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Filing Bankruptcy Chicago - Signing Document

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Filing Bankruptcy

What will it take to get out of debt?


Getting out of debt is a process that you can go through by taking advantage of existing federal laws known as bankruptcy laws. A qualified bankruptcy attorney can help you get out of debt from start to finish under Chapter 7 in approximately 120 days. Thereafter, you will have the ability to file a Chapter 7. There are specific requirements you have to qualify. However, if you do qualify for the fresh start Chapter 7, you can get out of most debts in approximately 120 days.

The most common debts that are eliminated in a Chapter 7 fresh start bankruptcy filing include credit cards, medical bills, personal loans, utility bills, auto repossession deficiencies, mortgage foreclosure deficiencies, debts for most attorney's fees and debts for most personal services. You can keep a lot of property while you file for Chapter 7 and get a fresh start. You can keep up to $15,000 worth of equity in your real estate home. You can keep up to $2400 worth of equity in one motor vehicle. You can also keep all of your necessary wearing apparel and most of your household goods if they do not exceed $4000 in value.

Therefore, getting a fresh start under Chapter 7 is something that is readily available throughout the country through a qualified bankruptcy attorney. My advice would be to seek an attorney in your local area to learn your rights. You will learn whether you qualify for Chapter 7, or whether you would be better qualified for Chapter 13. You will learn what it takes to file from start to finish. Your attorney will tell you about the pre-filing requirements, which include credit counseling, providing taxes, and providing paycheck stubs. You are also required to attend a Meeting of Creditors known as a 341 Meeting of creditors.

After your bankruptcy case is filed, but before you receive a discharge, you must submit and complete a personal financial management instruction course. This course is two hours in length, and it talks about all kinds of personal financial issues. The purpose of the class, or the instruction, is to get you more aware of what you need to do going forward so you don't fall back into debt again. The class will cover everything from insurance, purchasing an auto, purchasing a home, budgeting, and credit issues, so you don't fall into the same traps or mistakes that got you into debt in the first place.

If you hire an experienced bankruptcy attorney, you will be given advice throughout your case to make your case go smoothly and easily. If you try to file bankruptcy on your own, you could be making a huge mistake. There are so many requirements since the law has changed, and you do not want to try and do it alone. 

If you successfully complete a Chapter 7, those debts that are eliminated in the Chapter 7 or discharged are forever gone. Now, some debts will survive a Chapter 7 and those include student loans, recent taxes, parking tickets, child support, maintenance payments, and debts owed to a spouse, former spouse, or a child. 

To learn all of your rights under the Bankruptcy Code, meet with several bankruptcy attorneys before you make a decision. Like anything else that you want to purchase in life, there are different talents and different degrees of skill and expertise among attorneys. You might find an attorney who seems perfectly capable but hardly has any experience in filing a volume of cases. On the other hand, you don't want to go to an attorney who simply files cases over and over again, and treats you like a head of cattle. You want to find an attorney who is experienced, who has written on the subject, who is a member of certain organizations, and who can provide the time, expertise, and the experience to make you feel comfortable about the process.

Make sure that you ask the attorney all types of questions. You will learn from those answers exactly whether that's the right attorney to help you file your Chapter 7 or Chapter 13 bankruptcy case.

What are the advantages of filing with an attorney?


If you are thinking of filing for bankruptcy, you can file on your own, although I would never recommend it. What I recommend is that you find a qualified attorney in your area who you can meet with and learn what it takes to file. Once you meet with that attorney and you find out what is actually involved in the filing of a bankruptcy petition, you are not going to want to file on your own.

First, there is complicated software or documents that need to be prepared prior to filing a bankruptcy petition. The actual documents include a list of schedules, sometimes totaling fifty, sixty, or seventy pages in length, which include all of your income, all of your expenses, all of your assets and all of your liabilities. The documents are complicated in many ways. You do not know on your own whether the property you have is going to be protected under your state law. If you try to file without a bankruptcy attorney, you might be opening up the door to losing some of your assets in exchange for a fresh start.

Once your bankruptcy case is filed, a Chapter 7 trustee administers assets that are available to creditors. Now, you get to protect a certain amount of assets while filing a Chapter 7. In the state of Illinois, you get to protect up to $15,000 worth of equity in real estate. You get to protect up to $2400 worth of equity in one motor vehicle. You are able to protect $4000 worth of miscellaneous personal property throughout your case. If you are trying to file on your own, and you file and you do not have the ability to protect all of your property, then the trustee is going to take the nonexempt property, sell it, and pay your creditors a pro rata share. 

The biggest advantage of having an attorney handle your bankruptcy case, aside from preparing all the documents, aside from guiding you through the process and telling you what you need, is the fact that the attorney knows how to either protect your assets or advise you to file a different chapter so you won't lose your assets.

If you file on your own, it's known as "pro se." Pro se filers typically have a much more difficult time navigating through the bankruptcy court system. For one thing, you've got several requirements before your case could even be filed. Without the guidance of an experienced attorney, you may file on your own, only to find out that you did not file validly, and that your case is void from the beginning. If this were to happen, you would have to re-file, pay another filing fee, and submit your documents a second time.

You can do some things in life without an attorney. Self-help groups abound, and there are forms you can fill out on your own for some types of legal matters. I strongly discourage anyone from trying to file a Chapter 7 bankruptcy on his or her own without an attorney. The risk to you is just too great in terms of either losing property or not having your case go through to completion, which is known as a discharge. Many bankruptcy attorneys will work up a payment plan. If you don't have all the money up front, you might be able to find one who is willing to work with you on an ongoing basis, provided you make payments.

Therefore, if you think you can't afford a bankruptcy attorney, I suggest you can't afford not to use a bankruptcy attorney. Be very careful about filing on your own. Although federal law allows you to file bankruptcy on your own, you will find that very few people attempt to do so, because it is just too difficult to navigate through the federal bankruptcy system without an experienced bankruptcy attorney.

What does it take to get started?


The first thing it takes to get started in the filing of a Chapter 7 bankruptcy is a phone call to an attorney. You must set up an initial consultation so that you can get advice and counsel on whether or not bankruptcy is a good idea for you. Now, you can take other steps, studying the website, reading as much as you can, talking with other people who might have filed. However, the best thing that you can do is pick up the phone, make a phone call, set an initial consultation, and get information directly from a bankruptcy attorney. 

In my office, if you come to see me, we're going to sit down, we're going to have a free initial consultation, and I'm going to have you fill out the bankruptcy intake questionnaire. Then, I'm going to advise you on everything it takes to file a bankruptcy, and tell you whether you qualify. I'm going to go through your real estate. I'm going to go through your vehicle details. I'm going to look at your personal property. I'm going to tell you what the exemptions are. I'm essentially going to let you know whether you qualify for Chapter 7, whether your property is going to be protected in a Chapter 7 and most importantly, whether your debts are going to be eliminated in a Chapter 7.

Many people try to either file on their own, or go to an attorney who is the lowest in price, only to find out that they did not get good information, their case did not go through to completion, and they lost some of their property. To get started, the very first step is to make that meeting with an attorney. 

If you come to my office, I'm going to spend approximately 30 to 45 minutes with you going through everything there is that you need to know about bankruptcy, including what documents you need to gather to move forward. I have a book called Chapter 7 Success, which lays out everything that's going to happen throughout a typical bankruptcy case. It talks about the initial consultation. It talks about the requirements needed to file. It talks about the Meeting of Creditors that you must attend. It talks about receiving a discharge and it talks about the personal financial management class that must be taken after a case is filed, but prior to a case going to completion.

Everything starts with the first step. The first step in a bankruptcy case is meeting with the attorney. I can't stress enough the point that so many people say I should have talked to you and come to you sooner. I struggled for years and paid all kinds of money in payment plans to creditors. I depleted my 401(k). I sacrificed only to find that I couldn't keep up with the interest in the penalties and the amount of debt that I had was overwhelming. Most people say they should have come to see me sooner. They should have taken action sooner. They should have done something to stop the harassment.

The first step is always the toughest, but I guarantee you this; if you come to see me, you are going to learn your rights, you are going to feel comfortable with the process, and you are going to understand that you can be helped with either a Chapter 7 or a Chapter 13 bankruptcy. You are going to learn that I am the right law firm to help you. I am a member of the American Bankruptcy Institute and I have been practicing for over twenty-one years. I have the ability to advise you properly on all-important points concerning your case. I will let you know when the timing is right to file. I will let you know if you are eligible or not. I will let you know if your spouse is going to be affected or not. I will let you know if there are debts that are going to be eliminated or if there are debts that are going to stick around. I will let you know every aspect of your case. If there is any gray area, I will let you know that there is a gray area, so you are not shocked by the fact that something is going to happen.

I'm going to make you the most educated person on bankruptcy who is not an attorney. That is my goal because an educated client is going to be a good client. They're going to feel good about the process. They're going to understand what is happening and they are going to be able to navigate through the bankruptcy system along with their attorney, side-by-side, in a cohesive manner.

