. It is not to the advantage of the attorney or paralegal 57. After the Trustee has approved your to give you a payment you can’t afford. bankruptcy, you are required to pay your This would cause problems later down first Chapter 13 payment. Your payment the road. So don’t be afraid that your must be in the form of a money order or payment will be too high for you to cashier’s check. No cash is accepted. afford. 58. The Trustee will normally provide you 52. The Trustee will send a notice to with information on how to contact his/her all the creditors (people/companies you office with any questions as well as an owe money to.) This notice is normally address where to mail your payments. sent 5 days after you file your petition. 59. At this time, you may want to set up a 53. The court will normally send you payroll deduction so you don’t have to a notice informing you that you are worry about writing a check every month. eligible to file bankruptcy. You don’t Because a payroll deduction may take 4-6 have to do anything with this notice but weeks before it begins, you need to con- keep it in your personal file. tinue making payments to the Trustee on your own until the wage deduction starts. 54. The Trustee will then send all If you get behind in payments, your case your creditors, including you, a notice could be dismissed and you will have to informing you of the hearing date when start all over again. you should appear in court. This hearing is often referred to as the 60. Finally, a Confirmation Hearing is “Meeting of Creditors.” scheduled but you normally do not appear in court. Your attorney normally appears 55. At your Meeting of Creditors NO on your behalf to simply confirm that you judge will be present. The Trustee will are approved to be in the Chapter 13 plan.
  12. “102 Things You Need to Know Before You File Bankruptcy” Page 7 Changes in Payments During a business or individuals with a large amount Chapter 13 Bankruptcy of assets or debts that exceed one million dollars. In a Chapter 11 bankruptcy you 61. Nothing stays the same. During are allowed to still operate your business the 3-5 years that you are making but your creditors and the court must regular payments to the Chapter 13 approve a plan to repay your debts. There Trustee anything could happen. You is no Trustee unless the judge decides that may lose your job. Your spouse may one is necessary; however, if one is ap- lose their job. You may have a new pointed to your case, the Trustee will take baby. You may inherit some money. control of your business and property. Your old car may conk out and you have to replace it. A million things can (Note: I will not cover Chapter 11 in happen, which means your Chapter 13 this ebook because most consumers file a payment can be lowered or raised Chapter 7 or Chapter 13 bankruptcy. depending on the circumstance. Please consult with an attorney if you are interested in filing a Chapter 11.) 62. Many people, when something occurs where they cannot make a Rules that Apply to All Forms Chapter 13 payment one month, will of Bankruptcy simply not pay it. This is a very bad idea. All you have to do is contact your 65. Any debts you make AFTER you file attorney and ask them to file a Motion your bankruptcy petition cannot be in- to Modify the Chapter 13 Plan. You cluded in your bankruptcy. will need to go to the office and supply the attorney with new, updated income 66. Any debts you made BEFORE you and budget information, which explains filed your bankruptcy petition, but forgot to why you cannot make your normal include when you filed, can be added by Chapter 13 payment, but it is well your attorney. He/she will file an Amend- worth the 2 hours of time. ment to whichever Schedule of the bank- ruptcy petition is effected by the additional 63. If you need to go into debt and debt(s). purchase something on credit while you are going through a Chapter 13 67. After your bankruptcy is over and the bankruptcy, your attorney can file a creditors have been satisfied, any lien you Motion to Incur Debt for you. This will have is not automatically removed from allow you the needed money to pur- your property. The attorney will need to be chase the item. (Example: Sell one car hired to remove the lien. and purchase another one.) 68. Never make the mistake of running Chapter 11 Bankruptcy up debts on all your charge cards and then filing bankruptcy. You can be held respon- 64. Chapter 11 is similar to a Chapter sible for any charges you made within the 13, but it is normally filed by larger last ninety (90) days.
