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PersonalizedBankruptcyReportfor[AnswerA]
Congratulations! You have taken a great step towards getting out of
debt. Far too often, people file for bankruptcy without understanding
whathappensinbankruptcyorhowbankruptcywillaffect,ornotaffect,
theirdebtsandassets. Throughthispersonalizedreport,youwillgainan
understandingofthebasicsofbankruptcyandwhatwillhappentoyour
major debts and assets in your bankruptcy case. Bankruptcy provides
greatbenefitsbut thesebenefitsare limiteddependingonyourunique
circumstances.
Whilethisreportprovidesyouwiththebasicsofwhatyouneedtoknow,bankruptcy lawandyoursituationchangeconstantly. Thispersonalized
report is for informationalpurposesonlyandcannotbereliedupon for
anythingotherthanwhatyoucangenerallyexpecttohappentoyouand
yourassetsbasedonotherdebtorsinsimilarsituationstoyours.
Goodluckonyourfightoutofdebtwhetheryoudecidethatbankruptcy
isyourbestrouteornot!
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I. ELIGIBILITYFORBANKRUPTCYOption1: [IfincomeislessthantheIRSminimumforstateinAnswerB]
Basedonyouraverage incomeforthe lastsixmonthsof[AnswerD]permonth,
youhaveachoicetofileeitherachapter7bankruptcyorachapter13bankruptcy.
NOTE: If your secured debts (debts backed by a pledge of property) exceed
$1,081,400oryourunsecureddebts(debtsbackedsolelybyyourpromisetopay)
exceed$360,475,youcannotfileachapter13bankruptcycase. Youcaneitherfile
achapter7bankruptcycaseorachapter11bankruptcycase.
Option2: [IfincomeisleftthantheIRSminimumforstateinAnswerB]
Basedonyouraverage incomeforthe lastsixmonthsof[AnswerD]permonth,
yourincomeexceeds[STATE]smedianincome. Asitexceedsthemedian,youfai
one part of the means test. The means test uses a standard mathematica
formulatodeterminewhetheryoucan file forchapter7bankruptcycase,or,as
set forth in the Bankruptcy Code,whetheryour filingof achapter7 bankruptcy
case
would
be
an
abuse
of
the
bankruptcy
system.
Havingfailedthe firstpartofthemeanstest,youmustthendeterminewhether
youcanpassthesecondpartofthemeanstest. Youpassthesecondpartofthe
meanstestifyouraggregatecurrentmonthlyincomeover5years,netofcertain
statutorilyallowedexpenses, ismore than (i)$11,725,or (ii)25%of theofyour
nonpriorityunsecureddebt,as longasthatamount isat least$7,025. Or,more
simply, if your current monthly income demonstrates that you can pay your
unsecuredcreditors$11,725($195.42amonth)over5yearsor$7,025($117.09a
month) over 5 years and that is at least 25% of what you currently owe your
unsecuredcreditors, then youcannot filea chapter7bankruptcycase. Youare
allowed certain, standard deductions based on the number of vehicles you
operate, the number of people in your household, and your cost of living. In
addition, to these standard deductions, you can also deduct the full amount of
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certainexpensessuchasyourmortgageand loanpaymentsforyourcarorother
vehicle.
Ifyoufailbothpartsofthemeanstest,youarepresumedtoberequiredtofilea
Chapter 13 bankruptcy case and there is a presumption of abuse if you file aChapter7bankruptcycase.
However, you can defeat this presumption of abuse that requires you to file a
chapter 13 bankruptcy case by a showing of special circumstances thatjustify
additional expensesoradjustmentsof currentmonthly income. Unless you can
overcome the presumption of abuse and you have filed a chapter 7 bankruptcy
case, your bankruptcy case will generally be converted to chapter 13 (if you
consent)orthecasewillbedismissed. Abankruptcylawyeristhebestpersontoassistyouindefeatingthepresumptionbasedonspecialcircumstances.
EXCEPTIONS:
IF you are a veteran, and you are disabled, and your indebtedness occurred
primarily during a period in which you were: on active duty, or performing a
homelanddefenseactivity,youareexemptfromthemeanstest.
IFyouareamemberofareservecomponentoftheArmedForcesandmembersoftheNationalGuardandyouwerecalledtoactivedutyafterSeptember11,2001,
foraperiodofatleast90daysoryouhaveperformedhomelanddefenseactivity
foraperiodofatleast90days, youareexcludedfromallformsofmeanstesting
during the time of active duty or homeland defense activity and for 540 days
thereafter.
NOTE: If your secured debts (debts backed by a pledge of property) exceed
$1,081,400oryourunsecureddebts(debtsbackedsolelybyyourpromisetopay)
exceed$360,475,youcannotfileachapter13bankruptcycase. Youwillhaveto
file a chapter 11 bankruptcy case unless you can defeat the presumption as set
forthaboveandcouldtheneitherfileachapter7bankruptcycaseorachapter11
bankruptcycase.
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II. BANKRUPTCYBASICSBankruptcy
stems
from
a
system
of
federal
laws
and
rules
of
procedure
which
theUnitedStatesCongresshasenactedpursuanttoitspowersundertheConstitution
of the United States. United States Bankruptcy Courts in the 94jurisdictions
whereafederalcourtislocatedadministerbankruptcycases.
Bankruptcycasescannotbecommencedinstatecourtsbutmustbecommenced
byfilingabankruptcypetitionwiththeclerkofthebankruptcycourt. Bankruptcy
isa legalprocedurewhichallows individualsandbusinessestoobtainrelieffrom
debts toobtaina freshstart in their financesand remedy financial injustices. If
you live in or have property in the United States, you can file a bankruptcy
petition.
Onceyoucommenceyourbankruptcycase (donebythe filingofapetitionwith
the bankruptcy court), you have a breathing spell from efforts by creditors to
collect debts. When the bankruptcy court enters a discharge order upon
successful completion of your bankruptcy case, you are released from your
obligation to repay debts. The discharge order has certain exceptions and
restrictions.
OverviewoftheProcess
Bankruptcy provides numerous protections and benefits but follows well
establishedrulesandlawsthatdictatewhathappenstoyouandyourproperty.
TheAutomaticStay
The moment you commence your bankruptcy case, an order of the bankruptcycourt called the automatic stay goes into effect. The automatic stay requires
cessation of all collection actions, lawsuits in which you are a defendant,
foreclosures,wagegarnishments,evictions,demandsforrepaymentofdebts,and
phonecallstocollectdebts. Ifacreditortakesactioninviolationofthestay,you
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may recover actual and punitive damages as well as attorneys fees from the
creditor.
Theautomaticstay isnotunlimited. Congresshasdeclared28exceptionstothe
automatic stay, including fines from the prosecution of criminal actions and thecollectionofalimonyandchildsupport. Thebankruptcycourtmaygrantacreditor
relief from the automatic stay upon the filing of a motion in which the creditor
gives the bankruptcy court good cause to lift the automatic stay as to its debt
Otherlimitationsontheautomaticstayarise,especiallywherethedebtorhashad
one or more prior bankruptcy cases which were dismissed within a year of the
currentfiling. Therearespecialprovisionsthatapplytoevictioncaseswhichgive
landlordsanddebtorsspecificrightsandobligations.
Actsundertakenbyacreditorinviolationoftheautomaticstayarenotonlyvoid,
butmayexposetheviolatortomonetarysanctions.