Make the first step. Make the appointment. Get in and talk with an attorney. That is the very first thing that you should do if you are thinking of getting out of debt under either Chapter 7 or Chapter 13 of the Bankruptcy Code.

Is my court date really a court date at all?


Under Chapter 7 bankruptcy, or Chapter 13 bankruptcy, you are required to appear at a 341 Meeting of Creditors. This Meeting of Creditors is often referred to as the court date; however, it's not held typically in the courthouse. It is held at the trustee's office or at a governmental building in a conference room. The court date is basically a five-minute meeting, sometimes ten minutes, in front of a trustee. The trustee is going to ask a series of yes/no questions based upon the documents that were filed in your case. The trustee is appointed by the bankruptcy court to oversee the case to make sure that you are either paying back all you can pay back in a Chapter 13 or that you don't have any non-exempt assets that could be administered in a Chapter 7.

The trustee will swear you win. The trustee will look at your photo ID and your Social Security card. The trustee will examine your paycheck stubs and make sure that you have provided your most recent federal tax return in a Chapter 7 and whether or not you've taken the credit counseling session, which is required before a case could be filed. The trustee will then ask you a series of yes or no questions: What is your name? Where do you live? Did you sign the documents? Do you have any specific assets? Where do you work? What do you earn? Have you given away or sold anything for less than its fair market value? Do you expect to inherit any money in the future? Did you own a business? Did you transfer any real estate? Do you expect any significant change in income over the next six months?

A trustee in Chapter 7 bankruptcy is paid approximately 60 dollars per case. A trustee in Chapter 7 is not going to make a big issue out of minor personal property. An issue can arise if you have significant property above and beyond what the state of Illinois allows you to keep free and clear from your creditors.

Now, Chapter 13 court date is where the 341 Meeting is going to be a little bit of a longer process. Chapter 13 is a more difficult case, and the trustee in Chapter 13 wants to scrutinize your budget. For example, they want to look at your paycheck stubs and make sure that only ordinary deductions are coming out of those stubs. They want to look at your expenses and make sure that you are not putting too high a value on things such as food, clothing, transportation, utilities, and things of that nature. The Chapter 13 trustee wants to make sure that you dedicate all of your disposable income to your Chapter 13 repayment plan. So that meeting with the Chapter 13 trustee could last anywhere from 5 to 15 minutes, depending upon the case. The trustee may also want you to make amendments to your documents or provide certain documentation to justify some of your expenses.

In either a Chapter 7 or Chapter 13 bankruptcy case, that is the court date that most people refer to. It's actually a Meeting of Creditors in front of the trustee. Now, in Chapter 13, there is another court date called the Confirmation Hearing, but typically, the client or the debtor does not need to appear at that meeting. The attorney for the debtor will appear at the Chapter 13 Meeting of Creditors.

Therefore, if you are worried about having to go to court, or appearing in front of a judge, or testifying under oath in front of a jury, you can ease your fears. None of that is going to happen in a Chapter 7 or Chapter 13 bankruptcy case. The Meeting of Creditors often referred to as the court date is held in a conference room or office building, and it's relatively quick, painless, and efficient. Your attorney will be sitting right next to you, helping you if you have any questions. However, typically, the questions are either yes or no, and they are not very difficult.

If you have a qualified attorney who has prepared your bankruptcy paperwork and who has guided you in the process, then your court date or Meeting of Creditors should be very simple. If you file bankruptcy on your own, you can expect a nightmare Meeting of Creditors because typically, pro se or individual debtors who file on their own do not file the proper documentation, do not prepare the proper petition, and have a problem even in a Chapter 7 bankruptcy case, which is the easier of the two cases. I definitely do not recommend anybody to try to file a Chapter 13 bankruptcy without counsel.

Therefore, that's what your actual court date is, your 341 Meeting of Creditors. Should you have any problem, your attorney will be with you. Your attorney will guide you through the process, and your attorney will interject and help you if you are having a difficult time in front of the trustee.

Why do I need to reaffirm on a car but not on a house?


Reaffirmation is something that's required under the Bankruptcy Code with regard to certain property, and not with regard to certain other property. For example, if you are filing a Chapter 7 bankruptcy and you have an automobile that is financed, you have three choices with regard to that automobile. You can reaffirm the debt, you can redeem the debt, or you can surrender the car in exchange for eliminating the debt.

The reason why a reaffirmation, redemption, or surrender is required with a vehicle is based on the Bankruptcy Code. The Bankruptcy Code states that for a vehicle, a person must make one of those three decisions. In the past, before the Bankruptcy Code was amended, a person could simply continue to make payments on their auto. However, since the law was amended, making payments, known as the ride through, is no longer allowed. This is important because there are some finance companies, particularly Ford Motor Credit who will actually repossess a vehicle after a bankruptcy if it has not been reaffirmed, even if the debtor is current. I personally have seen this happen where someone has had their vehicle repossessed six months after their bankruptcy and they have not fallen behind on their payments. The Bankruptcy Code is strict and it says the debt must be reaffirmed if you wish to keep it or redeem.

Now, reaffirming a debt is simply signing an agreement stating that you wish to be bound by that debt. Therefore, that debt will survive the bankruptcy. In a Chapter 7, you have the option of turning in a vehicle and getting out of the debt. This is helpful if the vehicle is way upside down. For example, if you owe $35,000 on a $14,000 vehicle, this is your chance, as a debtor under Chapter 7, to surrender that vehicle in exchange for complete forgiveness of the debt. If, on the other hand, you reaffirm that debt, and something were to happen six months or a year down the road to that vehicle, then you are on the hook for the balance. Therefore, if you can't make your payments, the vehicle gets repossessed, they sell it at an auction, and they get a deficiency, you are going to be responsible for that deficiency because you signed a reaffirmation on that debt and agreed to be bound by the contract terms.

With regard to your residence, where you live, your home, the Bankruptcy Code was silent with regard to whether or not you need to reaffirm that. Since the code was silent, it actually spoke volumes. The fact that a vehicle is required to be reaffirmed, redeemed or surrendered and your personal residence, your real estate did not have that same requirement, then you are able to make voluntary payments on your mortgage and keep the house, even after the bankruptcy case is over, provided you continue to make those payments.

Now, there is a huge advantage in not reaffirming on a mortgage. The big advantage is if something were to happen down the road and you can't make your payments, and you have to give up your house and it goes into foreclosure, you are not going to be on the hook for any deficiency. What that means is the mortgage company can foreclose, eventually put you out of the house, but they can't look to you for any money. All they can do is take your house back. 

Now, some finance companies and mortgage companies are going to try to send your attorney a reaffirmation agreement on a home. However, a smart bankruptcy attorney is not going to make you sign a reaffirmation agreement on your home. That attorney is going to know that it's not required under the Bankruptcy Code and it is never to your advantage to sign a reaffirmation agreement on a home unless they are reducing the rate of interest or somehow decreasing the total balance.

So keep in mind, a vehicle needs to be reaffirmed if you want to keep it. Otherwise, it's subject to repossession, even if you are current. Your home mortgage does not have to be reaffirmed, even if your mortgage company sends you a reaffirmation agreement demanding that you reaffirm it. Trust your bankruptcy attorney who knows the law and knows your rights under the Bankruptcy Code. You do have to reaffirm, redeem, or surrender a vehicle. You do not need to reaffirm, redeem, or surrender a mortgage. You can continue to make voluntary payments, known as a ride through, for your home.

If you have any questions concerning whether or not you should reaffirm a debt on any property whether it be a mortgage, vehicle or other secured property, consult with your bankruptcy attorney and find out what the attorney recommends. There are some cases, even though it doesn't have to be reaffirmed, where reaffirming on a mortgage would make sense. I have seen interest rates dropped from 8 percent down to 2 percent on a mortgage. In some circumstances, it's worth the risk to sign that reaffirmation agreement knowing that you're going to get such a decrease in the interest rate that it's worth it. In other cases, the mortgage company is simply asking you to reaffirm under the same terms that you had before your bankruptcy case was filed. There is absolutely no reason to reaffirm on a mortgage for the same terms. The bankruptcy court does not require that you reaffirm it. Your attorney will advise you that you do not need to reaffirm it and your lender cannot force you to reaffirm it.

There are some circumstances where a lender says if you don't reaffirm the mortgage, we're not going to be able to offer you any kind of modification. I simply find this to be false. If the mortgage company wants to offer you better terms after your bankruptcy or modify your loan, they have every legal right to do so. What they are trying to do is they are trying to get you to reaffirm the debt before they will even offer you the modification. If that's the case, I recommend that you do not sign the reaffirmation and you look to refinance the mortgage two years after you file for bankruptcy. I have had clients who have had very much success in refinancing mortgages two years or so after their bankruptcy case was filed.

For more information, consult with an experienced bankruptcy attorney in your local area to learn all of your rights and obligations under the Bankruptcy Code with regard to your house, and/or your vehicle and the respective financing companies.

How should I respond to the bankruptcy trustee's questions?