  13. “102 Things You Need to Know Before You File Bankruptcy” Page 8 Debts That Cannot be Discharged • Name and complete mailing ad- dress of who you owe; 69. Some of the debts you owe • Your account number (if appli- cannot be forgiven in bankruptcy and cable); will need to be repaid by you. Even if • The name of who owes the debt the debt is included in your original (husband, wife or both); bankruptcy petition, any unpaid bal- • The total amount you owe this ance must be paid by you when the creditor; bankruptcy is over. The types of debts • How much your monthly payments I am referring to include, but are not are; limited to the following: • The date you originally went into debt with this creditor. (If you can’t re- • credit obtained by false pre- member the exact date, just an approxi- tenses or acts of fraud; mate year [i.e., 2001, 2002, 2003, etc.] will • all taxes, customs or duties; do); • debts owed for fines and penal- • If the debt is for a credit card, ties to another government unit; record the last date you charged on this • student loans; credit card. If you charged less than 90 • child or spousal support; days ago, you need to write down the • luxury items valued at $500 or amount you charged and the reason for more that were purchased sixty (60) the purchase.) days from the date you filed your original bankruptcy petition; 71. In the same file folder, also put in the • cash advances of $1,000 or following documents: more that were made within sixty (60) days from the date you filed your • Your current paycheck stubs; original bankruptcy petition; • If you are unemployed, include • debts made due to an act of copies of documents showing any income embezzlement or larceny; you receive(d) from unemployment, • debts owed a party where you worker’s compensation, child support, SSI, maliciously caused injury to another; social security, retirement, estate, etc. • debts owed for the death or • Mortgage and deed if you own or personal injury while intoxicated by are purchasing a home or other real drugs or alcohol. property (i.e., land, apartment complex, etc.); The First Steps to Filing a • Copies of your car, boat, motor- Bankruptcy Petition cycle, mobile home or other titles to motor vehicles; 70. Take a file folder and put a • Copies of your tax returns; statement from every creditor that you • Copies of any court proceedings owe in it. If you don’t receive a filed against you; monthly statement from the creditor, put the following information on a sheet 72. When you have put together your file, of paper and put it in your file: you will have most of the information
  14. “102 Things You Need to Know Before You File Bankruptcy” Page 9 needed to file a bankruptcy petition. who advertise cheap prices for filing However, the attorney, or whoever you bankruptcy petitions in your daily newspa- hire to prepare your bankruptcy petition per, often do not file all the schedules and may also require other documents, forms at one time (which is perfectly legal) depending on your particular situation, and will charge you additional money to file but they will let you know when you go the rest of the petition within the 20-30 day to their office for the initial intake allowance. After being “nickel-and-dimed” interview. to death, you normally pay more money to this attorney than if you just hired a com- 73. A bankruptcy petition is then filed petent attorney in the first place. in court. It contains several sheets of paper that includes schedules and 76. The best way to locate a good bank- forms. Each schedule and form relates ruptcy attorney is to first determine if they to different items that must be filled out specialize in bankruptcy. If you cannot properly. Normally people choose to locate someone in your area that special- hire an attorney to prepare their bank- izes solely in bankruptcy, then choose an ruptcy petition, but some people hire attorney who has been in the practice for independent paralegals, and some at least five (5) years or more. (Just call people purchase bankruptcy kits and your local Bar Association and ask for a attempt to do it themselves. referral.) 74. If you decide to hire an attorney, 77. Your can hire a freelance bankruptcy try to find someone who specializes in paralegal to prepare your bankruptcy the field of bankruptcy. In other words, petition, but if problems come up (such as your best choice for an attorney is one litigation with a creditor or the filing of who does nothing else but specialize in Motions), it would be best to hire an attor- bankruptcy law exclusively. You will ney to do these things for you. probably also find bankruptcy attorneys that also do divorce, wills, probate, and 78. You can purchase a bankruptcy “do- DUI; but if given a choice between the it-yourself” kit but unless you know how to two — chose the attorney who special- prepare the bankruptcy petition in a man- izes in bankruptcy. ner to present to the court, these kits will do absolutely nothing for you except give (Note: If you are in the southeastern you some practice at filling out forms. district of Ohio, I recommend Lloyd D. Cohen & Associates, the attorney I 79. In reference to the “do-it-yourself” work for at 614-444-4211.) kits, filing bankruptcy is not simply filling out a set of forms and handing them to the 75. Calling around to different attor- court. For instance, if you don’t know ney offices and asking them what they anything about exemption allowances you charge to file a bankruptcy is NOT the will not know how to include them and your most efficient method of locating a petition will be rejected or you may lose good bankruptcy attorney. Attorneys something you own.
