Declaring Bankruptcy

This is the copy I wrote for a bankruptcy attorney’s website. He is now a defense attorney, so he has allowed me post this sample for my portfolio.

Sometimes you can accrue so much debt that only bankruptcy can salvage your financial future. Bankruptcy used to have a bad stigma. When people declared bankruptcy decades ago, public sentiment was that the whole process served the irresponsible. When the housing market crashed in 2008, bankruptcies increased over 30 percent. Now, thanks to the rising amount of bankruptcy cases, the stigma has largely worn off.


You Need Help


The number of laws, guidelines, and proceedings are too much for any one person to handle. My firm specializes in bankruptcy cases. We can help you. Contact us right now, and get the ball rolling with your case. Waiting is the worst thing to do. This guide provides a general overview of the bankruptcy process, and explains how we can help you become debt-free.


What is Bankruptcy?


Bankruptcy is a legal process for consumers and businesses to write-off old debts and start over with a clean slate. Depending on what type of bankruptcy you file, outcomes and final liability can differ from case to case. There are multiple types of bankruptcies. However, Chapter 7 and Chapter 13 bankruptcies are the most common.


What Is a Bankruptcy Trustee?


When you declare bankruptcy, and file the paperwork, the courts will assign an impartial bankruptcy trustee to administer your case. This takes an enormous burden off of the court system, and is the reason you can even declare bankruptcy. Each state has a panel of trustees appointed to cases on a rotating basis. Once the trustee is appointed, they help you through the rest of the process with the attorneys and creditors.


What Is a Chapter 7 Bankruptcy?


When you declare a Chapter 7 bankruptcy, your bankruptcy will absolve you of most debt. However, the court may require you to sell the property you own to maximize the amount of money that the creditors receive. This is why Chapter 7 is sometimes called the “liquidation bankruptcy.” It is like waving the white flag in defeat, and dealing with whatever the courts decide. Typical Americans will file Chapter 7, but with the caveat of hoping for mercy. These are people who work, pay taxes, raise kids, and live law-abiding lives. However, a sickness in the family, a tragedy, or even financial scams have left them in debt. The reason I became a bankruptcy attorney was to fight for hard-working Americans and get them out of debt with a fresh start. A competent bankruptcy attorney can save you both time and money, regardless of your circumstances.


What is A Chapter 13 Bankruptcy?


Chapter 13 is for regular wage earners with valuable non-exempt property, which would become a part of the bankruptcy estate in a Chapter 7 case and sold by the trustee to pay creditors. In a Chapter 13 filing, you can retain that property. This type of bankruptcy also provides relief for those who are behind on secured debts such as mortgages and auto loans. A repayment plan allows you to catch up and save assets from foreclosure and repossession. With the help of an attorney, you can devise a debt-reduction and repayment plan that will enable you to become financially sound over the next few years. When you file for bankruptcy, it is reported to the various credit bureaus. But if you honor your repayment plan by making regular payments to your creditors, those payments appear on your credit report as well. This will show your stability and improve your credit rating.


Some debts can’t be discharged under Chapter 7 bankruptcy. However, they might be dischargeable under a Chapter 13 bankruptcy. Competent legal advice is necessary to determine this. The court appoints an impartial trustee in Chapter 13 cases. Once the court approves your repayment plan, the trustee will collect the payments and distribute the funds to the creditors. Only when you have made all the required payments are your debts discharged. The exception to this is the hardship discharge. The court can grant you a hardship discharge if the creditors have already received the same amount they would have gotten under a Chapter 7 filing. If you work and have a stable base salary, and you meet the other criteria regarding your debts, Chapter 13 may be a viable option for you.


What to Expect With Your Case


When you file for bankruptcy, you have to complete forms with lots of questions. All the information gathered during this process helps us prepare the bankruptcy petition we file with the court. Then we formulate a plan to take you through the process as smoothly as possible. It helps us minimize the effects that bankruptcy has on your lifestyle. Now, I could list every facet of a bankruptcy case, but that isn’t pertinent to your situation yet. So, instead of doing that, I will simplify the steps for Chapter 7 and Chapter 13 bankruptcy cases to give you an overview of how bankruptcies operate.


Retain a Qualified Bankruptcy Attorney


Meeting with a bankruptcy attorney often makes people nervous. However, if you are struggling financially, it only makes sense to determine if declaring bankruptcy can help you get out of debt and start fresh. Prepare to consult with us by getting your financial information together. At the back of this guide there is a 5-page worksheet for you to fill out and bring to our office for the consultation.