The bankruptcy trustee is appointed by the bankruptcy court to administer cases under the Bankruptcy Code. If you are filing a Chapter 7 bankruptcy, the bankruptcy trustee is going to make sure that you are satisfying all the requirements of the Bankruptcy Code, and if you have any nonexempt property that's available to be administered to creditors, the trustee actually administers those assets. In a Chapter 13 bankruptcy case, the trustee wants to ask you specific questions based on your income, your expenses, your assets, and liabilities, to make sure that you are proposing the proper amount of a repayment plan under Chapter 13. Therefore, the two trustees under Chapter 7 and under Chapter 13 have different focuses and different purposes in mind. 

Typically, a Chapter 7 bankruptcy case is going to be a no asset case. What I mean by no asset case is there's going to be nothing that you have to give up in exchange for your fresh start. Most Chapter 7 bankruptcy cases are cut and dried with regard to assets. The trustee appointed by the bankruptcy court is going to look over your petition, see what type of property you have, and then see what type of exemptions you are applying.

For example, in the state of Illinois, you can protect up to $15,000 worth of equity in your home. For a joint case, husband-and-wife, that would be protecting up to $30,000 worth of equity. Therefore, if you have a house that's worth $100,000 and you owe $70,000, you can still file a Chapter 7 and get a fresh start. With regard to vehicles, you are allowed a $2400 exemption under the vehicle exemption law. For a joint case, that would be $2400 for each spouse to be applied toward one vehicle. 

Under Chapter 13, the trustee wants to make sure that you are putting all of your available income towards your repayment plan. The trustee doesn't want to see $800 in a monthly food expense for a family of two. There are limits on how much you can spend and get away with in terms of Chapter 13.

Therefore, when you are meeting with these trustees, either under Chapter 7 or under Chapter 13, you want to answer the question specifically as to what is being asked. If the trustee is asking you where you work, how much you make, and asking how much you spend, you want to answer it as succinctly and swiftly as available. You do not want to be expounding upon your answer, opening yourself up to further scrutiny. It is an examination. It is under oath. You are answering honestly. Your attorney will be there with you, but you do not need to answer anything above and beyond what the trustee is asking you.

If you have a qualified, competent, skilled attorney, then your paperwork is going to be prepared properly. Proper schedules are going to make your meeting easier than if your schedules are incomplete. Therefore, when you are meeting in front of the trustee, you do not need to feel nervous. You do not need to feel like it's an inquisition or an interrogation where you are going to be found guilty, or that you need to worry about whether they are going to look at some of your answers with disrespect. Simply answer the question being asked by the trustee, and you will not have a problem.

As always, honesty is the best policy. If the trustee asks you about a tax refund, and you know you have one coming, then, by all means, let the trustee know. If the trustee asks you about a particular property that might not be listed effectively on your schedules, then let the trustee know. You have to answer all the questions that are brought to you under oath unless you want to invoke your Fifth Amendment right. In all my years of practice, I have never had a client who had to invoke his Fifth Amendment because I want to make sure that all my clients are qualified and that they are honest when we prepare their bankruptcy documents.

So, whether you are filing a Chapter 7 or a Chapter 13, the trustee is going to ask you questions at a 341 Meeting of Creditors. You are going to provide to the trustee your photo ID, your Social Security card, and either your most recent taxes in a Chapter 7, or four years of federal taxes in a Chapter 13, and two months' worth of paycheck stubs or other proof of income. Once you give that information to the trustee and your paperwork is prepared properly, you are going to be able to answer all of their questions without any problem.

If your attorney sees some sort of a problem before the meeting, he or she will advise you on what type of issues that could occur. However, in the overwhelming majority of bankruptcy cases, the Meeting of Creditors goes off without a hitch. You simply answer the question being asked of you by the trustee under oath as simply as possible. If you are someone who is nervous about the meeting, you can ask your attorney in advance what type of questions you are likely to be asked. I give all of my clients a book that lays out the typical questions that a Chapter 7 bankruptcy trustee is going to ask during a meeting. Since most clients see the questions in advance, they are not surprised when they get to the meeting. A good bankruptcy attorney will make you feel comfortable with bankruptcy throughout the entire process from start to finish, whether it's Chapter 7 or Chapter 13.

What qualifies you to handle my case?


My qualifications are very vast. I have been practicing bankruptcy for over twenty-one years. I am a member of the American Bankruptcy Institute and a former member of the National Association of Consumer Bankruptcy Attorneys. I have counseled over 10,000 individuals and families with regard to bankruptcy, including Chapter 7 and Chapter 13. I have written extensively on the subject, including the book Chapter 7 Success: The Complete Guide to Surviving Personal Bankruptcy. I have written well over 1500 articles on the topic. I have been the subject of over 1000 videos that you can find on the Internet with regard to bankruptcy that I have been involved in.

I basically have made bankruptcy practice my life's work. I advise people on a daily basis with regard to income and expenses, assets and liabilities. I advise people on whether Chapter 7 is a good idea or whether Chapter 13 is a good idea. I get myself involved in pre-bankruptcy filing counseling where I let people know when it is a good time to file and when it is not. I also help people pay back as little as possible on a Chapter 13.

I am known by my colleagues as a fine bankruptcy attorney who does right by his clients. I am known by the trustees as a quality bankruptcy attorney who prepares excellent documents, and I advise my clients on all the issues that would come up on a bankruptcy case. I understand the Bankruptcy Code, and anything I don't understand, or have an issue with, I will research. There are simple things that happen in a bankruptcy case and there are difficult things that happen in some bankruptcy cases. Most attorneys can handle the simple stuff. I can handle the difficult stuff. I can make sure that, from start to finish, the clients are protected. I make sure that cases don't get filed with any assets or if there are assets, I make sure that the client is aware that there is a potential asset they might have to give up in exchange for a fresh start.

Under Chapter 13, I file the cases at the right time so that my clients have the full thirty days to make their first payment on a mortgage. Many attorneys will file Chapter 13 any day of the month. This is a problem because if you file on the twenty-eighth of the month and your clients' mortgage payment is due on the first, then they have anywhere from one to three days to make their mortgage payment. I like to file to give my clients as much time as possible before they have to make their regularly scheduled mortgage payment. Timing is everything in a Chapter 13, as well as in a general bankruptcy case. I make sure that I put the proper timing in place so that my clients have the greatest advantage.

I stay active with bankruptcy organizations. I stay active with the upcoming laws. I follow all the existing laws, and I keep up-to-date with the judges and court system. I basically dedicate everything I do every day towards helping bankruptcy clients and improving on the bankruptcy system. I sometimes find it difficult with some of the laws that are out there, and some of the things that my clients have to be put through. However, there is a way to deal with it. The best thing I can do is educate my clients so they know that they are going to get the best service possible, they're going to know what's happening in the bankruptcy case, and they're not going to be shocked by anything that comes through.

So, if you hire my law firm, you are going to be represented by a quality attorney, very educated, very helpful, kind, considerate, friendly, and most importantly, competent. What you want out of a bankruptcy attorney is someone who knows how to prepare the paperwork, knows how to advise you, and knows how to guide you through the system. With my law firm, you will be well protected, you will have everything you need for success, and you will have success.

What lengths do you go to in order to ensure all of my creditors are listed?


Well, at my law firm, we take extra measures to make sure that all of your debts are listed. We are first going to start with the interview process where we're going to ask you to fill out a bankruptcy questionnaire, which provides detailed information regarding whom you owe money to. We are also going to conduct the interview and ask you if you owe any particular types of debts such as student loans, recent taxes, parking tickets, and child support; debts that you might not think about, we want to make sure that you don't have those.

I also go the extra step in pulling your Equifax credit report for free. I pull this credit report at my expense, with your approval, because I want to make sure that all of the people that you owe money to are listed on your bankruptcy petition. If you miss a creditor, it can cause problems in the future, so I want to go above and beyond the call, so I actually pull one of your credit reports at my expense. I also encourage all of my clients to pull the other two credit reports that they can pull for free once a year at www.annualcreditreport.com.

I then take the information between the intake questionnaire and the Equifax credit report and any bills that the client may have, and I prepare a bankruptcy petition. Particularly, the creditors are going to be listed on Schedules D, E, and F. Schedule D is the secured debt portion such as vehicles, houses and other things that there's a security interest for. Schedule E deals with tax debt, child-support debt, and maintenance. Schedule F is the unsecured or miscellaneous creditor list. Schedule F is where most of the creditors are going to be listed because most people have a series of unsecured debts such as credit cards, medical bills, personal loans, utility debts, and debts for any kind of service such as dental, plumbing, or just about any other debts are going to be in Schedule F.

I then send the schedules and the petition to the client for review and signature. I ask the client to look it over, sign where indicated, and if they have any other bills, send those in with your petition, and I will add them on for free. There is no other attorney that I know of that pays for an Equifax credit report to ensure that they are listing all the debts. I want to make sure that we don't have a problem down the road where a creditor says “I wasn't listed; therefore, my debt is not eliminated.”

