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WHICH DEBTS/CREDITORS DO I HAVE TO LIST? |
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The law requires you to list all creditors, including those whose claims you dispute. If divorced and your ex-spouse claims that you owe him/her money or that he/she paid an obligation that he/she claims you should have paid, you must list him/her as a creditor. You cannot intentionally exclude any person to whom you owe money or who claims you owe him/her money. You must list both the mortgagee and the government agency if the debt on your home is a Veterans Administration loan or any other federally insured mortgage. Debts must be listed whether your payments are current or in arrears. BACK TO INDEX You must disclose all real property (real estate) and all personal property, whether you own it outright or are buying it. BACK TO INDEX Any utility company (power, water, sewer, gas, telephone, etc.) you list may require you to pay a deposit in order to continue offering its services. If required, the payment must be made no later than 20 days following the filing of your bankruptcy. BACK TO INDEX After filing for bankruptcy, you are obligated to begin or to continue making child support and/or alimony payments. Only those payments that are past due at the time a case is filed may be paid through a Chapter 13 Plan. While neither child support nor alimony debts may be handled in a Chapter 7 case, either or both must be listed as debts and obligations.BACK TO INDEX Only a Chapter 13 Plan allows for the making of mortgage payments which are past due at the time your bankruptcy case is filed. In this case, you must make the next payment due after the date your case is filed, plus all subsequent payments, directly to the mortgage holder. Subsequently delinquent mortgage payments may lead to foreclosure on your home. BACK TO INDEX Bankruptcy crimes are investigated by the FBI. Being convicted of deliberately giving false or incomplete information about your assets or liabilities or lying under oath carries a penalty of $5,000.00 and/or a five-year jail term. BACK TO INDEX Your bankruptcy filing cancels all income tax extensions. The Trustee will direct you 1) to file within ten days all tax returns, 2) to keep all tax filings current while your bankruptcy case is pending, and 3) to file the returns to IRS, Special Procedures, Bankruptcy Dept, at a prescribed address. For your protection, you should file these returns with your attorney who, in turn, will submit them to the appropriate department of the IRS. BACK TO INDEX Under provisions of Chapter 7, you have the conditional right to reaffirm debts only if you and the creditor each sign a Reaffirmation Agreement whose terms do not impose a hardship on you or your dependents. You must file the Agreement with the Court before your discharge. Before allowing you to reaffirm a debt, a creditor normally requires that your payments be current and that you continue to make usual payments. BACK TO INDEX Under certain conditions you may keep certain items. If you do not wish to reaffirm a debt secured by collateral but you nevertheless want to keep the collateral without reaffirming the debt, then you may retain the collateral as long as you are absolutely current in the payments on and other conditions of the loan, and as long as you remain absolutely current on payments on and with any other conditions of the loan after your bankruptcy case is filed. BACK TO INDEX You may redeem (keep) property that is held by a creditor as collateral provided 1) it is tangible personal property used for personal, family, or household uses, 2) it has been exempted and/or abandoned by the Trustee, and 3) that you pay in cash the full amount of the actual cash value of the property within the time limits defined in the bankruptcy laws (generally, 45 days after the bankruptcy case is filed), unless agreed otherwise by the Creditor. Some major creditors allow time payments of the redemption amount. BACK TO INDEX Legal action can be taken to set aside judicial liens or non-possessory, non-purchase money liens on household goods, furnishings, wearing apparel, appliances, books, animals, musical instruments, implements or tools of trade, and professionally prescribed health aids. INFORM YOUR ATTORNEY OF THESE LIENS as formal legal action must be taken to remove them. BACK TO INDEX You are free to assume or reject outstanding leases and certain contracts that are not fully performed as of the time you file bankruptcy. However, if you reject the lease or contract, you must surrender the property which is the subject of the lease or contract. Examples: vehicle leases, premise leases or rentals, water softeners, alarm systems, vacuums, etc. BACK TO INDEX It is mandatory that you attend the First Meeting of Creditors, which takes place about 30 days following filing. The court may direct you to attend other hearings as well. Failure to attend any hearings mandated by the court may result in the dismissal of your bankruptcy case without further notice. In the case of a Chapter 13 filing, you must also attend the Confirmation Hearing on the date set forth in the notice you will receive from the bankruptcy court. BACK TO INDEX If you don’t (1) reaffirm, (2) redeem, (3) avoid liens, (4) retain the property, or (5) provide for payment on the loan in a Chapter 13 Plan, you will be obliged to surrender collateral. BACK TO INDEX You will need to make your first payment to the Chapter 13 Trustee at the Meeting of Creditors which will take place about 30 days from the filing of your case. This payment must be made by cashiers check or money order only as follows: Office of Chapter 13 Trustee. Cash and personal checks will not be accepted . BACK TO INDEX If you owe money to a bank or credit