Credit Counseling Before You File


As part of your mandatory credit counseling for bankruptcy claims, the credit counseling agency must provide the following services to you before you file for bankruptcy:


  • An evaluation of your financial situation. This includes your current income, debts, creditors, etc.
  • A discussion of alternatives to bankruptcy. You may be eligible for other products and services, such as a debt consolidation loan, a debt management plan, or a debt settlement plan. It depends on your financial situation, and you can decide which option is best for you. If you haven’t already reviewed alternatives to bankruptcy, consider visiting CareOne’s community forums to talk with people who’ve faced similar financial challenges.
  • A personal budget plan. A budget is a good idea for anyone, especially if you’ve had trouble paying your bills and keeping track of your income and expenses. A good budget plan can also help you avoid future debt problems and manage your money better going forward. While credit counseling for bankruptcy filing costs a small fee – around $50, depending on your state, the services provided, and how the counseling is delivered – the agencies approved by the government must provide free services for those who cannot afford the fee. Talk to the agency prior to your credit counseling session if you want to request a waiver of the fee.


Filing Your Bankruptcy Petition


When filing for bankruptcy, you’re required to complete a set of documents, collectively referred to as the bankruptcy petition. The petition includes a cover sheet (voluntary petition), bankruptcy schedules A through J, where you will itemize your assets, creditors, your income and your expenses, a statement of intention (Chapter 7 or 13), regarding your secured debts and leases, a statement of financial affairs, which will detail your financial situation for the past few years, and a means test form, which will determine whether you qualify for bankruptcy. We can pull most of the required information from the completed forms you bring to our consultation.


Credit Counseling After Bankruptcy Filing


Besides mandatory credit counseling before filing for bankruptcy, you must complete a debtor education course by an approved counselor after your debts are discharged. This course will include information about budgeting, managing money, using credit wisely, and information about other resources available to help you manage your money and credit better. As with the pre-filing credit counseling session, the post-filing session can happen in person, over the phone, or online. The pre-filing session lasts for approximately one hour, and the post-filing session will last for up to two hours. Fees for post-filing debtor education range from $50 to $100, unless you get a waiver from the counselor prior to your session. You receive a certificate after completing the post-filing debtor education. This is a different certificate than the certificate you received prior to filing for bankruptcy.


Meet With Trustee and Creditors


After you file for bankruptcy, you have to attend a “meeting of creditors”. This is a meeting with the bankruptcy trustee and perhaps some of your creditors. It is not a court hearing, and it usually lasts only a few minutes. Every bankruptcy case has a meeting of creditors (also called 341 hearings, or 341 meetings; named after the section of the bankruptcy code that governs them). The date of your creditors meeting depends on the chapter under which you file bankruptcy. In Chapter 7 cases, the first meeting is scheduled 21 to 40 days after you file for bankruptcy. In Chapter 13 cases, the first meeting may be set between 21 and 50 days after you file. You must attend. If you don’t attend the meeting of creditors, the court could dismiss your bankruptcy case.


Debts Discharged



Obviously, this step is the most satisfying one. Most of our clients say they felt a huge weight lifted off of them once their debts were discharged. A bankruptcy discharge eliminates only the debts listed in your bankruptcy petition. The debts will no longer be legally enforceable by your creditors, so no new legal actions can be initiated against you after the bankruptcy discharge. In a Chapter 7 bankruptcy, your debts will be discharged at the end of the 60-day period. For a Chapter 13 bankruptcy, your debts are discharged after you complete the repayment plan.


Life After Bankruptcy



Despite the stigma created by banks and lenders, your credit will not be ruined forever. In fact, by the time most people decide to file for bankruptcy, their credit score is already ruined. After bankruptcy, your debt-to-income ratio improves, and you have less outstanding debt. You actually look like a better risk because creditors will know you can’t discharge debt through bankruptcy again for up to 8 years. In fact, many consumers who declare bankruptcy start receiving credit card offers from 30 to 90 days after discharge. After declaring bankruptcy, check your credit report every 30 days, and dispute any debt claims that were listed in your bankruptcy, but have not been removed from your credit report.


A Final Takeaway



Remember, it is never too late to make a fresh start. We’ve helped many people climb out of immense black holes of debt through bankruptcy. The longest journeys begin with one small step, so take that step by calling us for a free consultation today.