Now, in Illinois, there is a case called Mendiola, which stands for the theory that as long as the debt was a prepetition debt, in other words, a debt that was owed prior to the case being filed, and as long as the debt was inadvertently left off the schedules, then the debt is eliminated anyway. However, I don't want to get into an arguing match with a creditor who claims they weren't listed. I also don't want my client to be hounded by a particular creditor who they might have forgotten about, or didn't even know that they owed. So, by providing and pulling the Equifax credit report, I can be rest assured that most creditors, especially those that are issuing credit, such as credit cards and other lending institutions, are going to be listed on the bankruptcy schedules.

One of the most important things you can do as a bankruptcy attorney is to make sure that the schedules are prepared completely, truthfully and accurately. By getting all the information concerning my clients' debts, I am able to confidently file a petition knowing I've done everything I can do, other than scouring the public records which no attorney is required to do, to make sure that the schedules are accurate. The difference between my law firm, and other law firms, is that other law firms will say bring me your debts and I will put them on your petition. Other law firms will not take the effort to pull a credit report, do data entry on the information on that credit report, and then supplement it prior to the case being filed. I go the extra step because I want to make sure that my clients have the best experience they can when getting out of debt through either Chapter 7 or Chapter 13 of the Bankruptcy Code. 

If you try to file on your own, you are required to find the proper address of where you need to send the bankruptcy notice. If you file through my office, we have a database of twenty-one years of experience of listing of creditors anything from the IRS to the state of Illinois, to the city of Chicago, the Commonwealth Edison, to Night Court Gas; we are going to have the proper addresses to send the notices to. Some of these notices change on a yearly basis. The IRS just recently changed where they want their notice to go. These types of things benefit you when you use a bankruptcy firm with an attorney such as myself, who go the extra mile in making sure that all of your debts are listed, all of the creditors are listed properly, and that bankruptcy notices go to all creditors in a timely manner. I will even make an effort to fax particular creditors when we need to. For example, if someone is being garnished, or someone's bank account has been attached, we want to make sure we get the bankruptcy notice faxed out before the bankruptcy court sends it through in the regular mail.

If you hire my law firm, you are going to be treated with respect. You are going to get an incomparable service, and you are going to know that your case is being done properly, legally, thoughtfully, and perfectly. In addition, if you have any questions concerning bankruptcy, or you need to know how to list the creditors, or which creditors need to be listed, you can contact my office for help.

Do you charge a flat fee or an hourly charge?


In most bankruptcy cases under Chapter 7, I charge a flat fee. The flat fee can range anywhere from $750 up to $2500 depending on the type of case. Some cases require very little work, and other cases require a ton of work. I base my flat fee on what I see in front of me. If you are someone who has less than ten creditors, very little in the way of assets, and the type of debts you have don't seem to cause any big issue, then you are looking at a relatively low flat fee. If, on the other hand, you have a lot of debt, and the type of debt that could cause a problem, such as IRS debt, student loans, city of Chicago violations, you are going to be looking at a higher fee because of the amount of work required in your case.

Most attorneys will charge a flat fee for bankruptcy. Some charge based on the amount of debt, but I like to charge based on the amount of work involved because I think that's what is fair. If you have a simple case, you're going to have a reasonably low attorney fee. I always work up a payment plan and I always help you in any way that I can.

Under Chapter 13, we also charge a flat fee, which is approved by the bankruptcy court in this jurisdiction, and that fee is $3500 over the life of the case. That flat fee means no matter what happens in your Chapter 13, whether it's month one or all the way to month sixty if your case goes full term, your attorney's fees are protected. Now, some firms charge an hourly rate under Chapter 13 and the fees can well exceed $3500, based on the amount of work that's involved. I think $3500 is a fair fee. I get paid a little bit over time, based on the monthly payment to the trustee and as long as your case succeeds, I get paid. If your case does not succeed and it ends quickly, then I will not get paid. So there's definitely an incentive to make sure that your case is done properly, to make sure that you are advised on all the issues, and make sure that you make your payments, and that you have the ability to make your payments.

Some bankruptcy law firms will file Chapter 13, knowing that the case is not going to make it. Those attorneys are simply trying to grab a fee upfront or trying to grab a quick fee in the beginning knowing that the client has no ability to make the case work. I, on the other hand want to make sure that the Chapter 13 is going to work. Not just in month one or month twenty, but all the way to month thirty-six or sixty if that's how long the case is set to make it. The reason why I want it to work is there's a budget that has to be applied in every Chapter 13. If the amount to pay the Chapter 13 trustee exceeds what my client can really afford, then they are never going to make it. I don't want to file a Chapter 13 bankruptcy case for a client if the case does not have the ability to make it. I want to look at the income and expenses and make sure that there's enough disposable income per month, if the client properly allocates the finances, to make the case work.

Therefore, whether you are doing a Chapter 7 or Chapter 13 through my office, you are going to be charged a flat fee. The great thing about a flat fee is that you know what it's going to take. You know how to work the payments. In addition, you are protected, no matter what happens in your case, whether it is difficult, simple, a lot of hours involved, or a few hours involved; you know you are protected. If you go to other firms that charge an hourly rate, you really do not know with any certainty what you are going to be charged, what your case is going to cost in the long run, what type of work is involved, and whether they are billing you properly.

Therefore, a flat fee is just a great way to go because you know it is one fee, you know whatever it takes is going to be taken care of, and you know you are going to have a highly skilled, competent bankruptcy attorney working on your behalf. You get the benefit of twenty-one years' experience when you hire my law firm. I'm a much different attorney now than when I started out twenty-one years ago. You get the benefit of all that experience and all that knowledge wrapped up into your case for a reasonable flat fee where you can make monthly payments.

When should I take the pre-filing credit counseling?


In order to file bankruptcy whether it is Chapter 7 or Chapter 13, there are several requirements that must be completed. One requirement that pertains to both types of bankruptcies is the fact that you must take a credit counseling session before your case is filed. Now, there are some restrictions on how much time can pass between taking the filing and filing for bankruptcy. If you take the credit counseling more than 180 prior to filing, then your counseling certificate technically has expired and you will have to take it again. 

Now, credit counseling is a one-hour or an hour and a half session done over the telephone, online, or in person with a credit counselor who has been approved by the United States Bankruptcy Court. A session that lasts for that time period will cost anywhere from $15-$25, and sometimes even $50 depending on the jurisdiction. I like to advise my clients not to even consider taking the credit counseling until your fees are paid or until you have all of your other requirements satisfied. For example, you will be required to provide the most current federal tax return that you have. If you haven't filed taxes for the last year, then you might as well get that taken care of before you think about taking credit counseling. You must also provide your paycheck stubs or equivalent proof of income for the past two months from other sources prior to a case being filed. If you haven't gathered all of that information, then I do not recommend you take the credit counseling. Most importantly however, is if your attorney is not going to file your bankruptcy case until your fees are paid in full, then by all means, don't even think about credit counseling until your fees are paid in full. Once you have satisfied those other requirements, the last thing that you should do prior to filing is to take the credit counseling. Since it can be done in approximately one hour or an hour and a half's time, you can literally do it the day before you want to be filed or even the night before you want to be filed. 

Now, in some cases, attorneys will file with less than full payment. In those circumstances, the attorney is going to engage in a Post-Petition Retainer Agreement, whereby the attorney agrees to do a certain amount of work prior to filing and then a certain amount of work after filing for a separate fee. If your attorney is willing to do that, then you can take the credit counseling right away because you know as soon as you get those requirements satisfied, he or she is going to file on your behalf.

I have had clients who have rushed to take the credit counseling class only to lapse in their payments and to let well over six months past. Unfortunately, I have to advise those clients that despite the fact that they did the pre-filing credit counseling once, they are going to have to do it again because the certificate has expired. When they passed the Bankruptcy Reform Law, they definitely wanted you to take the credit counseling within 180 days of filing. It did not say that you needed to take it once or that if you took at once, it would be good for a certain number of years. It specifically states within 180 days of filing you must take the pre-filing credit counseling.

Now, another thing to note about the credit counseling is it can be taken the same day as the filing. When the law first changed, there was some confusion on whether or not it had to be a calendar day before you could file. So, for example, did you have to take it at 11:00 PM the night before? Did you have to then wait until the next day to file or could you have filed it right after you took it on that same day? The law is pretty well settled now that as long as you take the pre-filing credit counseling prior to filing, it will be accepted by the court. Therefore, this comes in handy, because if I am trying to save a home from foreclosure so I need to file right away and someone comes to see me in the morning, I can have them take the credit counseling on the spot while I'm preparing the documentation for the case. That way, as soon as they are completed, we can then go through the documents and have your case filed.

There were so many areas under the new bankruptcy laws that were unclear. This filing of the credit counseling or taking the pre-filing credit counseling was one such area. It's good to know now that you can file somebody the same day he or she takes the pre-filing credit counseling.

When is the right time to apply for credit after bankruptcy?


You can apply for credit immediately after filing a Chapter 7 bankruptcy. However, I want to caution you that the type of offers you are going to receive, and the type of credit that you're going to be allowed to obtain immediately after a bankruptcy filing, may not be to your advantage.