PropertyoftheEstateandExemptions
Whenyoucommenceyourbankruptcycase,allyourlegalandequitableinterests,
including interests in real and personal property, become property of the
bankruptcyestate. Thetrusteeofthebankruptcycasewillthenadministerallof
thepropertyforthebenefitoftheyourcreditors.
Bankruptcy law entitles you to claim certain property as exempt. You keep
exemptyourexemptpropertyanditstaysoutofthehandsofhisorhercreditors
Some state law exemptions have been the law for hundreds of years and are
outdated, such as exemptions for church pews, the family Bible, two swine and
fourtonsofhay.
Propertywhichyouaretypicallyallowedtoexemptincludes:
Someoralloftheequityinadebtorspersonalresidence Someorallofthevalueinavehicle Adebtorstoolsofthetrade Householdgoods
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Jewelry Lifeinsurance Personalinjuryclaims
The list of exemptions available under the federal exemption scheme is morecurrentandprovidescategoriesofexemptpropertywithvaluesthatareadjusted
forthecostoflivingeverythreeyears. Intheeventacreditorhasacourtordered
lien which impairs an exemption, you may request that the creditors lien be
avoided and if so ordered, this judicial lien will be released. Your specific
exemptionsarelistedcompletelyinfullinSectionIV.
TheDischarge
TheUnited StatesSupremeCourt hasemphasized that bankruptcy gives to the
honest but unfortunate debtora new opportunity in life and a clear field for
future effort, unhampered by the pressure and discouragement of preexisting
debt.
The discharge orderof the bankruptcy court releasesyou from personal liability
fordebts. Dischargeprovidesapermanent injunctionpreventingcollectionofal
ofthedebtstowhichitapplies. Afteradischarge,youenjoyyourproperty(other
thanpropertyoftheestate)freefromtheclaimsofcreditors. Thebestexampleofpropertythatisfreefromthecreditorsafterdischargeisfutureearnings.
However,thedischargedoesnotapplytoallofyourdebts. Automaticexceptions
setforth intheBankruptcyCode,suchasmosttaxes,alimony,spousalandchild
support,criminalrestitutionandfines,andstudent loanswherethedebtordoes
notproverepaymentisanunduehardshipwillnotbedischarged(theentirelistis
setforthbelow). Moreover,acreditorcanbringaproceedingwithinabankruptcy
case(knownasanadversaryproceeding)todeterminethatadebtshouldbenotbedischarged ifthedebtwas incurredbyfraud,willfulandmalicious injury,and
otherlikecauses. Thebankruptcycourtmaydetermineafterlitigationthatadebt
will not be discharged or is nondischargeable. If you commit certain offenses,
suchasnotdisclosingallofyourassets,ormakingafalseoathinyourbankruptcy
case,thebankruptcycourtmaydenydischargeofallofyourdebts.
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Therearesix typesofbankruptcy reliefandeach type iscalledachapter for its
sectioninthebankruptcylegislation. Thetwotypesmostcommonforindividuals
arechapter7andchapter13.
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A. Chapter7BankruptcyCasesAChapter7bankruptcycase isa liquidationofbothyourdebtsandyourassetsunder the supervision of a trustee. Chapter 7 cases are, more often than not,
routine and the vast majority of them are discharged or released and
administratively closed without the trustee liquidating any assets or distributing
anyassetstocreditors. InamajorityofChapter7cases,youneverappearinfront
of the bankruptcyjudge but only attend a meeting of creditors conducted by a
trustee.
When
you
file
a
Chapter
7
case,
your
bankruptcy
case
is
controlled
by
a
trusteeappointed by the United States Trustee Office (a division of the Department of
Justice). In a Chapter 7 case, the trustee investigates your assets, determines
whether to object to any exemptions you have claimed (state and federal laws
protectcertainproperty),andhastheabilitytosellanyassetsthatarenotexempt
and distribute the proceeds of the sales to creditors. The trustee also has the
abilitytoobjecttocreditorsclaims. YoumustqualifyforChapter7relief.
To qualify for relief in Chapter 7, you must meet the eligibility criteria by
obtaining prepetition credit counseling briefing, and completing a means test to
determine whether your income and expenses are above or below the median
incomeascomparedtootherindividualsinthestate. Youmustfileascheduleof
assets, includingclaimsofyourexemptionsand liabilitiesandmustpaythefiling
fee unless excused by the bankruptcy court. Unless a creditor, the trustee or
another interestedpartyfilesanobjection,thecourtwillenteradischarge. The
dischargeofadebtor inaChapter7casemaynotaffectcertaindebts likeyour
mortgage
or
auto
loan
because
you
have
pledged
your
property
to
obtain
thedebt.
You can enter into reaffirmation agreements for the purpose of retaining your
securedcollateralsuchasyourhouseorcar(moreonthisoptionbelow).
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Youwillnotreceiveadischargeofdebtsexceptedfromthedischargeunderthe
Code,orifthebankruptcycourtcarvesoutaparticulardebtfromyourdischarge
after litigation. Moreover you can be denied a bankruptcy discharge if you are
found to have lied to the trustee or court, fraudulently transferred property, or
destroyed records. Inaddition, the dischargecanbe revoked if itwas obtained
throughfraud.
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court. Notonlydoesthebankruptcycourtscrutinizeyourfinancial life,butyour
financesaresubjecttomonitoringbythechapter13trusteeandcreditors. Ifyou
fail to make a payment under the plan, the trustee and creditors can seek to
dismissyourChapter13caseresultinginthelostopportunityforadischarge.
Inaddition, ifduring thetermof theplanyour incomeorassets increase, those
partiescan request that theplanbemodified to increasepayments. Moreover,
Chapter 13 cases are more costly than chapter 7. You must pay a trustees
commission approximately 10 percent of the plan disbursements. Your
attorneys fees are higher for Chapter 13 cases than Chapter 7 cases, usually
ranging from $ 2,500 to $ 3,500 plus filing fees, depending on thejurisdiction
AttorneysfeesforaChapter7rangebetween$1,000and$1,500.
Chapter13
ThePlanandPlanConfirmation
AsaChapter13debtor,youmustfileaplanthatproperlytreatsthedebtsowed
bythedebtoraccordingtothe legalpriorityofcreditorsclaims. Priorityclaims,
suchastaxes,mustbepaid in fulloverthetermoftheplan. Aplancancurea
defaultinamortgageorlease,bypayingtheamountinarrearsovertheplanterm,
while maintaining regular payments. Although home mortgages cannot bemodifiedunderaChapter13plan,andvehiclepurchaseloansobtainedwithin910
dayspriortocommencementofthecasemustalsobepaidinfull,sometypesof
secured claims can be modified and the debtor need only pay the value of the
collateral,plusmarketinterestrateoverthetermoftheplan.
Theplanneednotpayunsecuredclaimsinfullaslongitprovidesthatthedebtor
will pay all projected disposable income over an applicable commitment
period, and as long as unsecured creditors receive at least as much under theplanastheywouldreceiveunderchapter7. Inchapter13,disposableincomeis
definedasincome(otherthanchildsupportpaymentsreceivedbythedebtor)less
amounts reasonably necessary for the maintenance or support of the debtor or
dependents and less charitable contributions up to 15% of the debtors gross
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income. Ifyouoperateabusiness, thedefinitionofdisposable incomeexcludes
thoseamountswhicharenecessaryforordinaryoperatingexpenses.