  15. “102 Things You Need to Know Before You File Bankruptcy” Page 10 How Your Credit Will Be Effected by you have shown that you make timely Bankruptcy payments, your credit line may be in- creased without you depositing any more 80. If you are behind in paying your money. bills, your credit is already effected. Filing a bankruptcy may actually be 83. However, the fact remains — one of your first step in repairing a bad credit the main reasons for filing bankruptcy is to situation. When a creditor finds a get OUT of debt — not back into it. You bankruptcy on your credit report, it should take responsibility for your own shows them that all prior credit prob- financial spending and saving, making sure lems have been resolved. The question not to get to the point where you have to then becomes, “Are you creditworthy?” file another bankruptcy. Once you experi- ence total freedom of paying for things you 81. Every creditor is different and want to buy, and owning them free and each one treats bankruptcy with a clear — you will enjoy life more and grow different set of rules for determining as a human being. About the only items your creditworthiness. Although there the average American really needs to go are many exceptions, normally a into debt for is an automobile for transpor- creditor likes to see how well you do in tation and a home for their family to live in. paying your bills during the first year or Everything else should be purchased out two after filing bankruptcy before they of the monthly income, or saved for and extend new credit to you. So although a purchased in full. The only reason Ameri- Chapter 7 bankruptcy appears on your cans are in debt is because they “want it credit report for ten (10) years, and a now!” and don’t have the patience to wait. Chapter 13 appears for seven (7) years, most people only find it to be a Other General Questions and Answers problem for a couple of years after filing — provided everything else looks 84. If I am married, does my spouse good on their current credit report. have to file bankruptcy? 82. In addition, there are 1,000’s of No, however the spouse that does creditors who extend credit to people not file will not receive the benefits of who have filed bankruptcy. The inter- bankruptcy. In other words, if the non-filing est rates are normally higher, of spouse is jointly liable on certain debts, he course, but you can obtain credit easily or she will remain liable for those debts if with one or more of them. One of the the filing spouse filed for a Chapter 7 best ways to build your credit after bankruptcy. He or she will also remain bankruptcy is to obtain a “secured” liable for any amount not paid for in the credit card. This is one where you put filing spouse’s Chapter 13 plan. On the money in a bank and the bank issues other hand, the non-filing spouse will not you a credit card. The credit limit of the have bankruptcy noted on his or her credit credit card will be the same amount of report. money you have in their bank. After
  16. “102 Things You Need to Know Before You File Bankruptcy” Page 11 Therefore, if the debts you owe that is garnishing your check is now being are also owed by your spouse, or co- paid (or is being discharged) through the signed by your spouse, it would be to bankruptcy petition you filed. As soon as your benefit to file a bankruptcy to- the clerk file stamps your bankruptcy gether as a married couple. If most of petition, you have immediate protection the debts are in your name only, you under the United States Bankruptcy Court may consider filing a bankruptcy as the and every creditor you owe must proceed only debtor. through this court to collect anything from you. 85. What if I am unmarried but living with someone? Can we file a bank- 87. How can I immediately stop creditor ruptcy together? harassment? At the present time, if you are The filing of a bankruptcy under living together with a significant other Chapter 7 or Chapter 13 will IMMEDI- but are unmarried, you cannot file a ATELY bring the harassment caused by bankruptcy together, even if the bills creditors to a HALT. Once your bankruptcy are in both your names. In this case, has been filed, creditors are forbidden from each one of you would have to file taking action against you or against your separate bankruptcy petition. A com- property to collect money you owe them. If petent attorney or paralegal can sepa- they try to do so, they