After you file a Chapter 7 bankruptcy, you become a statistic and your name is part of the public record. You are going to find offers from car dealers and other lenders who are looking to engage you in business. The reason they are engaging you in business is not necessarily to help you, it is to help them make money. Lenders understand that after a Chapter 7 bankruptcy filing, you cannot file again for eight years. Those lenders are hoping that you will get back on the credit merry-go-round so to speak. They want you to pay an annual fee with high interest, the late fees, the over limit fees, and the interest fees that you grew accustomed to prior to your case being filed. 

What I like to recommend to my clients is that you go at least six months on a cash basis. What that means is that if you don't have the funds to pay for something in full in cash, then you don't buy it. You can always get a secured credit card after a Chapter 7 bankruptcy case by putting a certain amount of dollars in a bank account, and in exchange for that, you will get a credit card where you are able to use your money but with the convenience of plastic. Secured credit cards are great, because eventually they start reporting positively to the credit bureaus and in due course, they can be converted into an unsecured credit card for you to use.

If you want to buy a home after a Chapter 7 bankruptcy case, then I recommend you wait at least two years after the date of filing. You also want to make sure that you don't have any negative credit incurred or listed on your reports after your bankruptcy case is filed. I recommend that my clients check their credit bureau six months after filing and then again in another six months after that. You can check your credit for free once a year at www.annualcreditreport.com. On that website, you will be able to gain access to each of the three bureaus without a charge at least once a year. Some clients want to pull one every four months so that they have a rolling view of one of their credit bureaus as time passes. This is a very good idea; however, most clients don't have the discipline to do that. Therefore, provided you can pull it once a year at www.annualcreditreport.com, you are doing yourself a good service.

When you pull the credit report, you want to make sure that all the negative items that should have been removed or concluded as part of your bankruptcy are, in fact, removed or updated to reflect bankruptcy filing. In many cases, clients will call me and say hey, I filed bankruptcy with you and that American Express account is still showing due and owing. Why haven't they updated it? Everybody else updated everything and included bankruptcy next to the name. 

In those circumstances, you want to start an online dispute with the credit bureau, basically saying that the debt due to American Express, or whichever creditor who might be reporting negatively was included in my Chapter 7 bankruptcy and include a copy of your discharge as well as a listing of that creditor. The credit bureau will then reach out to that creditor to find out whether or not the information is true and accurate. If the credit bureau does not hear a definitive answer back within thirty days, then that item must be removed from your report. By taking these proactive steps to clear your credit, you will enhance the chance of getting decent offers for credit six months to two years down the road. 

You can purchase a vehicle immediately after filing a Chapter 7 bankruptcy, before your case has even gone through to completion. This is known as open bankruptcy financing. Auto lenders understand that once you file for bankruptcy, any lending or agreement that they do with you is a post-petition debt and cannot be eliminated in bankruptcy. Many of these auto financing creditors want you to jump back into an auto loan immediately, so that you can start making payments in the hopes that you are going to pay them their interest, which is going to be a lot higher than if you had never filed bankruptcy before.

Therefore, there is availability of credit after a Chapter 7, two years on a mortgage, immediately on the vehicle, and pretty rapidly on other forms of credit. However, make sure that you scrutinize the deals and make sure that you are not getting into a situation where you are not going to be able to make the payments under those loans.

Should I reaffirm on my car if it's upside down?


When you file for Chapter 7 bankruptcy relief, you will have three options with regard to a financed vehicle. The first option is to reaffirm the debt. To reaffirm a debt means to sign back on the dotted line and go on the hook for that vehicle. That means that if something were to happen down the road to that vehicle and you did not have the ability to pay for it, it could be repossessed, sold at an auction and you could be pursued for the deficiency. You want to be very careful when you reaffirm on a vehicle that you are making a wise decision, that you have the ability to pay for that vehicle, and that you want to keep that vehicle beyond the bankruptcy filing.

A second option with regard to vehicles is to redeem the property. By redeeming the property, you are basically paying the creditor in a lump sum the fair market value of the item in exchange for wiping out the debt. Section 722 of the Bankruptcy Code provides for this redemption. There is a particular lender; I believe it is the US Bank, who is heavily involved in 722 Redemption Financing. In those cases, 722 Redemption Financing becomes the new lender. They pay off the old lender, the fair market value of the car in one lump sum, and they take out a new loan with you. They jump into the place of your old lender for less money.

Let me give you an example. If you have a vehicle that is worth $10,000 and you owe $20,000, then 722 Redemption Financing will pay off your old debt for the market value, which is $10,000, and enter into a new loan with you for $10,000 plus interest, fees, and other calculations. The good thing about a 722 Redemption is that you are no longer upside down on your vehicle. You have a new lender and your old lender has been satisfied for the fair market value.

The last option that you have with regard to a secured vehicle is to surrender the item and complete satisfaction of the debt. The question of whether to surrender a vehicle depends upon the equity position of the vehicle, whether you want the vehicle moving forward, and whether you can afford the vehicle moving forward. I have had many cases where I have had clients who owes twice as much as what the car is worth because they kept rolling over prior auto financing debt into their new financing debt. In those circumstances, this is a perfect opportunity for a client to give back the car, get out of the debt, and get a complete fresh start.

Now, many clients will say, "how am I going to ever get financing again?" They are going to get offers for lender financing on vehicles before the bankruptcy case has even completed. This concept is known as open bankruptcy financing, and it is available to most clients, although the interest rate is higher.

If your car is significantly upside down, then I seriously recommend to either surrender, or look into the 722 Redemption Financing. I don't see any reason to reaffirm on an upside down vehicle if you are technically just going to be paying the same rate, and the same dollar amount with no reduction in principal. Some clients are just so in love with their car that they want to sign on the dotted line, they want to reaffirm it, they don't care what they are paying, they don't care about the interest, and they don't care anything about the balance. For those clients, all I can do is counsel them. I can't convince them to take action in terms of either redemption or surrender. I can't even convince them that they'll be able to get financing again. Most clients are skeptical about that, because they feel, “who is going to finance me if I just filed for bankruptcy and eliminated the debt?”

Clients have to trust the attorneys and understand that we know what we are doing. We have seen this time and time again. We know what kinds of options are available to our clients. I can only recommend. My client will make the ultimate decision on whether they want to reaffirm on a debt when they are completely upside down. The client has the final say. If I feel that the reaffirmation agreement is completely against their interests, I will still let them enter into it, but I will have them sign a statement that they were advised against it. That way they know that they are doing something that their counsel did not agree with, but their counsel allowed them to do it because it technically is the debtor's choice on whether he or she wants to reaffirm a debt, even though it's way upside down.

Will my non-filing spouse be affected by my filing bankruptcy?


This complex question involves a complex answer. If you are married, then your spouse's income and your spouse's expenses are going to be a factor in terms of whether you are eligible to file under Chapter 7. In addition, if you aren't eligible to file under Chapter 7, it is a factor in terms of what you are going to have to pay back under Chapter 13. If you are separated from your spouse, then your spouse is not going to be a factor in terms of income. If you have debt individually, and your spouse has no debt with you, then your spouse will not be affected, other than providing their income for calculations as to whether or not you can file, that spouse. In other words, if your own credit cards, your own auto financing, your separate mortgage debt, your separate utility expenses, are in your name only, it will not affect the non-filing spouse.

I do hundreds of cases where only one spouse files for bankruptcy and the other does not need to file for bankruptcy. The exception to this rule would be if there were joint debts. For example, if the husband is filing a Chapter 7 to eliminate an American Express credit card debt that is in both his name and his spouse's name, then the credit card company has the right to come at the spouse to collect the debt after it is discharged by the husband. Many people feel that if one person files for bankruptcy and lists that creditor, that the creditor is now gone. The truth is, there's joint and several liability on joint debt. So if the husband files for bankruptcy and the wife does not, and they both are on that credit card as a responsible party for payment, then the lender or the credit card company can pursue the non-filing spouse.

One of the things that I ask clients who are married and who are thinking of filing individually is whether there is joint debt between the two of them. In many cases, people have separate accounts and they are not co-mingled. In those cases, I can honestly tell my client, the person who is going to be filing, that your wife or spouse will not be affected because you don't have any joint debts. In other circumstances, there is joint debt, but the people want to file anyway because only one wants to file.

If we moved to Chapter 13 now, a special section of the Bankruptcy Code allows a joint debt to be paid 100 percent in full, while other creditors such as other credit card companies, can be paid less than in full. This particular area of Chapter 13 provides for cosigned debt to be paid as a special class. By paying the cosigned debt as a special class, only one spouse really needs to file.

Let's take a situation where a gentleman filing has a lot of credit card debt and one of those credit cards just happens to be in the name of both he and his spouse to the tune of $10,000. We can file a Chapter 13 just for the gentlemen, and list all of his debt and provide a special payment to the joint credit card company of 100 percent payback. The reason we can do 100 percent payback is because the Bankruptcy Code allows a special class with regard to joint debt. So under a Chapter 13, the non-filing spouse would be protected as long as the filing spouse agrees to pay back 100 percent of that debt.