Theapplicablecommitmentperiod,referstotherequireddurationoftheplan,
and it depends on your current monthly income. The applicable commitmentperiodmustbethreeyearsifcurrentmonthlyincomeislessthanthestatemedian
for a family of the same size and five years if the current monthly income is
greaterthanafamilyofthesamesize. Theplancanbeaperiodshorterthanthe
applicablecommitmentperiod ifthedebtorproposes topayunsecureddebts in
full.
ThetrusteeandcreditorshavetherighttoobjecttoyourChapter13plan.
The discharge in your Chapter 13 bankruptcy case releases you from all debts
provided for by the plan or disallowed, subject to certain exceptions. The
discharge provides an injunction that prevents creditors provided for in the
Chapter13planfrompursuingyouonthedischargedobligations. Exceptionsfrom
dischargeincludecertainlongtermobligations(suchasahomemortgage),debts
foralimonyorchildsupport,certaintaxes,debtsformostgovernmentfundedor
guaranteededucational loansorbenefitoverpayments,debtsarising fromdeath
or personal injury caused by driving while intoxicated or under the influence of
drugs, and debts for restitution or a criminal fine included in a sentence on the
debtorsconvictionofacrime.
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III. FLOWCHARTSThe
two
attached
charts
demonstrate
the
steps
that
you
can
expect
to
occur
in
atypicalchapter7bankruptcycaseandatypicalchapter13bankruptcycase.
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IV. EXEMPTIONSAVAILABLETOYOUAs
discussed
briefly
above,
exemptions
are
assets
that
are
not
included
in
yourbankruptcy estate and therefore are not available to creditors to satisfy their
debts. Bankruptcy law allowed each state to choose whether to make federa
exemptionssetforth intheBankruptcyCodeavailabletoresidents in itsstate in
additiontoitsstatelawexemptionsortooptoutandallowitsresidentstoonly
choosestatelawexemptions. Besureyoudoublecheckoraskanattorneyabout
your state and bankruptcy law procedures to know when and how you have to
claimyourexemptionsinorderforthemtobevalidinyourbankruptcycase.
[IfAnswerBisanystateorterritorybesidesArkansas,Connecticut,theDistrictof
Columbia,Hawaii,Massachusetts,Michigan,Minnesota,NewJersey,NewMexico,
Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and
Wisconsin] [Answer B] has opted out of the federal exemptions under the
BankruptcyCodeandallowsyoutochooseonlytheexemptionsunder[AnswerB]
statelaw.
Theexemptionsavailabletoyouunder[AnswerB]statelawareasfollows: [Insert
theExemptionsavailableforthestatechoseninAnswerB]
[IfAnswerBisCalifornia] AlthoughCaliforniahasoptedoutanddoesnotallow
you to choose between state and federal exemptions, California allows you to
choosebetweentodifferentsetsofexemptionsunderitsstatelaws.
TheexemptionsavailabletoyouunderCaliforniastatelawareasfollows: [Insert
theExemptionsavailableforthestatechoseninAnswerB]
TheexemptionsavailabletoyouunderthealternativesetofCaliforniastate law
exemptionsareasfollows: [InserttheFederalExemptions]
[If Answer B is Arkansas, Connecticut, The District of Columbia, Hawaii,
Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania,
Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin]
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[AnswerB]hasnotoptedoutofthefederalexemptionsundertheBankruptcy
Codeandallowsyoutochooseeithertheexemptionsunder[AnswerB]statelaw
ortheexemptionsunderfederalbankruptcylaw.
The exemptions available to you under [Answer B] state law are as follows[InserttheExemptionsavailableforthestatechoseninAnswerB]
The exemptions available to you under federal bankruptcy law are as follows
[InserttheFederalExemptions]
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V. YOURDEBTSIn
bankruptcy,
debts
are
divided
into
four
categories:
secured,
priority,administrative,andgeneralunsecureddebts.
1) SecuredDebt: Asecureddebtisadebtthatcollateralizedbythedebtors property. A creditor whose debt is secured has a right to take its
collateral to satisfy the debt. For example, most people who buy new cars on
credit give the lender a security interest (or lien) in the car. The debt is
securedbythecarandthe lendercantake(repossess)thecar iftheborrower
failstomakepaymentsontheloan.
2) UnsecuredDebt: Adebt forwhichthecreditorhasno lienwithwhichtosatisfythedebt. Thedebtissaidtobegenerallyunsecurediftheclaim
is also not entitled to any priority of payment under the Bankruptcy Code. For
example,theamountowedonacreditcard.
3) Priority Debt: A priority debt is a debt entitled to priority inpayment,aheadofmostotherdebts, inabankruptcycase. Examplesofpriority
debts are some taxes, wage claims of employees, and alimony, maintenance orsupportofaspouse,formerspouse,orchild.
4) Administrative Debt: An administrative debt is a priority debtcreatedwhensomeoneprovidesgoodsorservicestoyourbankruptcyestate(this
canhappenonlyafterthebankruptcycaseisfiled). Examplesofanadministrative
debtarethefeesgeneratedbythetrusteeinrepresentingthebankruptcyestate.
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VI. NONDISCHARGEABLEDEBTSNon
dischargeable
debts
will
not
be
affected
by
a
bankruptcy
filing
and
you
wilstillhavetopaytheminfull.
[Answer B checked off] You have indicated that you have nondischargeable
debts. You must pay particular attention to your nondischargeable debts and
how they are affecting you financially. If your nondischargeable debts are the
root of your financial problems, filing a bankruptcy case may not be a good
alternativeforyou. Still,evenwhenyouhavenondischargeabledebts,youshould
evaluateyourentirefinancialpictureandthisentirereportandweighallthepros
andconsofabankruptcyfiling. Thefollowing isa listofthemostcommonnon
dischargeabledebts.
Domestic Support Obligations (alimony, maintenance and childsupport);
Certain types of taxes owed within 3 years of your bankruptcyfiling;
Debts incurred by the use of false financial statements or otherfalsepretenses;
Courtfinesandpenalties, includingcriminalfinesandrestitutiontocourtoravictimimposedincriminaltypeproceeding;
Cash advances on credit cards in last 60 days; credit cardpurchasesover$1,075forluxurygoodsorservicesinlast60days.
Debts arising from a judgment incurred from a DWI/DUconviction;
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Damages arising from willful or malicious injury to property orpersons;
Federally insured student loans, unless you can show unduehardship;
Debtsarisingfromfraudorembezzlementorfromthemisuseoffundswhenyouwereactingasa fiduciaryorcaretakerofother
peoplesfunds;
CreditcardchargesforpaymentoftaxestotheIRS; Debtsfrommaritalsettlementagreementordivorcedecree; debtsowedtocertaintaxadvantagedretirementplans, debtsforcertaincondominiumorcooperativehousingfees Debts you couldnt discharge in a previous bankruptcy that was
dismissedduetofraudormalfeasance.
[Answer B not checked off] You have indicated that you do not have non
dischargeable
debts.
This
means
that
all
of
your
debts
are
capable
of
beingdischargedinyourbankruptcycase,butexceptionsmaystillexistsuchassecured
loansandprioritydebts. Doublecheckthefollowinglistofthemostcommonnon
dischargeabledebtstoensureyouhavenonondischargeabledebts.
Domestic Support Obligations (alimony, maintenance and childsupport);
Certain types of taxes owed within 3 years of your bankruptcyfiling;
Debts incurred by the use of false financial statements or otherfalsepretenses;
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Courtfinesandpenalties, includingcriminalfinesandrestitutiontocourtoravictimimposedincriminaltypeproceeding;
Cash advances on credit cards in last 60 days; credit cardpurchasesover$1,075forluxurygoodsorservicesinlast60days.