can be held in rate the expenses and budget so that contempt of court. This is the advantage each of you pay 50% of the day-to-day of the law, administered by the United living expenses (if both of you share States Bankruptcy Court, and provided as the expenses) and submit the informa- a way to help citizens get “another tion properly to the court. chance.” Even if there is a wage garnish- ment or other legal proceeding under way, 86. Will bankruptcy stop a wage the filing of a bankruptcy will bring it to a garnishment? screeching halt, giving you the opportunity to take care of your financial affairs in an Yes, some of the money gar- orderly and permanent way. nished from your paycheck may even be returned to you. It all depends on 88. What if I owe the IRS back taxes? how much was garnished and when it How will bankruptcy help me? was garnished. If your wages are currently being garnisheed, a Notifica- Most tax debts cannot be discharged tion of Stay pleading need to be filed in in a bankruptcy. Trust funds and withhold- court as well as a letter mailed to the ing taxes you owe, such as sales taxes or creditor and your employer to stop the employee withholding obligations can garnishment after your bankruptcy never be discharged. However, income petition is filed. and self-employment taxes can be dis- charged if they are at least three (3) years Stopping a wage garnishment is old and the tax returns have been on file possible because whomever you owe for at least two (2) years.
  17. “102 Things You Need to Know Before You File Bankruptcy” Page 12 In situations like this, a bank- If your should receive any harassing ruptcy can be a great help in many or annoying creditor calls after filing your ways. The biggest benefit is that you bankruptcy petition, a letter can be mailed may be able to reduce the amount of to the creditor which spells out Section 362 the tax you owe. In a Debt Adjustment of the Bankruptcy Code (Automatic Stay.) Plan, you can also stop interest and This letter prohibits the creditor from penalties on all taxes you owe — even contacting you again or risk being held in the ones that are non-dischargable. contempt of court. This will place you in a situation where it will be easier to pay your taxes off. 91. Am I a “bad” person because I file bankruptcy? 89. How much does it cost to file bankruptcy? You are NOT a “bad” person be- cause you decide to file for bankruptcy. At the present time, the court will Back in the old days (pre 1900), if a person charge you $200.00 to file a Chapter 7 went bankrupt, creditors stepped in, sold bankruptcy petition and $185.00 to file everything the person owned, split the a Chapter 13. money between themselves, put the bankrupt person out in the street and make 90. When does a bankruptcy take a public mockery of them. Therefore, this effect? is why people who have not kept up with When the Clerk of Court receives the times, still feel that bankruptcy is a your bankruptcy petition and date/time “bad” thing to do. But that was over 150 stamps it, your bankruptcy is immedi- years ago! The economy has changed, ately effective. The Court sends notice employers have changed, life is more of your filing to all of your creditors and complicated, interest rates are higher than bill collectors generally within 24-48 they have ever been in history and the hours after filing. That is why it is so money you make doesn’t reach as far as it vitally important to include complete used to just five years ago. addresses and zip codes of all the people you owe on your bankruptcy Any one of these factors could cause petition. The court will send a copy of a “good” person who was responsible and your petition to all these creditors so financially secure, to suddenly consider they will stop harassing you. If those filing bankruptcy. Not one of us is immune addresses are not correct, the creditor from the world’s problems. So if there won’t know you filed bankruptcy and comes a point in your life where you find it will continue to harass you. It is also necessary to take advantage of the bank- important to list all the collection ruptcy law, don’t feel “guilty” about it. In agency addresses so they can be fact, you should be glad the United States notified as well. Upon receipt of the has set up a governing body to protect notice of your filing, creditors and bills people like you and me. collectors are prohibited from having contact with you.