Now, you might say this works out to a disadvantage because the other creditors are treated equally. Well, this exception has been carved out in the Bankruptcy Code to protect a co-debtor. Therefore, whether you are filing Chapter 7 or Chapter 13 makes a big difference on how cosigned debt is going to be treated. In a Chapter 7, the creditor can simply go after the non-filing spouse for 100 percent of the debt. In a Chapter 13, if the filing person is paying back the debt as 100 percent as a special class, then the non-filing spouse is protected.

Consult with an experienced bankruptcy attorney to determine whether or not you should file individually or jointly, and if you do file individually, whether or not you have a way to protect the non-filing spouse.

What happens to funds garnished from my check prior to filing?


One of the things interesting about bankruptcy filing is people will often wait until the last minute. People know they are in debt. People know they are being harassed by creditors. They know they are receiving notices in the mail. They might even notice that there's a court proceeding going on. However, for many people, the thought of filing a bankruptcy is repugnant, and they want to delay the inevitable for as long as possible, hoping for some reason they won't have to file. For example, maybe there will be a change in income that will allow that person to pay off his debt. In other cases, a family member might be promising to help them out so they don't have to file for bankruptcy.

Inevitably, while all these dreams and wishes are happening, creditors are pursuing collection activities. Once a creditor has a judgment in state court, that creditor has several options to collect on the debt. The creditor can file a wage garnishment and collect up to 15 percent of your gross income per pay period. The creditor can also attach a bank account, freeze the bank account for two times the judgment amount, and then petition the court for a turnover order to collect their judgment.

Many times, clients will come to me after they are already being garnished and they want to file for bankruptcy. The minute I file for bankruptcy on behalf of a client, I can stop a wage garnishment. By stopping a wage garnishment, any amount taken out of their check after the date of filing belongs to the debtor. Therefore, in a case where somebody continues to take out wage deduction garnishments after the case is filed, I can send a letter to payroll, I can send a letter to the creditor, and I can have any funds removed after the date of filing back to the debtor.

However, any funds that are removed or garnished prior to the date of filing rightfully belong to the creditor. My hands are tied at that point. The date of filing the bankruptcy is the controlling date. Therefore, if you are someone who knows that your wages are subject to garnishment and you allow them to incur cycle after cycle, that money is gone. That money rightfully belongs to the creditor. However, once we file the bankruptcy, any further wage garnishment will stop immediately.

Now, with regard to a bank citation, there is something called a turnover date, or a return date. The creditor first notifies the bank that there is a judgment, and that they want them to freeze the account for up to two times the dollar amount of the judgment. Then there is a follow-up court date. The follow-up court date is where the creditor is going to go in, and with the bank's answer on file, say to the judge, the bank is holding X amount of dollars. We want X amount of dollar turnover to our client in satisfaction of the judgment. Since there is a gap between when the bank account is frozen and when the creditor can actually go into court and get a turnover order, I, as a bankruptcy attorney, have time to intercept and stop that.

Therefore, unlike the wage garnishment where anything taken before the case is filed is gone, in a bank citation, I have a chance to jump in while the account is frozen, and file a bankruptcy case before there's a turnover order. In those cases, the money being held in the bank will be released, and the debtor will receive all of the funds. Timing is critical when you file a Chapter 7 bankruptcy case. If I file a bankruptcy case one day after there is a turnover order, then it's too late to get that money back.

Now, a trustee in a Chapter 7 bankruptcy case, depending upon how much was taken, can treat that as a preferential payment to a creditor, and try to do a long arm and get that money back. However, in essence, if it's already gone to the court order for turnover, it's too late.

If you are someone who is thinking about filing for bankruptcy, and you have either a garnishment or a bank citation pending against you, you might want to speak with a bankruptcy attorney immediately. Timing is critical in determining whether you're going to be able to stop a garnishment, whether any of that money will be refunded to you, and whether you can stop a bank citation from having it turned over to a creditor. Get in touch with a bankruptcy attorney immediately. Time is of the essence when it comes to filing.

How does my office protect your private information?


Every one of my clients is referenced by name and not by number. Therefore, when you call my office, we are going to look up your file by name. You are not going to be issued a number internally. The only number that you are going to have through my office is your actual bankruptcy case number.

We have a bankruptcy questionnaire, which we have you complete that does have sensitive information such as your Social Security number on it. That questionnaire remains in the file for the life of your bankruptcy case and beyond. In fact, that questionnaire is safeguarded for the rest of the time in my office. 

Information is also protected with the bankruptcy court. There is a special form called a Statement of Social Security Number, which is a one-page document that clients will sign. The document basically lists out in full numbers the Social Security number and then it shows how it's going to look redacted with all of the bankruptcy filings. This Social Security statement is filed separately from the rest of your documents. It has to be scanned in, it has to be submitted to the court, and the court has the actual form that shows your full Social Security number. Creditors, and other people looking into your bankruptcy, do not have access to this item.

One notice will go out to the creditors with your Social Security number on it. The reason for this is that creditors must have the ability to locate you in their system so they can abide by the Automatic Stay and stop sending you notices. Any future creditors, we will obliterate the number so that all they get is proof of filing. My office also will give you back all of your bills, which include sensitive information. This is done at the 341 Meeting of Creditors, approximately four to six weeks after your case is filed. You will also be given back all of your tax return information. My office will hang onto the questionnaire, the rest of the documents will be filed with the bankruptcy court, and the remainder will be returned to you. Any additional documents still left in the file will be shredded.

The reason I bring this to your attention is because there was a firm that was dumping clients' information into a dumpster, and people were picking it out of the dumpster. We make sure that none of your sensitive information, or any of your information, leaves the office without being shredded. We also make sure that any sensitive information or bill information is returned to you. Once my office has prepared and filed your bankruptcy case, there is no reason for me to hang on to your taxes, or your bills, or any other personal documents that were requested in an effort to file your bankruptcy case properly. You have the option as the client to determine whether you want to keep those items in the folder that I give you or discard them to your own liking.

What you need to know is when you are dealing with my office, you are going to be protected in every way, shape and form. You are a person. We will look you up by name. You will be referenced by name. You are never a number in my office. The only number that you ever get and the only number that you ever want is your bankruptcy case number, because that means relief; that means relief under Chapter 7 and means relief under Chapter 13.

We make every effort to get your information to the trustee as required by law whether that is via email, via fax or hand delivery. Then return that information to you once we have provided it to the trustee. There are certain circumstances where the trustee will want additional information, or the trustee will state that they didn't receive the information the first time. In those cases, we will make sure that the trustee is updated. We will even hand deliver the documents to the trustee in the event that the trustee says that they didn't receive it.

Your personal information is important to you because it's going to be the basis for your fresh start. You want to protect your Social Security number at all times. You don't want to keep your Social Security card in your pocket, purse, or wallet. You don't want to let anybody have your security number for any reason. Protect your Social Security number because that is the basis for how credit is established. Identity thieves can do terrible things to you once they have your name, your address, and your Social Security number. They can open up debt in your name. They can take out lines of credit, including mortgages and vehicle purchases if they appear to be you.

So, be very careful with what you do with your Social Security card, as we are very careful with the information that you provide to us. We want to have the great experience for you through my office and through a bankruptcy filing. We want to make sure that you have records of everything that's filed, and we return documents of everything that is provided so that we can prepare your case. If you follow these instructions, and if you choose my law firm, you are going to be in great shape going forward, both from a financial aspect because you have eliminated debt and from a financial management standpoint because you are going to learn things from our office to protect yourself in the future.

Why do I have to appear before a bankruptcy trustee?


The Bankruptcy Code spells out the law with regard to bankruptcy filing. One particular section known as Section 341 Meeting of Creditors is the section that requires a debtor to appear before the trustee to be examined under oath. The main reason you have to appear is because you have to testify that you are, in fact, who you say you are and that these are, in fact, your debts, your assets, your income, and your expenses. If you were not required to appear, the trustee would have no way to examine your case other than looking at your bankruptcy petition and sending correspondence back and forth.

Bankruptcy is a right under the federal government, but it is with limitations. There are many requirements that you must satisfy such as the pre-filing credit counseling, providing the tax returns, providing your paycheck stubs, and appearing at a Meeting of Creditors. Now, the trustee who oversees the Meeting of Creditors wants to ask particular questions required by the Justice Department, the bankruptcy court, and the US Trustees Office. These questions include did you sign the document? Did you list all your assets and all your liabilities? Are you working? Have you given anything away, or sold anything at a price below its fair market value? Do you expect to inherit any money? Can you sue for any money for personal injury or workers' compensation injuries? Have you owned a business in the last four years? Have you owned any property anywhere in the world? These types of questions are what the trustee is going to ask you, to make sure that you are first, entitled to a fresh start, and number two, that you do not have any nonexempt assets that can be taken and sold to pay your creditors.