Debts arising from a judgment incurred from a DWI/DUconviction;
Damages arising from willful or malicious injury to property orpersons;
Federally insured student loans, unless you can show unduehardship;
Debtsarisingfromfraudorembezzlementorfromthemisuseoffundswhenyouwereactingasa fiduciaryorcaretakerofother
peoplesfunds;
CreditcardchargesforpaymentoftaxestotheIRS; Debtsfrommaritalsettlementagreementordivorcedecree; debtsowedtocertaintaxadvantagedretirementplans, debtsforcertaincondominiumorcooperativehousingfees Debts you couldnt discharge in a previous bankruptcy that was
dismissedduetofraudormalfeasance.
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VII. YOURHOMEAssuming
that
you
want
to
keep
your
home,
bankruptcy
should
only
be
used
as
alastresort.
A. Ifyouronlyfinancialproblem isyourmortgage,youshould likely lookto modify your mortgage to make it more affordable through your lender and
someofthegovernmentprograms. Youcanenter intoamortgagemodification
program, including HAMP (Home Affordable Modification Program) and others
established by the Obama administration, then you may be able to reduce the
principal,theinterestrateorbothandthenbringyourmonthlymortgagepayment
downtoamoreaffordablelevel. Thisisthebestresultifyouareanunderwater
homeowner.
Iffinancialproblemswithyourhomearecoupledwithoverallfinancialproblems
andmortgagemodification isnot workingoryour lenderwill notagree towork
withyou,youcouldconsidereitheraChapter7oraChapter13bankruptcycase.
B. YouwillonlybeabletokeepyourhomeinaChapter7bankruptcycaseif you are current on your mortgage, continue to make payments as contractedandentered intoaworkoutorreaffirmationagreementwithyour lender. Ifyou
cancontinuetomakepayments inaChapter7bankruptcycase,youcanreduce
anysecondmortgagesorhomeequitylinesthatarenotsecured(i.e.,alltheequity
ofthehouse iseatenupbythe firstmortgage) intogeneralunsecuredclaim for
whichpersonal liabilitycanbedischarged intheChapter7bankruptcycasewith
otherunsecureddebtsforaverysmallpercentageofthedebtorfornothingatall
However, the lien on the house remains so that when the house is sold, the
second mortgagee or home equity line lender could look for their payoff todischargeitsmortgage.
In a Chapter 13 bankruptcy case, you can retain your home by paying the
mortgage by its terms after filing your bankruptcy case. The advantage on a
Chapter 13 bankruptcy case is that you have the opportunity to pay off any
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defaultsonyourmortgageover3to5yearsthroughyourchapter13bankruptcy
plan. You also have the ability to stripoff any second mortgages and home
equitylinesthatarecompletelyunsecured,providedyoudonotdefaultduringthe
Chapter13plan.
C. While bankruptcy generally relieves some pressure and will give youtime to make some decisions, bankruptcy may not be the best option for a
homeownerandshouldonlybeconsideredasalastoption.
D. Ataminimum,bankruptcywillprovideyousomebreathingroomandtemporarilystallaforeclosuresale.
In a Chapter 7 bankruptcy case, the automatic stay temporarily prevents a
foreclosure process from continuing. Your mortgage lender can continue the
foreclosureprocesswiththepermissionofthecourtbutthatusuallytakesatleast
60days. Youcanusethistimetoworkoutaloanmodification.
InaChapter13bankruptcycase,theautomaticstaylikewisetemporarilyprevents
your lender from continuing a foreclosure process so that you can regroup and
workoutawaytokeepyourhome. Inaddition,youcancureadefaultorpayoff
themortgageininstallmentspaymentsovertimethroughachapter13plan.
In all bankruptcy cases, you may be able to raise defenses to your mortgage
lendersclaimsabouthowmuchyouowe.
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VIII.YOURCAR,TRUCK,RV,ORBOATBecause
of
the
automatic
stay,
filing
a
bankruptcy
case
stops
your
lender
fromseizingyourvehicle. Bankruptcyhaltsallattemptstotakeanyofyourproperty,
evenpropertyonwhichyour lendershave liens. Moreover, ifyourcarhasbeen
repossessedbutnotsold,bankruptcymayhelpyougetyourcarback. Bankruptcy
alsoprovideswaystokeepyourcarforthelongterm.
Chapter7BankruptcyCase
At the beginning of your Chapter 7 bankruptcy case, you must file a document
calledaStatementof Intention. InthisStatement,youmusttellthecourtwhatyouplantodowithanysecuredcollateralsuchasyourcar.
In a Chapter 7 bankruptcycase,youcanredeem yourvehicle, reaffirm your
debt,orsurrenderthevehicle. Afourthoption,todonothingandkeeppayingthe
loanmayalsoexistbuttheexistenceisquestionableanddependsonobtainingthe
consent of the lender. Ifyou donotact in accordancewith theStatement, the
lenderwhoholdsthesecurityinterestonthatcollateralwillnotbebarredbythe
automatic stay of picking up that collateral after 30 days after the Section 341creditorsmeeting.
Moreover,bankruptcyalsoprovidesyoutheabilitytochallengeyourautodebtor
arepossessiontoensurethattheywerelawfulinformandexecution.
Redemption
Toredeemyourcarinbankruptcy,youpayyourlenderonlywhatthecarisworth,
not what you owe on your loan. Redemption in bankruptcy can save youconsiderable amounts from redemption outside of bankruptcy. Outside of
bankruptcy, to redeem you have topay yourentire loan, includingallcostsand
fees in order to redeem. In bankruptcy, you redeem at the replacement value
withoutdeductingforthecostsofsale. Ifyourcarisworth$10,000butyoustil
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owe $15,000 on your loan, you only have to pay $10,000 to redeem the car in
bankruptcy.
ExampleVehicleRedemptionIfyouowneda2007F150,thevehicleredemptionmightbeasfollows:
KellyBlueBookValue: $12,000
OutstandingBalanceonLoan: $17,000
YoupaytoRedeemOutsideofBankruptcy: $17,000
YoupayinfulltoRedeemduringBankruptcy: $12,000
You must pay the entire redemption amount in cash. Some creditors let you
redeemininstallmentpaymentsbutthebankruptcycourtcannotrequirealender
toacceptinstallmentpayments. Also,somelendersmayofferyoualoanforthe
presentvalueofyourcarsoyoucanredeem inyourbankruptcycase. Theseare
called redemption loans. You may find this new loan with a much lower
principalthatwhatyouoweveryappealing,especiallyifyoucanvalueyourcarat
averydepressedlevelandmaybeabletorefinanceagaininthefuture. However,
bewareofinterestrateandfeesincludedintheredemptionloan.
Reaffirmation
Whenyouenter intoa reaffirmationagreement,youagree to repayadebt that
wouldotherwisebedischargedinyourbankruptcycase. Yourpersonalliabilityon
yourautoloanwouldnormallybedischargedinbankruptcybutyourlenderwould
continuetohavetherighttorepossess. Youwouldreaffirmanautoloaninorder
tokeepacarinwhichalenderhasasecurityinterest.