  18. “102 Things You Need to Know Before You File Bankruptcy” Page 13 Websites to Help you Learn More 101. http://www.abanet.org/home.html — This About Bankruptcy link will take you to the American Bar Associa- tion website where you can search for and 92. http://www.bid4assets.com/ — A locate an attorney in your area that is a mem- bidding website where you can purchase ber of the Bar Association. items sold in bankruptcy estates. Pick up a real bargain! 102. http://www.victoriaring.com/bankruptcy — I update this website on a weekly basis. I 93. http://www.swiggartagin.com/bkfaq/ also add questions from people just like you on — This site lists a long list of questions and the “question and answer” page. So bookmark answers about bankruptcy to help consum- my website, subscribe to my ezine and keep ers. checking back for the latest information. 94. http://bankruptcy-law.freeadvice.com/ I sincerely hope this book helped you to — This is another web site containing a become more knowledgeable about the long list of questions and answers to help subject of consumer bankruptcy. I cer- consumers understand more about bank- tainly understand and symphasize with ruptcy. people who are experiencing financial difficulties because I have been in the 95. http://www.myguidehub.com/bank- same boat you are in right now. (I had to ruptcy/ — This wealth of information website is specifically for consumers filing file bankruptcy back in 1988.) bankruptcy. However, don’t allow debt to destroy your 96. http://www.uscourts.gov/bankform/ life. Instead, you have the opportunity to — You don’t have to spend money on a take charge of your financial situation and “do-it-yourself” kit. Download all the official get some relief, which is legally offered to bankruptcy forms from the internet so you you by the United States Bankruptcy have an idea of what they look like. Court. 97. http://www4.law.cornell.edu/uscode/ 11/ — The Bankruptcy Code online. 98. http://bankrupt.com/ — Internet bankruptcy library. 99. http://findlaw.com/01topics/03bank- ruptcy/ — Findlaw’s resources for bank- ruptcy. 100. http://www.bestcase.com/ — The software program I highly recommend using for preparing bankruptcy petitions. I recommend it to all attorney offices, freelance paralegals and other non- attorney preparers.
  19. “102 Things You Need to Know Before You File Bankruptcy” Page 14 IMPORTANT -- PLEASE READ!! The following 16 pages contain the forms you need to fill out in order to have a bank- ruptcy petition preparer obtain all the information necessary to prepare your official bankruptcy petition for court. These forms have been used in Columbus, Ohio and were personally designed by Victoria Ring and they are provided free to you as part of the “Bankruptcy-To-Go” Kit. Print these pages out and follow the information at the top of each form to properly complete it. Please understand, these forms are NOT the forms you use to file in court. They are only information-gathering forms that are retained in your confidential file. The information you supply on these forms is taken and correctly entered on the official bankruptcy petition. This document is the one filed with the Bankruptcy Court, not these information gathering forms. Do not attempt to file these forms with any court. They are strictly for obtaining information to prepare your bankruptcy petition.
  20. GENERAL INFORMATION Name of Bankruptcy Jurisdiction: (To obtain this information, call the directory assistance operator [or check the court listings in your telephone directory] and obtain the telephone number of the Bankruptcy Court in the county where you reside. [You will need to know where this court is in the future to file your petition.] Ask the receptionist at the Bankruptcy Court what the “jurisdiction” is for your county. Print this information above. If you are unable to locate this informa- tion for any reason, enclose an additional $5.00 and I will search and locate this information for you. This information is extremely vital for the completion of your bankruptcy petition.) Name, First Middle (spell out) Last Social Security Number Date of Birth Street Address City State Zip County of Residence Length of Time at This Address SPOUSE, First Name Middle (spell out) Last Social Security Number Date of Birth Address (if living separately) City State Zip Area Code & Home Phone Work Phone Spouse’s Work Phone DEPENDENTS Name Age Relationship to You Is this dependent living With You? Are you paying or receiving any alimony or support money? o Yes o No Has either you or your spouse been known by any other name during the past 6 years? (Example: maiden name, last name from previous marriage, legal name change, etc.) o Yes o No If yes, write the NAME and DATE(S) USED below: Page 1 of 16 -- Information Gathering Sheets for Bankruptcy Petition Preparer Designed by Victoria Ring, http://www.victoriaring.com/bankruptcy/
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