Chapter 7 bankruptcy is known as liquidation bankruptcy. In 99 percent of the cases, there is no property to liquidate. However, in certain circumstances, people are willing to give up property in exchange for a fresh start. In those cases, the trustee is going to sell that property, petition the court for the authority to sell it, as well as provide a pro rata distribution to creditors that once again has to go before the approval of the court. The trustee's job in a Chapter 7 bankruptcy case is to administer any nonexempt assets. The only way to find out if you have any nonexempt assets is to interview you under oath, with proper identification, to make sure that you are the person. That is the sole reason for the Meeting of Creditors in addition to allowing creditors the opportunity to appear and ask questions as well.

However, a creditor can bring its own meeting under Section 2004 of the Bankruptcy Code. 2004 exams are rare, however, in some circumstances, a creditor may have a lot of questions for the debtor, and there is not sufficient time afforded at the regular 341 Meeting of Creditors. In cases, where a creditor wants to seek additional information, that creditor can bring a motion to hold the 2004 exam which the court will readily approve. Then the attorney for the debtor and that creditor can arrange for the two to sit down once again under oath to answer questions regarding assets, income, and anything on the bankruptcy petition related to finances.

If you are someone who is thinking of filing bankruptcy, you do not have to be concerned about the 341 Meeting of Creditors. You just have to follow the advice of your counsel, answer the questions honestly, and provide the required documentation at your meeting. If you follow these instructions, you will be like the overwhelming majority of Chapter 7 bankruptcy clients who have a tremendous experience of getting out of debt through my office.

Do I really need to file for bankruptcy?


The decision to file bankruptcy is a personal one. Whenever someone comes to see me in my office, obviously something is bothering him or her with regard to debt. Nobody comes to see me when he or she has a ton of money and no debt problems. For every client that I meet with, there is going to be a solution, whether it is a Chapter 7, or a Chapter 13, or some sort of payment plan, or nothing. For everyone who comes to see me, usually something's got them down.

What I do in the initial consultation is interview a client and find out what they own and what they owe, how much they earn and how much they spend per month to determine whether this person should be a Chapter 7, or whether this person should not file it all, or whether this person should be a Chapter 13. 

Most consumers are not aware of what types of debts can be eliminated, and what types of debts cannot be eliminated. For example, I have had people who have come to see me and the only debt they have was an outstanding student loan. For those people, you cannot eliminate a student loan. Your only option would be a Chapter 13. There are other people who come to see me and they have a lot of money in the bank. They have a paid off vehicle and they have $80,000 worth of credit card debt they want to eliminate. For those people, Chapter 7 is not going to be an option unless they are willing to give up property. Chapter 13 could be an option provided they want to make a payment plan of a significant amount of the debt.

What I hear a lot is the question do I really need to file? I like to answer clients this way. If you feel that you can get out of debt on your own within the next six months without causing an extreme hardship to you or your family, then, by all means, you probably don't need to file a bankruptcy and you should try to get out on your own. If, on the other hand, at the end of a six-month effort, you are going to be still significantly in debt, or you are going to cause extreme hardship upon your family, then I recommend you file for bankruptcy. It is at that point that we can determine whether a fresh start under Chapter 7, or a reorganization under Chapter 13, is your best option.

For many people, they have a home with no equity, they have a vehicle with no equity, and they have a lot of unsecured debt. Unsecured debt, such as credit card debt that carries high interest, is very tough to bail yourself out of. The interest is so high that unless you have an extreme change in income, or unless someone is willing to help you out, you're not going to get out of the debt readily. Therefore, for those people, Chapter 7 is going to be a great idea.

For other people, they are trying to save a home from foreclosure or they are trying to keep a car that is subject to repossession. If those people have the ability to repay a little bit over time or if their income exceeds their expenses each month, then Chapter 13 would be a good option. The great thing about Chapter 13 is that you don't necessarily have to pay your debt back in full. In many cases, creditors can be paid less than in full, especially unsecured creditors.

Ultimately, the decision on whether to file a bankruptcy is up to the client. I, as a bankruptcy attorney, will lay out what needs to be done, what relief can be obtained, and recommend a plan of action. It is from that point that it is out of my hands. The client has to make the decision. Many clients take the information, they read my material, and they continue to struggle and make some mistakes like depleting their 401(k) only to realize that they are still in debt. Those types of clients who don't take immediate action fall deeper into debt and continue to struggle.

The best advice I can give a client who is thinking of filing is to take quick action one way or another. If you are struggling financially and an attorney is recommending a solution for bankruptcy that is going to work, and it's going to eliminate your problems, then I would strongly consider that advice, and consider filing for bankruptcy relief. If, on the other hand, the attorney is telling you well, you really don't need to file, you have the ability to pay this, or if you file, you're going to lose your assets and things of that nature, then take his advice, too, and think about not filing. 

The worst thing you can do is to do nothing when you need to do something. Consult with an experienced bankruptcy attorney. That attorney will give you the guidelines. That attorney will give you the advice that you need. In addition, if the attorney is worth his salt, he will not try to convince you to file a case when a case does not need to be filed.

What is the Automatic Stay in bankruptcy?


The Automatic Stay is something that is created the minute your case is filed under either Chapter 7 or Chapter 13 of the Bankruptcy Code. It is basically the protection from future actions by creditors without leave of court. For example, if you are being garnished, or if you are summoned to court, the filing of a bankruptcy creates an Automatic Stay, which then can be sent to those creditors to stop the further collection activity.

The Bankruptcy Court will send an official notification of your bankruptcy filing to every creditor that is listed in your petition approximately five to seven business days after filing. However, some creditors need immediate awareness of your bankruptcy filing. That would include a lender who wants to foreclose, a lender who wants to repossess a vehicle, a utility that's trying to shut off service, a license that's going to be suspended based on parking tickets or moving violations, or any other creditor that might need immediate attention to stop further collection activity. In those cases, my office will prepare a one-page document entitled Automatic Stay. 

It will have the debtor's name, the debtor's case number, the date it was filed, as well as some instruction as to what the Automatic Stay is, and what actions creditors are no longer allowed to take. We commonly fax an Automatic Stay to utilities when clients are subject to shut off and we commonly fax the Automatic Stay to mortgage lenders subject to foreclosure proceedings or a sheriff's sale date.

The Automatic Stay in a Chapter 7 lasts for as long as the case, unless the creditor brings a Motion to Modify the Automatic Stay. If the Automatic Stay is modified, then creditors can proceed against the property of the debtor. One such example would be in the case of a vehicle where the debtor is behind, and is not making current payments to stay current. In that situation, an auto finance company, during the Chapter 7 bankruptcy case, might bring a Motion to Modify the Automatic Stay to allow that lender to recover the collateral through repossession and sell it. This does not mean that the debtor is personally going to be responsible for the debt. It simply means that the creditor is able to recover their depreciating collateral and safeguard it.

The same is true with a mortgage lender. If a Chapter 7 bankruptcy case is filed and the homeowner is not current on the payments, then the lender can simply bring a Motion to Modify the Automatic Stay and have the right to either begin a foreclosure action or continue a foreclosure action that was in place prior to the case being filed.

The total bankruptcy case is going to last anywhere from 90 to 110 days, and then, at that point, the debtor would receive a discharge. From that point, the Automatic Stay that was protecting the debtor during the duration of the case turns into a discharge injunction, whereby these same creditors cannot pursue the debtor, because not only was there an Automatic Stay, but the case has gone through to discharge. If a creditor violates the discharge injunction or discharge of the Automatic Stay, then your bankruptcy attorney does have the right to bring a motion before the court for sanctions for violating the Automatic Stay, or in the case of a discharge case, bring a Motion to Reopen, to try and find the creditor sanctionable for violating the discharge injunction.

If you are continuing to receive harassing phone calls or bill collection letters from creditors after your bankruptcy case has been filed, technically that is a violation of the Automatic Stay. However, if a creditor was not notified of your bankruptcy, then it is an innocent violation of the Automatic Stay and not subject to sanctions. You should contact your bankruptcy attorney with regard to any creditor who continues to call, send you letters, or continues to serve you legal documents while your case is in progress or after your case has gone to completion. Your attorney will know how to bring a motion back before the judge to hold that creditor sanctionable for violating the Automatic Stay and the discharge injunction. 

Most clients want the Automatic Stay in place as soon as possible. This occurs once the case is actually filed. To get filed, ask your attorney what requirements need to be satisfied for he or she to file your case. Some attorneys require full payment, and some do not. All attorneys are going to require, as the Bankruptcy Code mandates, that a credit counseling session be taken. You will also need to provide your most recent federal tax return and two months' worth of paycheck stubs or other forms of evidence of pay in order to get your pre-filing bankruptcy requirements satisfied.

What does the bankruptcy petition involve?


The bankruptcy petition under Chapter 7 of the Bankruptcy code is a long document containing anywhere from 40 to 70 pages of legal information. The bankruptcy petition starts with information about the debtor: the debtor's name, address, Social Security number, as well as whether they filed for bankruptcy in the past eight years. The bankruptcy petition then talks about real estate property under Schedule A. This is where you would list your home, or your timeshare, or any other real estate that you have any interest in whatsoever. 