You must meet certain requirements to enter into a reaffirmation agreement
First, you reaffirmation must be effective under nonbankruptcy law and the
creditormustmakenumerousdisclosuresofthecostsofreaffirmation. Second,
youmustenterintothereaffirmationagreementbeforeyoureceiveadischargein
yourbankruptcycase. Inaddition,thebankruptcycourtwilloftenapproveyour
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reaffirmationonlyifyouappearbeforethebankruptcycourtforahearing. Atthis
time, you will be told that no discharge debt, such as your auto loan, must be
reaffirmed. In addition, the bankruptcyjudge will tell you the consequences of
entering intoa reaffirmationagreement, including repossessionandadeficiency
judgmentifyoudefault.
Becausebankruptcy lawseeks toprotect lenders frompressuringdebtors intoa
reaffirmationofanautoloan,reaffirmationrequirementsinclude:
Anagreementbeexecutedbeforedischarge; Thedebtorsrighttorescindfor60days; Lendersprovidespecificdisclosures; Anagreementbefiledwiththebankruptcycourt; Thatthedebtorappearatahearinginfrontofabankruptcyjudge
ifnotrepresentedbyalawyer;
Alawyerssignatureifrepresentedbyalawyer.Make
sure
that
you
can
make
the
monthly
payments
because
if
you
breach
anapprovedreaffirmationagreement,youwillstillowetheentiredebt,includingany
deficiencyafterthesaleofthevehicle,notwithstandingthebankruptcydischarge.
If you have an attorney your attorney must file an affidavit stating that your
reaffirmation is voluntaryanddoesnot imposeanunduehardshiponyou. You
must disclose your income and expenses reflecting your ability to pay the
reaffirmed debt, except if the lender is a credit union. If you are without an
attorney,thebankruptcycourtmustevaluatewhethertheagreementwillimpose
unduehardshiponyouandthattheagreement is inyourbest interests,andthe
courtwillnotapprovetheagreementifitisnotinyourinterest.
Bankruptcycourtsaregenerallyreluctanttoallowyoutoenterintoareaffirmation
agreementwhenyouwanttoreaffirminordertokeepdrivingaluxurycar. Also
they hesitate to allow you to enter into reaffirmation agreement if you seek to
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protect the guarantee of a friend or relative. Even if you meet all the
requirementsofareaffirmationagreement,yougeta60daycoolingoffperiodin
whichyouarefreetorescindthereaffirmation.
Consider all alternatives before reaffirming a debt such as an auto loan andseriouslyconsidersellingyourcarandreplacing itwitha lessexpensiveusedcar
beforeyouenterintoareaffirmationagreement.
TreatmentofVehicleLoansinChapter13
InaChapter13case,yourbestbetistopayoffyourcarinmonthlypaymentsin3
5yearsthroughyourChapter13plan. Youmaybeabletoreduceyour interest
rate intheplanandpotentiallyreducewhatyouowetothecurrentvalueofthe
carifyourloanisnotapurchasemoneysecurityinterestonacarpurchasedwithin
910daysbeforethebankruptcy.
For purchase money security interests on vehicle purchases less than 910 days
beforebankruptcy,thevehicleloanmustbepaidinfulleitheroverthelifeofthe
plan, or according to the terms of the loan agreement. You should determine
whichoptionpresentsthemostaffordablemethodtopayyourvehicledebtsand
drafttheChapter13planaccordingly.
VehicleLeasesinBankruptcy
Beforeyoutakeanyactionsinbankruptcyregardingyourvehiclelease,youmust
makesurethatyouhaveatrueleaseratherthenarenttoowntransaction.
You likely entered into a true lease if your financing entity actually owns the
vehicle and at the end of the term, you have nothing. You have to return the
vehicleandyoucannotsellthevehicle. Underatrueleaseagreement,theterms
of the lease contract govern the rights and obligations between you and thelender. Typically your vehicle lessor has the right to repossess the car for any
default, such as nonpayment of an installment or lack of insurance, the same
mannerasasecuredpartywould.
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Inabankruptcycase,youcanassumethevehiclelease meaningyoucanagreeto
continuewiththe leaseandcuredefaults orrejectthe lease meaningthatyou
cansurrenderthevehicleandhavenofurtherobligationtopayleaseinstallments
Ifyoudonotexpresslyrejectorassumeyourvehicleleasewithin60daysoffiling
in a Chapter 7 bankruptcy case, the lease is rejected by operation of law. Your
vehicle lessor isentitledtorepossessthevehiclewithoutseekingrelief fromthe
automatic stay. In bankruptcy cases in all chapters, you must indicate in your
initialbankruptcydocumentsyourintenttoassumeyourvehiclelease.
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IX. CHECKLISTFORFILINGYOURBANKRUPTCYCASE
Credit
Counseling
Briefing
Beforefilingabankruptcypetitionunderanychapteryoumustobtainabriefingby
a credit counseling agency approved by the United States trustee or the
BankruptcyAdministrator. Thebriefingmustbeobtainedwithin180daysbefore
commencement of your case, and a certificate of proof of completion must be
filedwiththecourt. Thecostofthebriefingisabout$50,anditcanbecompleted
over the internet,by telephone,or inperson. Thebankruptcycourtcanexcuse
you fromtherequirement ifyouarephysicallyormentallydisabledoronactive
militaryduty. Also,thecourtcanapproveadelayinobtainingthebriefingifthere
are exigent circumstances preventing you from obtaining the counseling before
filingthepetitionbutthesearedifficulttoobtain.
FilingFeesBankruptcy petitions must be accompanied by a filing and administrative fee
payabletothecourt. Currentlythefeesforbankruptcycases: $299forChapter7
cases;$279forChapter13and12cases,and$1,039forChapter11cases. Filingandadministrativefeesareinadditiontoattorneyfeesandcounselingfees. You
may file an application to pay the filing fees in installments, and courts usually
allow payment over time, in four to five segments. In a Chapter 7 case, the
bankruptcy court may approve a waiver of the filing fee upon application that
conformstoOfficialForm3Bandproofthatyourincomeislessthan150percent
oftheofficialpovertylinebasedonthesizeofyourfamily.
Filing
Documents
Youmustfilecertaindocuments. Youcommenceyourbankruptcycase. Ifthese
requireddocumentsarenotfiled,thecourtwilldismissthecaseandyouwilllose
thebenefitsofbankruptcyprotection.
Tocommenceacase,thedebtormustfilethefollowingdocuments:
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OfficialForm1: thevoluntarypetition OfficialForm21:the statement of social security number. The socia
security statement must contain your full number. Pursuant to the
privacy policy of the United States Courts, the full social securitynumber does not become a public record, and only creditors wil
receivethefullnumbertoenablethemto identifythedebtor intheir
records.
Alistofcreditorsnamesandaddresses: The list of creditors, oftenknownasthemailingmatrix, isnotanofficial formbut isoften the
subjectofalocalform.
Acertificatefromanapprovedcreditcounselingagencythatthedebtorhadtherequiredbriefing
Atthesametimeorshortlyafteracasebegins,youmustfile: OfficialForm7: Schedulesofassets,liabilities,incomeandexpenses OfficialForm7,cont:Statementoffinancialaffairs Form22A,B,orC: themeanstestcalculation(dependingonyour
bankruptcyChapter).
FormB203: theattorneysdisclosureofcompensation Chapter 7 case only Official Form 8, a statement of intention with
respecttosecureddebts.
Chapter13caseonly Chapter13plan. Noofficialformexistsforthechapter13plan,butmanyjurisdictionshaveaformofchapter13planthat isrequiredorsuggested. AmodelChapter13bankruptcyplan is
attachedbelow.