union or other creditor with which you maintain any type of checking, savings, certificate of deposit, etc. account, the creditor may take the balance in your account(s) as of the date your bankruptcy is filed. You would be best served, therefore, to close all such accounts or at least drastically reduce the amount of money in the account prior to the filing of your bankruptcy case. BACK TO INDEX Should you add creditors after your case is prepared for filing with the court, there will be an extra charge for each amendment. BACK TO INDEX Cosigners remain liable to pay on the cosigned debt(s) in Chapter 7 cases. In Chapter 13 cases, cosigners receive a stay as long as the Plan is active; however, once the Plan closes, your cosigners will still be liable to pay any portion of the debt that remains unpaid through the Chapter 13 Plan. BACK TO INDEX Each day attorneys receive numerous phone calls from creditors, clients, and other attorneys. This attorney gives priority to mail, e-mail or written notes. In short, written communications always get better results than phone calls. BACK TO INDEX 11 USC 523 - Exceptions to Discharge
For fines, penalty or forfeiture to government that are not compensation for loss includes tax penalties - (see Rev Rule 68-574, 1968; 2 C.B. 595). BACK TO INDEX a. Cash b. Security Deposits c. Household goods d. Miscellaneous household e. Other f. Other s not listed Brief: All of debtor’s non-exempt assets are converted to cash and distributed to creditors. Seldom are there any non-exempt assets. The individual debtors then receive a discharge, which releases debtors from any responsibility to pay most debts. Detail: Chapter 7 is referred to as straight liquidation bankruptcy or fresh-start bankruptcy. Chapter 7 offers immediate relief from the burden of unmanageable debt. In Chapter 7 most debts are immediately erased and eliminated, with the exception of alimony, support, fraud debts, student loan, and most taxes. However, these non-dischargeable debts may be delayed or reduced in a Chapter 13 Plan. About 30 days after filing your case, you will be required to attend what is known as a Creditors Meeting or 341 Hearing held in Salt Lake City. Your attorney will attend with you and assist in preparing for the event. Usually no other appearances, meetings or hearings will be required. An order of Discharge will be issued in about four (4) months after your case is filed. Secured creditors will have their collateral returned to them; unless debtors are current and then reaffirm the debt. Advantages:
Disadvantages:
If creditor loses on consumer debt determination of discharge, then court shall grant attorney fees to debtor. BACK TO INDEX Brief: Debtors propose a plan for payment of some or all of debtor’s debts, within certain statutory guidelines. the plan is then carried out by the Chapter 13 Trustee, under Court supervision. Protects most of debtors property. Can save home from foreclosure and vehicles from repossession. Detail: A Chapter 13 offers immediate relief from the burdens of unmanageable debt. Most of the time your reorganization “Plan” can be developed to allow you to retain most of your property, real or personal, even after creditors have initiated collection, repossession, foreclosure and/or court action. Your proposed “Plan” will allow you to have sufficient funds to pay reasonable and ordinary expenses, as well as the payment of your net disposable income for the next 36 to 60 months to the Court appointed Chapter 13 Trustee for payment of secured debts, priority debts, and a portion of your unsecured debts. The process involves a detailed examination by the Court appointed Chapter 13 Trustee of the feasibility of the proposed “Plan of Reorganization” Upon completion of your payments under the Plan, most, but not necessarily all, of your debts not completely paid in the Plan will be discharged. While restructuring your payments to most creditors, you will be required to timely pay all mortgages on your home, during your “Plan” You will be required to commence payment on your “Plan” within approximately 30 days after filing your case, at the 341 Hearing. About 30 days after filing your case, you will be required to attend what is known as a Creditors Meeting or 341 Hearing. This meeting will be held in Salt Lake City. Your attorney will attend this meeting with you and assist in preparing for the event. Your “Plan” will be considered for Confirmation, about six (6) months after your case is filed. In the mean time, you will have to make payments and help the Trustee see that your Plan is feasible and in compliance with the Law. Once your “Plan” is confirmed by the Court no other court appearances are usually necessary as long as you keep your monthly payments current. Chapter 13 offers limited protection for cosigners on consumer (non-business) debts, as you make lesser payments through your “Plan”. Chapter 13 is used primarily by individuals, or individuals in business as sole proprietors. However, it cannot be used by individuals who operate businesses in other legal entities, e.g., corporation, partnership, LLC, etc. Advantages:
Disadvantages:
If you are listing any utility company obligations as a creditor in your Chapter 7 or 13, the utility company has the right to require a security deposit for continuation of services. The security deposit needs to filed with the utility within 20 days of filing the bankruptcy petition to maintain your utility service. The utility deposit depends on the prior service cost with the utility, but is usually equal to two to three months of service cost. It is your responsibility to check with any utility company listed after filing to determine what is necessary to continue their service. BACK TO INDEX |
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