The next section is Schedule B, which lists your personal property. Under Schedule B, you have to list checking accounts, savings accounts, money on hand with the landlord, your personal household goods, clothing, wearing apparel, and interest in any kind of 401(k), profit sharing, or other retirement account. You have to list if you have a vehicle. You have to list if you have any animals, and you have to list if you have the right to sue anybody for any personal injuries or workers compensation awards. You also have to indicate if you have any life insurance, and indicate whether it is term or whole life. You also have to list whether you have any cash on hand.

The next part of the bankruptcy petition is Schedule C, which is the exemption section. This section allows you to protect your property, or a great portion of your property, by using existing state laws of exemptions. In the state of Illinois, you, as a debtor, are able to protect up to $15,000 of equity in your primary real estate. You are also allowed to protect up to $2400 in one motor vehicle. You also are allowed to keep all of your necessary clothing. One hundred percent of your retirement benefit, as long as it is ERISA qualified, is protectable. You also have a $4000 miscellaneous wildcard exemption that can be sprinkled over any type of personal property. You can't use the wildcard on your primary residence because that's real property; however, you can use the $4000 wildcard exemption on any type of personal property.

Moving to Schedule D, this is where you would list your secured creditors such as mortgages, auto lenders and any other secured creditor. By secured creditor, I mean if there is no payment made, there is an item that the creditor can repossess or take back such as a mortgage in a foreclosure or an auto in a repossessed auto case.

Moving to Schedule E, this is where you would list tax debt as well as debt owed for child support and/or maintenance. Maintenance is money owed to a spouse or former spouse and child support is obviously current support as well as past-due support.

Schedule F is where you will see your unsecured creditors. The most common unsecured creditors are credit card companies, lenders, utilities, utility bills, individuals who might have loaned you money, debt for any other type of service. Student loans although non-dischargeable, are unsecured debts. These types of debts are what you would see in Schedule F.

Schedule G has to do with co-debtors if there are any co-debtors on your case. Schedule H has to do with landlord/tenant. Schedule I is your income. Schedule J is your expenses. Then we move to the Statement of Financial Affairs. This is where you list everything that you've made in the last three years, whether it came from a job, or whether it came from unemployment, or other form of government assistance. There's also a section in the SOFA where you list what type of lawsuits you have been involved in. Many people forget that a foreclosure is a lawsuit and it must be listed in this section. You'll also list how much you paid towards your attorney fees. You will also state whether you had a business in the last two years. You will also have to indicate whether you have transferred any property other than in the ordinary course of business within the last two years.

That's typically the bankruptcy petition from start to finish. Your attorney will prepare some assisting documents. However, you can see from my explanation that the bankruptcy petition contains all the information concerning your assets, your liabilities, your income, your expenses, and everything concerning your financial affairs. It is basically a big picture about what you have and what you owe.

What is an adversary proceeding in bankruptcy?


Under the Bankruptcy Code, creditors have a right to object to your bankruptcy discharge. They do this by filing a formal adversarial complaint in the bankruptcy court. This is a separate complaint that runs on a separate track aside from your typical bankruptcy, which involves a 341 Meeting of Creditors, and then a discharge. By filing the adversarial complaint, a creditor is bringing an action before the court basically stating that that particular debt should not be eliminated in bankruptcy.

The most common form of adversarial complaint is that of a credit card run up or a fraud action. If the debtor has a credit card that they seem to run up and make excessive charges and cash advances on just prior to filing bankruptcy, that creditor has the right to have a hearing or a lawsuit with regard to those recent run-ups. The goal for the creditor is to have those recent run ups or cash advances found to be non-dischargeable so they can collect on those in the future. If a debt is determined to be non-dischargeable, then it is not part of your bankruptcy discharge and the creditor is free to collect on that debt from now until the end of time, or until it's paid, whichever occurs first.

An adversary involves a summons and a complaint, and the creditor is going to allege a particular statute under the Bankruptcy Code as to how they feel that the debt is non-dischargeable. The fee to defend an adversarial complaint is separate from the fee to handle your bankruptcy case in the first place. Thus, an adversarial complaint is a big deal to a debtor because most bankruptcy attorneys are not going to include that in their fee.

Many adversarial complaints go uncontested, meaning the debtors simply do not defend the action because they cannot afford counsel. If someone has by way of an example, a $25,000 credit card debt to American Express, and of that $25,000 debt, $3500 was incurred just prior to filing; the creditor will bring an adversarial complaint not on the entire $25,000 but on the portion that was incurred too close to filing. Therefore, the debtor in that case will get a discharge of all but not for whatever they recently incurred.

For this reason, when clients come to see me, I advise them and we also put in writing that they should no longer use their credit cards. A lot of clients will hear this information, leave my office, and do the exact opposite. It is to their own peril if they do not listen to my advice, and they run up credit cards or take cash advances in anticipation of filing bankruptcy. There are other forms of adversarial complaints but the most common is to hold a certain debt non-dischargeable. There are other forms of adversaries but they are beyond the scope of a typical consumer bankruptcy case. 

If you find yourself in an adversary, you have to be prepared to deal with all issues of litigation just like if it was a non-bankruptcy case. There's going to be a summons and a complaint. You have to appear and answer. There might be extensive discovery, production of documents, written interrogatories. There's going to be a pretrial and eventually there is going to be a trial. The trial is in front of the bench so you are not looking at a jury. However, it is a serious trial and your attorney must be licensed to practice in front of the federal bar, or make an application to appear before the bar even though he or she might not be federally licensed.

Make sure that you research information about attorneys prior to hiring them for an adversarial complaint. Most attorneys do not handle adversarial complaints in bankruptcy cases. You should look for a bankruptcy attorney who is able to handle an adversarial complaint.

You also have an opportunity to settle an adversarial complaint with the creditor, or with the person objecting to a particular debt prior to it getting involved in litigation. Often the creditors will accept a judgment and a payment plan. In other cases, creditors get a judgment of nondischargeability with no intention of ever collecting on the debt. Sometimes creditors will do this as a deterrent so that other people do not think they can get away with running up credit cards or taking cash advances in anticipation of bankruptcy.

For more information on adversaries, and what to do to avoid having an adversary filed against you, consult with an experienced, local bankruptcy attorney in your area. Many of the things that cause people to receive an adversary can be avoided if they just take certain steps such as waiting for some time before filing, paying creditors back a little bit before filing and not engaging in any kind of fraud upon the creditor.

How to have a successful bankruptcy


Having a successful bankruptcy involves smart decisions from the start and then taking sound advice throughout the case. The most important decision that you make prior to filing a bankruptcy is which attorney you hire. If you hire the right attorney, you are going to get the right guidance and the right advice to have a successful case.

You want to make sure that you satisfy all of your pre-filing bankruptcy requirements before you decide you want your case filed. You also want to make sure that you take the credit counseling session prior to filing, provide your paycheck stubs and provide your tax information to your attorney. You also want to be truthful and honest with everything that you own and everything that you owe, and tell your attorney about everything. 

One of the problems that debtors have is they leave things off or they don't advise their bankruptcy attorney about a particular issue. If your bankruptcy attorney is aware of something, he or she can plan accordingly and likely make it go away. If not, the attorney will advise you to file under a different chapter.

Another thing to have a successful bankruptcy is to follow the instructions of your attorney. There is going to be a Meeting of Creditors that you need to appear at. There is typically only one day that you need to appear in a Chapter 7 bankruptcy case. There is also a personal financial management instruction course that you must complete after the case is filed but prior to the case being discharged. If you make your court date and you take the financial management class and you provide all the proper information to your attorney, your case should proceed smoothly.

That is how you have a successful bankruptcy case. You must be honest, forthcoming and do everything that your bankruptcy lawyer advises you to do. Chapter 7 is a relatively simple case. Most Chapter 7 cases complete without any incident. Some Chapter 7 cases simply do not make it because clients do not complete the requirements. I have had cases where people just did not make a court date on several occasions and the case was dismissed. I have also had cases where the client would not complete the two-hour personal financial management instruction course and the case closed without a discharge. If your case closes without a discharge, that means that you have basically wasted your time because all of the creditors are free to pursue you after a case closes without a discharge.

Your attorney is going to do everything he or she can to prevent you from having your case dismissed without a discharge. However, the attorney cannot take the class for you; you have to take it on your own. The attorney cannot show up in court for you, you have to show up with your attorney. Therefore, if you listen to the advice of your counsel, and you satisfy the few requirements that you need to satisfy, you will have a successful bankruptcy.

The key to a successful bankruptcy really is the attorney that you choose. I can't stress that fact enough. The attorney that you choose, much like a doctor performing a surgery, is going to be the key to whether you have a successful case and whether you have a successful surgery. Just like a doctor in a surgery, you will be advised on what you need to do before hand, what you need to do during, and what you need to do afterward. The right attorney is the key to a successful bankruptcy case.

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