Many of the required documents must be signed by you under the pain and
penaltyofperjury. Ifyoumakefalsestatementsontheforms,oromitinformation
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Afteryourbankruptcycase iscommenced,youwillreceivenoticeofthemeeting
ofcreditorswhich iscommonlyreferredtoastheSection341meeting,afterthe
BankruptcyCodesectionrequiringthemeeting. Youmustattendthismeetingin
person. Youwillbeadministeredanoathbythetrusteeandthetrusteewillask
youquestionsaboutyourassets,liabilities,income,andexpensesunderoathand
the proceeding is recorded. The purpose of the trustees questions are to
ascertainwhetheryouhavemadeacompleteandaccuratelistofyourassetsand
liabilitiesandwhetheryouhaveanyassetsthatcanbeliquidatedfordistribution
tocreditors.
The Section 341 meeting is recorded and is held in a public place, usually with
otherdebtorspresent. Creditorsmayattendthemeeting. However,creditorsare
notrequiredtoattendandusuallydonotattend. Thetrusteewillusuallyexamineyouforfivetotenminutes,butmaycontinuethemeetingonanotherdateifthere
is insufficient time and the examination is not concluded. You are required to
bring tothemeetingapicture formof identification,proofof thesocialsecurity
number,recentbankaccountstatements,andproofofcurrentincome,suchasa
pay stub. Some trustees will send you a letter requesting that additiona
documentsbebroughttotheSection341meeting. It is inyourbest interestto
satisfyallofthetrusteesrequeststothebestofyourability. Ifyoudonotspeak
English,aninterpretermaybeprovidedfortheSection341meeting.
BankruptcyCourtMostdebtorsneversee the insideofabankruptcycourtroom. TheSection341
meetingisusuallytheonlyeventthatyouwillhavetoattendinperson.
PersonalFinancialManagementCourseYou must complete a personal financial management course after thecommencement of your bankruptcy case and file with the court a certificate of
completionofthecourse. Thecoursemustbegivenbyaninstructorapprovedby
theUnitedStates trusteeprogram. InaChapter7case, thecertificatemustbe
filedwithin45daysaftertheSection341meeting,andinaChapter13case,bythe
lastplanpayment. Thecostoftheinstructionvaries,butgenerallydoesnotcost
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morethan$100. Youmayaskthecourtforawaiverofthecourserequirementon
thegroundsthatyouarementallyorphysicallydisabled,orareonactivemilitary
duty.
BankruptcyDischargeOnce you have performed your required duties, your bankruptcy discharge wil
routinely enter unless a creditor or the trustee files an adversary proceeding
againstyouseekingtoexemptadebtfromdischargeordenyingyourbankruptcy
discharge.
LegalAdviceYoumaybeaskingwhetheryoushouldfilethebankruptcycasewithorwithoutanattorney. Therulesandstandardsyoumustadheretoarethesamewhetheryou
have a lawyer or not. You will have to comply with the requirements of the
BankruptcyCodeandtheRules. Youmustproperlyfileyourbankruptcycaseand
handleitproperlythroughoutthecase.
Bankruptcyiscomplicated. Understandingbankruptcylawandbankruptcyrulesis
often beyond the ability of a person not educated in the law and even many
lawyerswhodonotregularlypracticebankruptcylaw. Thelegalrightsavailabletoyouunderyourpersonalsituationwillvary. Theconsequencesofmakingmistakes
inabankruptcycasecanbedrastic.
PayingforanAttorneyIronically, most debtors need to save money to file a bankruptcy case with a
lawyer. Attorneysgenerallychargeanupfrontcash feeoracombinationofan
upfront fee withyourbalance tobe paidover time. Remember that you must
alsopayafilingfeewithyourbankruptcypetitionunlessthecourtwaivesthefeeor allows it to be paid in installments. If you simply can not pay, pro bono
programs and agencies provide free legal services to debtors. Lawyers have a
professionaldutytoprovidelegalservicestothosewhoareunabletopay.
ProfessionalHelp?
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Whenanyoneisplaguedbyfinancialtroubles,heorsheisnotalwaysinthestate
ofmind tomake thebestdecisionsabout their financial condition. Whetheror
not you plan on working with an attorney, you should likely seek advice from a
competent professional about whether or not to file for bankruptcy. Consumer
bankruptcylawyerswilloftenprovideaconsultationtoprospectiveclientsforlittle
ornofee. Seekaconsultationbeforeyouembarkonabankruptcycasetotryand
seeiftherearelessdrasticalternativesthatcouldworkforyou.
AssetforthinthisGuide,therearemanyreasonstostayoutofabankruptcycase
and there are reasons to choose to file. If the choice to file is made, there are
further issuesastotheappropriatechapterforrelief,thetimingofabankruptcy
filing,aswellastechnicalrequirementsaffectingyourrights. Thesedecisionsare
extremelycomplicatedandrequireanevaluationofthefactsofaparticularcaseand an assessment of the applicable law. Good representation by a qualified
professionalmaybecritical.
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X. SAMPLECHAPTER13BANKRUPTCYPLANSet
forth
below
for
you
reference
is
a
sample
chapter
13
plan
from
the
UnitedStatesBankruptcyCourtfortheDistrictofMassachusetts.
Mostbankruptcycourtsthroughoutthecountryhavepreferredformswhichyou
canobtainfromthebankruptcycourtoronlineatthebankruptcycourtswebsite
Call or go online to see if the bankruptcy court where you must file your
bankruptcy case has a local form and use that form if you do decide to file a
chapter13bankruptcycase.
SampleChapter13Plan
DEBTOR(S):
(H)________________________________ SS#:_____________________
(W)________________________________ SS#:_____________________
I. PLANPAYMENTANDTERM:
Debtor(s)shallpaymonthlytotheTrusteethesumof$__________forthetermof:
36Months. 11U.S.C. 1325(b)(4)(A)(i);
60Months. 11U.S.C. 1325(b)(4)(A)(ii);
60Months. 11U.S.C. 1322(d)(2).Debtoraversthefollowingcause:
__________________________________________________________________________________________________
__________________________________________________________________________________________________
________
;or____Months. TheDebtorstatesasreasonstherefore:
__________________________________________________________________________________________________
_______________________________________
II. SECUREDCLAIMS:
A. Claimstobepaidthroughtheplan(includingarrears):
CreditorDescriptionofClaimAmountofClaim
(prepetitionarrears,purchasemoney,etc.)
_____________________________________________ $________________
_____________________________________________ $________________
_____________________________________________ $________________
TotalofsecuredclaimstobepaidthroughthePlan: $________________
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B. Claimstobepaiddirectlybydebtortocreditors(NotthroughPlan):
CreditorDescriptionofClaim
__________________________________________________________________________________________________
__________________________________________________________________________________________________
___________
C. ModificationofSecuredClaims:
CreditorDetailsofModificationAmt. ofClaimtoBe
(AdditionalDetailsMayBeAttached)PaidThroughPlan
____________________ __________________________ _________________
____________________ __________________________ _________________
D. Leases:
i. TheDebtor(s)intend(s)torejecttheresidential/personalpropertyleaseclaimsof
__________________________________________________________________; orii. TheDebtor(s)intend(s)toassumetheresidential/personalpropertyleaseclaimsof
____________________________________________________________________.
iii. Thearrearsundertheleasetobepaidundertheplanare______________________.
III. PRIORITYCLAIMS:
A. DomesticSupportObligations:
CreditorDescriptionofClaimAmountofClaim
__________________ ________________________ $______________
__________________ ________________________ $______________
B. Other:
CreditorDescriptionofClaimAmountofClaim
____________________ ___________________________ $______________
____________________ ___________________________ $______________
____________________ ___________________________ $______________
____________________ ___________________________ $______________
TotalofPriorityClaimstoBePaidThroughthePlan: $______________
IV. ADMINISTRATIVECLAIMS:
A. AttorneysFees(tobepaidthroughtheplan): $______________
B. MiscellaneousFees:
CreditorDescriptionofClaimAmountofClaim__________________ _________________________ $______________
__________________ _________________________ $______________
__________________ _________________________ $______________
C. TheChapter13TrusteesfeeisdeterminedbyOrderoftheUnitedStatesAttorneyGeneral. Thecalculationofthe
Planpaymentsetforthutilizesa10%Trusteescommission.
V. UNSECUREDCLAIMS:
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Thegeneralunsecuredcreditorsshallreceiveadividendof______%oftheirclaims.
A. Generalunsecuredclaims$_______________
B. Undersecuredclaimsarisingafterlienavoidance/cramdown:
CreditorDescriptionofClaimAmountofClaim
__________________ _________________________ $_______________
__________________ _________________________ $_______________
__________________ _________________________ $_______________
C. NonDischargeableUnsecuredClaims:
CreditorDescriptionofClaimAmountofClaim
__________________ _________________________ $_______________
__________________ _________________________ $_______________
__________________ _________________________ $_______________
TotalofUnsecuredClaims(A+B+C): $_______________
D. Multiplytotalbypercentage: $_______________
(Example: Totalof$38,500.00x.22dividend=$8,470.00)
E. Separatelyclassifiedunsecuredclaims(coborrower,etc.):
CreditorDescriptionofClaimAmountofClaim
__________________ _________________________ $_______________
__________________ _________________________ $_______________
__________________ _________________________ $_______________
Totalamountofseparatelyclassifiedclaimspayableat_____%: $_______________
VI. OTHERPROVISIONS:
A. Liquidationofassetstobeusedtofundplan:
__________________________________________________________________________________________________
________________.
B. MiscellaneousProvisions:
_____________________________________________________________________
VII. CALCULATIONOFPLANPAYMENT:
a)Securedclaims(SectionIATotal): $_________________
b)Priorityclaims(SectionIIA&BTotal): $_________________
c)Administrativeclaims(SectionIIIA&BTotal): $_________________
d)Regularunsecuredclaims(SectionIVDTotal): +$_________________
e)Separatelyclassifiedunsecuredclaims: $_________________
f)Totalofa+b+c+d+eabove: =$_________________
g)Divide(f)by.90fortotalincludingTrusteesfee:
CostofPlan=$_________________
(ThisrepresentsthetotalamounttobepaidintotheChapter13Plan.)
h)Divide(g),CostofPlan,byTermofPlan,_____months
i)RounduptonearestdollarforMonthlyPlanPayment: $________________
(Enterthisamountonpage1)
Pursuantto11U.S.C. 1326(a)(1)unlesstheCourtordersotherwise,debtorshallcommencemakingthepayments
proposedbyaplanwithinthirty(30)daysafterthepetitionisfiled. Pursuantto11U.S.C. 1326(a)(1)(C),thedebtorshal
makepreconfirmationadequateprotectionpaymentsdirectlytothesecuredcreditor.
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VIII. LIQUIDATIONANALYSIS
A. RealEstate:
AddressFairMarketValueTotalAmountofRecorded
Liens(ScheduleD)
____________________ $___________________ $_____________________
____________________ $___________________ $_____________________
____________________ $___________________ $_____________________
TotalNetEquityforRealProperty: $_____________________
LessTotalExemptions(ScheduleC): $_____________________
AvailableChapter7: $_____________________
B. Automobile(Describeyear,make,model):
______________Value$________Lien$_________Exemption$_____________________
______________Value$________Lien$_________Exemption$_____________________
TotalNetEquity: $____________________
LessTotalExemptions(ScheduleC)$____________________
AvailableChapter7: $____________________
C. AllotherAssets: (AllremainingitemsonscheduleB): (Itemizeasnecessary)
__________________________________________________________________________________________________
______________________________________. TotalNetValue: $_____________________
LessExemptions(ScheduleC): $____________________
AvailableChapter7: $_____________________
D. SummaryofLiquidationAnalysis(totalamountavailableunderChapter7):
NetEquity(AandB)plusOtherAssets(C)lessallclaimedexemptions: $__________________
E. AdditionalCommentsregardingLiquidationAnalysis:
__________________________________________________________________________________________________
________________________________________
IX.
SIGNATURES
PursuanttotheChapter13rules,thedebtororhisorherattorneyisrequiredtoserveacopyofthePlanuponthe
Chapter13Trustee,allcreditorsandinterestedparties,andtofileaCertificateofServiceaccordingly.
_________________________________________ ________________________________
DebtorsAttorneyDate
AttorneysAddress:_______________________________________________________________
Tel. #()_______________________
EmailAddress:_________________________________________________________
I/WEDECLAREUNDERTHEPENALTIESOFPERJURYTHATTHEFOREGOINGREPRESENTATIONSOFFACTARETRUEAND
CORRECTTOTHEBESTOFOURKNOWLEDGEANDBELIEF.
_________________________ _______________________
Debtor Date
_________________________ _______________________
Debtor Date
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XI. ALTERNATIVESTOABANKRUPTCYCASETOCONSIDER DoNothing
Doing
nothing
seems
unusual,
but
it
is
often
the
least
expensive
and
easiestoptionforsomeone infinancialtrouble. Ifyouhavenoassets
thatcreditorscanget,youarejudgmentproof. Ifyouarejudgment
proof,youshouldconsidernotfilingbankruptcyatallbutinsteadwrite
letterstoyourcreditorsstatingthatyouarejudgmentproof. Although
onlyabankruptcywillstopcollectioneffortsasamatterof law,many
creditorscanbepersuadedwithaletterthattheyshouldabandonthe
effort to collect assets from ajudgment proof individual. The letter
shouldsaythatyourcreditorshouldstopcontactingyou,thatyoumayfile for bankruptcy, in which event your case will be closed as a no
assetcase,andthatitisfutileforthecreditortocontinueitscollection
efforts. Failureofacreditortoceasecollectioneffortsafterthe letter
may subject the creditor to liability for violating Fair Debt Collection
PracticesAct(FDCPA).
CreditCounselingManygoodcreditcounselorswilldotheirbesttohelpyouavoidfiling
forbankruptcy. However,somecreditcounselorsarebadandwilljust
collect money for you without providing any valuable services. Be
carefulwhenhiringacreditcounselor.
WorkoutsDirectworkouts,i.e. negotiationsdirectlywithcreditors,maybeaway
to
resolve
your
financial
problems.
There
are
numerous
types
of
workoutsthatoftendependoncreditorspolicies. Youmaybeableto
workoutarepaymentplanforsomeorallofthedebtovertimewitha
reduced interest rate that could include forgiveness ofsome or all of
yourdebt.
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LoanModificationsAs a homeowner, you can try various measures to avoid foreclosure
outsideofbankruptcy,however,allrequiresometypeofconcessionby
thehomemortgagecompany. Loanmodificationsarespecifictoeach
homeownerandlenderandinvolveanegotiationofworkoutterms.
RefinancingRefinancingdebtsthroughtheequity inyourhomesuchasthrougha
second mortgage, reverse mortgage, or home equity line are also
alternativestobankruptcy. Bewareofthemanyrisks.
ForeclosureRescueScamWatchout. Neverpursueaforeclosurerescuetransaction inorderto
avoidbankruptcy. Nevertransferyourhousetoanother individualor
company,whopromisestorefinanceitandpayyourmortgage. These
dealsarealwaysscams. Transferringthetitletoyourhomeorproperty
ispermanentandfraughtwithdanger.
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XII. RESOURCESThis
personalized
report
gives
you
the
basics
of
what
you
need
for
a
bankruptcy filing so thatyou fullyconsider a bankruptcycase. While
thisreportgetsyouonyourwayandputsyouaheadofmostdebtors,
this report does not cover all possibilities in a bankruptcy case and
cannotbereliedupontoensureasuccessfulbankruptcycase.
Manyothervaluableresourceswillhelpgetoutofdebt,eitherbyfiling
abankruptcycaseoroutsideofbankruptcy.
Inparticular,recommendedare:
TheRoadOutofDebt: BankruptcyandOtherSolutionstoYourFinancialProblems, byJoanN.FeeneyandTheodoreW.Connolly(Wiley&Sons,Inc.2010);www.roadoutofdebt.com
Additionally,youcanconsultthefollowingsources:
BankruptcyandDebtBasics
AmericanAssociationofRetiredPersons(AARP):
www.aarp.org
AmericanBankruptcyInstitute:www.abiworld.org.
Bankrate.com:www.bankrate.com
TheCenterforResponsibleLending:
www.responsiblelending.org/
ElizabethWarrensworks(HarvardLawprofessorand
bankruptcyexpert):
www.law.harvard.edu/faculty/directory/facdir.php?id=82)
IHateDebt:www.ihatedebt.com
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Jump$tartCoalitionforPersonalFinancialLiteracy:
www.jumpstartcoalition.org
Mahalo:www.mahalo.com/howtodealwithdebt
collectors
MSNMoney:http://articles.moneycentral.msn.com.
PracticalMoneySkills:www.practicalmoneyskills.com
SmartMoney:www.smartmoney.com
U.S.BankruptcyCourts:
www.uscourts.gov/bankruptcycourts/bankruptcybasics.ht
ml
ConsumerCreditDebt
NationalFoundationforConsumerCredit(NFCC):1(800)
3882227orwww.nfcc.org.See
www.nfcc.org/FirstStep/firststep_01.cfmforalistof
NFCCapprovedcounselors.
AssociationofIndependentConsumerCreditCounseling
Agencies(AICCCA):1(866)7038787orwww.aiccca.org.Seewww.aiccca.org/find.cfmforalistofAICCCA
approvedcounselors.
BetterBusinessBureau(BBB):1(703)276.0100or
www.bbb.org.Seewww.bbb.org/us/toensurethatother
consumershavenothaddifficultieswiththecredit
counseloryouareconsideringhiring.
CreditAbuseResistanceEducation(CAREprogram):
www.careprogram.us
FairDebtCollection.com:www.fairdebtcollection.com
FederalTradeCommission(FTC):Visitwww.ftc.govorcall
tollfree,1(877)FTCHELP(18773824357);TTY:1(866)
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6534261tofileacomplaintortogetfreeinformationon
consumerissues.
Stopreceivingprescreenedcreditcardoffersby
notifyingeachofthethreemajorcreditbureaus,Equifax,
Experian,andTransUnion,throughtheirWebsites:
Equifax:www.equifax.com
Experian:www.experian.com
TransUnion:www.transunion.com
LegalHelp
Contacttheclerkofthebankruptcycourt,theU.S.Trustees
Officeortheofficeofthebankruptcyadministratorinyourarea
andaskfornamesofcompetentconsumerbankruptcylawyers.
AmericanBarAssociation:www.abalawinfo.org
/find1.htmland
www.abanet.org/legalservices/findlegalhelp/home.cfm
(AmericanBarAssociationlistofresourcesincluding
foreclosureresourcesandinformation)
AmericanBoardofCertification:www.abcworld.org
AmericanBankruptcyInstitute:www.abiworld.org
AmericanCollegeofBankruptcy:www.amercol.org
MartindaleHubbelllawyerratingservice:
www.martindale.com
NationalAssociationofConsumerBankruptcyAttorneys:
www.nacba.org
NationalConsumerLawCenter:www.consumerlaw.org
orwww.nclc.org.
ThomsonWestPublicationsattorneylocatorservice:
www.findlaw.comandbankruptcy.findlaw.com
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42
FilingforBankruptcywithoutanAttorney:Thisresource
providesmoredetailedinformationabouttheprocedures
forfilingforbankruptcyfortheindividualwhochoosesto
representhimorherself.
www.uscourts.gov/bankruptcycourts/prose.html
MortgageDebt
Thefollowingresourcesareusefulindealingwithmortgage
debt,foreclosure,ormortgagescams.
ComptrolleroftheCurrencyU.S.Departmentofthe
Treasury:www.helpwithmybank.govwww.occ.treas.gov.
FDIC:www.fdic.gov;(FHA):1(800)CALLFHAor
www.fha.com
FederalTradeCommission(FTC):
www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.sht
m
FederalReserveBoard:
www.federalreserve.gov/pubs/foreclosurescamtips/default.htm
ForeclosureSelfDefenseBlog:
http://foreclosureselfdefense.com
HomeownerCrisisResourceCenter:
www.housinghelpnow.org
HomeownershipPreservationFoundation(HPF)and
HOPENOWhotline:1(888)995HOPEor
www.hopenow.com
MakingHomeAffordable:
www.makinghomeaffordable.gov
NoloPress:www.nolo.com/legal
encyclopedia/bankruptcyforeclosuredebt/
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43
NeighborWorksAmerica:
www.nw.org/network/home.asp
TheOfficeoftheComptrolleroftheCurrency(OCC):
www.helpwithmybank.govand
www.occ.gov/customer.htm.
U.S.DepartmentofHousingandUrbanDevelopment
(HUD):1(800)5694287orwww.hud.gov.See
www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfmforalist
ofHUDapprovedcounselors.
TaxDebt
InternalRevenueService(IRS):1(800)8291040or
www.irs.gov,See
www.irs.gov/individuals/index.html?navmenu=menu1for
manyresourcesforindividualsand
www.irs.gov/localcontacts/index.htmlforcontact
informationforyourlocalIRSoffice.Donthaveyourmost
recenttaxreturn?Transcriptsareavailableforthecurrent
andthreepriorcalendaryears.Toobtainacopy,contact
theIRSbyphoneorsubmitForm4506Tbymailorfax.
TheCollectionProcess:www.irs.gov/pub/irs
pdf/p594.pdf
OfferinCompromiseBooklet:www.irs.gov/pub/irs
pdf/f656b.pdf
TaxpayerAdvocateService(TAS):1(877)7774778or
www.irs.gov/advocate/.Seewww.taxtoolkit.irs.gov/helpwithtaxproblemsii/tas/
forcontactandotherinformation.
8/6/2019 Personalized Bankruptcy Report
44/44
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people understand the debt relief available to them under the
BankruptcyCode.
DISCLAIMER: This report is intended as a general discussion of legal
issues regardingyourassetsanddebtandnotasastatementof fact,
legal advice or a legal opinion. Personal opinions may also be
expressed.Noattorneyclientrelationshipiscreatedbythisreport.Do
not act or rely upon lawrelated information in this report without
seeking the advice of an attorney licensed to practice in debt andbankruptcyareas,preferablywithexperiencewithbankruptcycases.
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